2.   Basis of Presentation

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared from the books and records of the Company and include all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and Rule 8‑03 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission. Accordingly, these interim financial statements do not include all of the information and footnotes required for complete annual financial statements. Interim results are not necessarily indicative of the results that may be expected for the full year. Interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10‑K for the year ended June 30, 2019, from which the accompanying condensed consolidated balance sheet dated June 30, 2019 was derived.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated as part of the consolidation.

Liquidity

Since our spin-off from Integrated BioPharma, Inc. in August 2008, we have incurred significant losses and negative cash flows from operations. As of March 31, 2020, the Company’s accumulated deficit was $146.9 million. For the nine months ended March 31, 2020, the Company’s net loss was approximately $12.9 million and it had cash used in operating activities of $9.5 million. As of March 31, 2020, cash on hand totaled approximately $10.0 million.

The following equity transactions occurred during Fiscal 2020:

See Note 11 – Stockholders' Equity for additional information.

On May 13, 2020, the Company entered into a purchase agreement, pursuant to which the Company agreed to sell to Lincoln Park and Lincoln Park agreed to purchase 1,000,000 shares of the Company’s common stock at a price of $1.09 per share for an aggregate purchase price of $1,090,000, pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-236735), filed with the Securities and Exchange Commission in accordance with the provisions of the Securities Act of 1933, as amended, and declared effective on March 19, 2020, and the prospectus supplement thereto dated May 14, 2020.

In the past, the history of significant losses, the negative cash flow from operations, the limited cash resources on hand and the dependence by the Company on its ability – about which there can be no certainty – to obtain additional financing to fund its operations after the current cash resources are exhausted had raised substantial doubt about the Company's ability to continue as a going concern. Based on the total cash on hand of approximately $10.0 million as of March 31, 2020, combined with subsequent purchases of the Company's common stock by Lincoln Park through the date of the filing of this report totaling approximately $10 million, we believe the Company has adequate cash on hand to support the Company's activities for at least one year from this report date.

The Company has historically financed its activities through the sale of common stock and warrants. Through March 31, 2020, the Company has dedicated most of its financial resources to research and development, including the development and validation of its own technologies and the development of a proprietary therapeutic product against fibrosis based upon those technologies, advancing its intellectual property, the build-out and recommissioning of its CDMO facility, and general and administrative activities.

As of March 31, 2020, the Company has not completed development of or commercialized any vaccine or therapeutic product candidates. As such, the Company expects to continue to incur significant expenses and operating losses for at least the next year. The Company anticipates that its expenses and losses will increase substantially if the Company:

To become and remain profitable, the Company must succeed in commercializing its technologies, alone or with its licensees, the service offerings provided by its CDMO facility, and in developing and eventually commercializing products that generate significant revenue. In addition, profitability will depend on continuing to attract and retain customers for the development, manufacturing and technology transfer services offered by the Company.

On June 26, 2018, the Company closed on an underwritten public offering with total gross proceeds of approximately $16.0 million, before deducting underwriting discounts, commissions and other offering expenses payable by the Company. The securities offered by the Company consisted of (i) 4,350,000 shares of Common Stock at $0.90 per share, (ii) 6,300 shares of Series A Convertible Preferred Stock (“Series A Preferred”), and (iii) 5,785 shares of Series B Convertible Preferred Stock. The Company granted the underwriters a 45‑day option to purchase up to an additional 2,666,666 shares of common stock to cover over-allotments, if any. On July 12, 2018, the Company received approximately $1.35 million, before deducting underwriting discounts, commissions and other offering expenses payable by the Company, from the proceeds of the sale of 1,500,000 over-allotment shares of Common Stock purchased at $0.90 by the underwriter during the 45‑day provision. See Note 11 – Stockholders' Equity for additional information.

In July 2019, iBio entered into a Master Manufacturing Services and Supply Agreement (“MSA”) with Lung Biotechnology PBC (“Lung Bio”), a subsidiary of United Therapeutics Corporation, to produce recombinant human collagen-based bioink for 3D bioprinted organ transplants. iBio will collaborate with Lung Bio to scale-up production of rhCollagen in tobacco plants using iBio’s FastPharming™ System. Under the MSA, the initial work to be performed by iBio involves the development of a scalable purification process for rhCollagen, as well as cGMP supply of the material for clinical trials. During the quarter ended September 30, 2019, iBio received a prepayment of approximately $1.6 million from LungBio, $1.0 million of which was allocated to the purchase of capital expenditures per the MSA and $620,000 allocated to the performance of related contracted services. The $1.6 million was recorded as a contract liability on the balance sheet. In Fiscal 2020, the Company recognized approximately $46,000 of the contract liability amount related to LungBio as revenue.

In addition, in June 2018, iBio established a strategic commercial relationship with CC-Pharming Ltd. of Beijing, China (“CC-Pharming”) for the joint development of products and manufacturing facilities for the Chinese biopharmaceutical market, utilizing iBio’s technology. The first product focus selected pursuant to the Master Joint Development Agreement executed between iBio and CC-Pharming is a therapeutic antibody. On February 6, 2020, the Company entered into a statement of work with CC-Pharming pursuant to the Master Joint Development Agreement memorializing their collaborative efforts to develop and test a new BCCP 2019-nCoV vaccine to be manufactured using iBio's FastPharming System(TM). During the quarter ended September 30, 2018, iBio received prepayments of approximately $2.9 million from CC-Pharming which it recorded as a contract liability on its balance sheet. In Fiscal 2019, the Company recognized approximately $1.8 million of the contract liability amounts related to CC-Pharming as revenue. In Fiscal 2020, the Company recognized approximately $147,000 as revenue.

In November 2018, the Company received a capital contribution from the Eastern Affiliate of approximately $2.5 million for working capital purposes.

The Company plans to fund its future business operations using cash on hand, through proceeds from the sale of additional equity or other securities, and through proceeds realized in connection with the commercialization of its technologies and proprietary products, license and collaboration arrangements and the operation of our subsidiary, iBio CDMO.

As a result of the impact of the COVID-19 pandemic crisis, the Company ascertains that certain risks associated with further COVID-19 developments may adversely impact the Company's capital and financial resources, including the Company’s overall liquidity position and outlook, any changes, or reasonably expected changes, to the Company’s cost of, or access to, capital and funding sources, and any material impact to its sources or uses of cash. Although the Company does not anticipate any negative current impact, the risk exists that further COVID-19 developments may negatively impact the Company’s financial condition and restrict the availability of liquidity for its operational needs.