8-K: InMed Pharmaceuticals Faces Capital Raise Delay Amidst Going Concern Warning and Auditor Change

InMed Pharmaceuticals Inc. announced an amendment to its equity purchase agreement, a change in its certifying accountant, and the failure to achieve a quorum at a special shareholder meeting, delaying a critical vote on share issuance.

Summary

• InMed Pharmaceuticals Inc. (the "Company") entered into an Amendment to its Standby Equity Purchase Agreement (SEPA) with Yorkville (YA II PN, LTD.) on June 13, 2025, allowing the Company to suspend the use of the Registration Statement for Common Shares during 'Black Out Periods' to manage disclosure of material nonpublic information or amend filings.
• The Company announced a change in its independent registered public accounting firm: Marcum LLP resigned effective June 12, 2025, due to CBIZ CPAs P.C. acquiring Marcum's attest business, and CBIZ was engaged for the fiscal year ending June 30, 2025.
• Marcum LLP's report for the fiscal year ended June 30, 2024, included an explanatory paragraph regarding substantial doubt about the Company's ability to continue as a going concern.
• A material weakness in financial reporting resources, previously disclosed for the fiscal year ended June 30, 2023, and leading to audit adjustments in FY2022, was remediated as of June 30, 2024.
• A special meeting of shareholders held on June 13, 2025, to approve the potential issuance of 20% or more of Common Shares under the SEPA, failed to achieve a quorum, preventing any business, including the vote on the Share Issuance Proposal, from being conducted.
• Approximately 60% of the shares that were voted were in favor of the Share Issuance Proposal, despite the lack of a quorum.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the significant 'going concern' warning from the previous auditor and the failure to achieve a quorum for a critical shareholder vote on capital raising, indicating financial instability and governance challenges. While the SEPA amendment offers some control, the underlying issues and delays are concerning.

Positives

• The amendment to the Standby Equity Purchase Agreement (SEPA) provides InMed Pharmaceuticals with greater control over the timing of share issuances, allowing for 'Black Out Periods' to manage disclosure of material nonpublic information or correct filings.
• The Company successfully remediated a previously identified material weakness related to the adequacy of resources for financial reporting matters as of June 30, 2024.

Negatives

• The Company's previous auditor, Marcum LLP, included an explanatory paragraph in its report for the fiscal year ended June 30, 2024, indicating substantial doubt about InMed Pharmaceuticals' ability to continue as a going concern.
• A special shareholder meeting on June 13, 2025, failed to achieve a quorum, preventing a crucial vote on the potential issuance of 20% or more of Common Shares under the SEPA, which is vital for future capital raising.
• The delay in approving the share issuance under the SEPA creates uncertainty regarding the Company's ability to access this financing mechanism in a timely manner.

Risks

• Substantial doubt about the Company's ability to continue as a going concern, as noted by the former auditor, poses a significant financial risk.
• The failure to achieve a quorum at the special meeting delays the Company's ability to potentially raise capital through the issuance of shares under the SEPA, impacting liquidity and operational funding.
• Potential for significant shareholder dilution if the Share Issuance Proposal is eventually approved and the Company utilizes the SEPA to issue 20% or more of its outstanding Common Shares.
• Low shareholder engagement, evidenced by the lack of a quorum, could hinder future corporate actions requiring shareholder approval.

Future Outlook

The Board is currently assessing whether to hold a subsequent special meeting of shareholders at a later date to vote on the Share Issuance Proposal, and/or to include the Share Issuance Proposal in its definitive proxy statement for the Company's 2025 annual general meeting of shareholders.

Management Comments

• "The Company may, from time to time, suspend, in its sole discretion, the use of the Registration Statement related to the Common Shares under the SEPA by providing written notice to Yorkville in the event that the Company determines in good faith that such suspension is necessary: (A) to delay the disclosure of material nonpublic information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interest of the Company; or (B) to amend or supplement the Registration Statement or Prospectus so that the Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading."

Industry Context

This filing primarily addresses company-specific financial, governance, and financing matters rather than broader industry trends. The challenges related to capital raising and going concern status are internal to InMed Pharmaceuticals Inc. within the pharmaceutical sector.

Comparison to Industry Standards

• The inclusion of a 'going concern' explanatory paragraph by the former auditor for the fiscal year ended June 30, 2024, indicates significant financial distress, which is a deviation from the financial stability typically expected of publicly traded companies in the pharmaceutical industry.
• The failure to achieve a quorum at a special shareholder meeting for a critical capital raise proposal suggests potential weaknesses in corporate governance, shareholder engagement, or investor confidence, which is not aligned with best practices for public companies seeking to secure financing.

Corporate Governance

Stakeholder Impact

• Shareholders face uncertainty regarding the Company's financial stability due to the 'going concern' warning and potential significant dilution if the Share Issuance Proposal is eventually approved and utilized.
• Investors may view the Company as high-risk due to the financial uncertainties and delays in securing capital, potentially impacting stock price and investment decisions.
• Employees may face increased uncertainty regarding job security and the Company's long-term viability given the financial challenges.

Next Steps

• The Board will assess whether to hold a subsequent special meeting of shareholders to vote on the Share Issuance Proposal.
• The Board may include the Share Issuance Proposal in the definitive proxy statement for the Company's 2025 annual general meeting of shareholders.

Key Dates

Recommendation

Keywords

InMed Pharmaceuticals, SEC filing, 8-K, Standby Equity Purchase Agreement, SEPA, capital raise, share issuance, auditor change, going concern, corporate governance, shareholder meeting, Nasdaq listing rules, financial reporting, dilution