##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005
 Commission File No. 000-26363
 IPIX Corporation
  Delaware
    
    52-2213841(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 
  þ o
 þ o




---



##### 



IPIX CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005
INDEX
 PART I  FINANCIAL INFORMATION
    
    
    
    3Item 1. Condensed Consolidated Financial Statements (unaudited)
    
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    
    21Item 4. Controls and Procedures
    
    
    
    21PART II  OTHER INFORMATION
    
    
    
    22Item 1. Legal Proceedings
    
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    
    
    23Item 6. Exhibits
    
    
    
    23Signatures
    
    
    
    23




---



##### 



PART IFINANCIAL INFORMATION
 
 ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 IPIX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2005
    
    
    2004(unaudited)
    
    
    (1)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,541,951
    
    
    $
    12,784,058Restricted cash and short-term investments
    
    
    630,000
    
    
    
    550,000Short-term investments
    
    
    1,469,788
    
    
    
    895,254Accounts receivable
    
    
    592,757
    
    
    
    413,873Inventory, net of reserves of $292,150 and $346,132
    
    
    2,169,763
    
    
    
    2,334,271Prepaid and other current assets
    
    
    1,144,085
    
    
    
    1,511,392Assets held for sale for discontinued operations
    
    
    
    
    
    
    321,384Total current assets
    
    
    19,548,344
    
    
    
    18,810,232Computer hardware, software and other, net
    
    
    1,444,842
    
    
    
    715,663Restricted cash and other long-term assets
    
    
    111,564
    
    
    
    718,343Total assets
    
    $
    21,104,750
    
    
    $
    20,244,238LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,366,145
    
    
    $
    1,042,979Accrued liabilities
    
    
    3,266,615
    
    
    
    3,376,775Deferred revenue
    
    
    219,254
    
    
    
    84,100Liabilities held for sale for discontinued operations
    
    
    
    
    
    
    164,112Capital lease obligations
    
    
    
    
    
    
    219,977Total current liabilities
    
    
    4,852,014
    
    
    
    4,887,943Long-term restructuring liabilities
    
    
    482,812
    
    
    
    141,675Total liabilities
    
    
    5,334,826
    
    
    
    5,029,618Stockholders equity:Preferred stock, $0.001 par value, 5,001,100 authorized,
290,347 shares issued and outstanding (aggregate liquidation
value: $7,555,704 and $7,325,335)
    
    
    290
    
    
    
    290Common stock, $0.001 par value, 50,000,000 authorized, 26,588,363 and
21,539,058 shares issued and outstanding
    
    
    26,588
    
    
    
    21,539Additional paid-in-capital
    
    
    546,079,023
    
    
    
    533,658,473Accumulated deficit
    
    
    (530,335,977
    )
    
    
    (518,465,682
    )Total stockholders equity
    
    
    15,769,924
    
    
    
    15,214,620Total liabilities and stockholders equity
    
    $
    21,104,750
    
    
    $
    20,244,238
 
 (1)
    
    The December 31, 2004 balances were derived from the audited consolidated financial
statements. 
 3




---



##### 



IPIX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenue:Hardware
    
    $
    1,024,261
    
    
    $
    594,657
    
    
    $
    1,340,883
    
    
    $
    807,752License and other
    
    
    408,542
    
    
    
    417,918
    
    
    
    760,149
    
    
    
    681,058Total revenue
    
    
    1,432,803
    
    
    
    1,012,575
    
    
    
    2,101,032
    
    
    
    1,488,810Cost of revenue:Hardware
    
    
    559,163
    
    
    
    439,260
    
    
    
    729,742
    
    
    
    584,419License and other
    
    
    196,154
    
    
    
    145,387
    
    
    
    392,024
    
    
    
    297,690Total cost of revenue
    
    
    755,317
    
    
    
    584,647
    
    
    
    1,121,766
    
    
    
    882,109Gross profit
    
    
    677,486
    
    
    
    427,928
    
    
    
    979,266
    
    
    
    606,701Operating expense:Sales and marketing
    
    
    1,972,415
    
    
    
    1,073,319
    
    
    
    3,687,275
    
    
    
    1,920,418General and administrative
    
    
    2,254,028
    
    
    
    924,617
    
    
    
    4,547,829
    
    
    
    1,617,281Research and development
    
    
    659,482
    
    
    
    510,077
    
    
    
    1,325,977
    
    
    
    956,179Restructuring charges
    
    
    1,819,388
    
    
    
    
    
    
    
    1,819,388
    
    
    
    Loss on impairment of asset
    
    
    
    
    
    
    
    
    
    
    253,358
    
    
    
    Total operating expenses
    
    
    6,705,313
    
    
    
    2,508,013
    
    
    
    11,633,827
    
    
    
    4,493,878Loss from operations
    
    
    (6,027,827
    )
    
    
    (2,080,085
    )
    
    
    (10,654,561
    )
    
    
    (3,887,177
    )Interest and other income, net
    
    
    39,005
    
    
    
    16,472
    
    
    
    143,992
    
    
    
    19,972Loss from continuing operations
    
    
    (5,988,822
    )
    
    
    (2,063,613
    )
    
    
    (10,510,569
    )
    
    
    (3,867,205
    )Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    (1,339,107
    )
    
    
    (1,359,726
    )
    
    
    (2,745,533
    )Net loss
    
    
    (5,988,822
    )
    
    
    (3,402,720
    )
    
    
    (11,870,295
    )
    
    
    (6,612,738
    )Preferred stock dividends
    
    
    (115,821
    )
    
    
    (223,736
    )
    
    
    (230,369
    )
    
    
    (624,168
    )Net loss available to common stockholders
    
    $
    (6,104,643
    )
    
    $
    (3,626,456
    )
    
    $
    (12,100,664
    )
    
    $
    (7,236,906
    )Basic and diluted loss per share:Continuing operations
    
    $
    (0.27
    )
    
    $
    (0.14
    )
    
    $
    (0.48
    )
    
    $
    (0.36
    )Discontinued operations
    
    
    
    
    
    
    (0.09
    )
    
    
    (0.06
    )
    
    
    (0.22
    )Net loss per share to common stockholders (basic and diluted)
    
    $
    (0.27
    )
    
    $
    (0.23
    )
    
    $
    (0.54
    )
    
    $
    (0.58
    )Weighted average common shares (basic and diluted)
    
    
    22,794,321
    
    
    
    15,894,427
    
    
    
    22,366,171
    
    
    
    12,397,576
 
 4




---



##### 



IPIX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30,2005
    
    
    2004Cash flows from operating activities:Net loss
    
    $
    (11,870,295
    )
    
    $
    (6,612,738
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    293,154
    
    
    
    519,702Bad debt expense
    
    
    18,772
    
    
    
    2,675Stock based compensation expense
    
    
    793,930
    
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    (197,656
    )
    
    
    (370,966
    )Inventory
    
    
    164,507
    
    
    
    (37,270
    )Prepaid expenses and other current assets
    
    
    1,318,692
    
    
    
    (48,232
    )Other long-term assets
    
    
    (23,335
    )
    
    
    133,791Accounts payable
    
    
    323,166
    
    
    
    (177,346
    )Accrued liaibilities
    
    
    (280,830
    )
    
    
    112,949Deferred revenue
    
    
    135,154
    
    
    
    (68,024
    )Long-term restructuring liabilities
    
    
    341,137
    
    
    
    (158,995
    )Net cash used in operating activities
    
    $
    (8,983,604
    )
    
    $
    (6,704,454
    )Cash flows from investing activities:Acquisition of computer hardware, software and other
    
    
    (1,022,219
    )
    
    
    (76,026
    )Short-term investments
    
    
    (574,534
    )
    
    
    (313,684
    )Restricted cash
    
    
    (80,000
    )
    
    
    300,000Net cash used in investing activities
    
    $
    (1,676,753
    )
    
    $
    (89,710
    )Cash flows from financing activities:Proceeds from:Common stock offerings
    
    
    9,758,750
    
    
    
    4,896,740Exercise of stock options
    
    
    1,879,477
    
    
    
    4,901,436Conversion of AIR
    
    
    
    
    
    
    537,253Payments for:Capital lease obligations
    
    
    (219,977
    )
    
    
    (328,996
    )Net cash provided by financing activities
    
    $
    11,418,250
    
    
    $
    10,006,433Net increase in cash and cash equivalents
    
    
    757,893
    
    
    
    3,212,269Cash and cash equivalents, beginning of the period
    
    
    12,784,058
    
    
    
    10,240,980Cash and cash equivalents, end of the period
    
    $
    13,541,951
    
    
    $
    13,453,249Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    22,914
    
    
    $
    10,946
 
 5




---



##### 



NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            6




---



##### 



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(unaudited)
    
    
    (unaudited)Revenue
    
    $
    
    
    
    $
    288,072
    
    
    $
    159,643
    
    
    $
    533,633Cost of revenue
    
    
    
    
    
    
    560,368
    
    
    
    220,091
    
    
    
    1,238,504Gross profit
    
    
    
    
    
    
    (272,296
    )
    
    
    (60,448
    )
    
    
    (704,871
    )Operating expenses:Sales and marketing
    
    
    
    
    
    
    579,959
    
    
    
    907,915
    
    
    
    1,074,736Research and development
    
    
    
    
    
    
    486,852
    
    
    
    391,363
    
    
    
    965,926Total operating expenses
    
    
    
    
    
    
    1,066,811
    
    
    
    1,299,278
    
    
    
    2,040,662Loss from discontinued operations, net of taxes
    
    $
    
    
    
    $
    (1,339,107
    )
    
    $
    (1,359,726
    )
    
    $
    (2,745,533
    )
       7




---



##### 



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Numerator:Loss from continuing operations
    
    $
    (5,988,822
    )
    
    $
    (2,063,613
    )
    
    $
    (10,510,569
    )
    
    $
    (3,867,205
    )Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    (1,339,107
    )
    
    
    (1,359,726
    )
    
    
    (2,745,533
    )Net loss
    
    
    (5,988,822
    )
    
    
    (3,402,720
    )
    
    
    (11,870,295
    )
    
    
    (6,612,738
    )Preferred stock dividends
    
    
    (115,821
    )
    
    
    (223,736
    )
    
    
    (230,369
    )
    
    
    (624,168
    )Net loss available to common stockholders
    
    $
    (6,104,643
    )
    
    $
    (3,626,456
    )
    
    $
    (12,100,664
    )
    
    $
    (7,236,906
    )DenominatorWeighted
average common shares outstanding -
basic and diluted
    
    
    22,794,321
    
    
    
    15,894,427
    
    
    
    22,366,171
    
    
    
    12,397,576Basic and
diluted loss per share:Continued operations
    
    $
    (0.27
    )
    
    $
    (0.14
    )
    
    $
    (0.48
    )
    
    $
    (0.36
    )Discontinued operations
    
    
    
    
    
    
    (0.09
    )
    
    
    (0.06
    )
    
    
    (0.22
    )Net loss per share to common stockholders (basic and diluted)
    
    $
    (0.27
    )
    
    $
    (0.23
    )
    
    $
    (0.54
    )
    
    $
    (0.58
    )
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Vested stock options
    
    
    659,266
    
    
    
    1,966,911
    
    
    
    1,039,383
    
    
    
    1,427,395Convertible preferred stock
    
    
    3,219,517
    
    
    
    4,224,624
    
    
    
    3,086,714
    
    
    
    7,597,297Series B warrants
    
    
    
    
    
    
    1,916,519
    
    
    
    
    
    
    
    1,055,668PIPE Additional investment rights
    
    
    35,819
    
    
    
    
    
    
    
    17,910
    
    
    
    3,914,602
    
    
    
    8,108,054
    
    
    
    4,144,007
    
    
    
    10,080,360
  8




---



##### 



As of June 30,2005
    
    
    2004Average share price of IPIX Common stock
    
    $
    2.82
    
    
    $
    10.17Stock options : Shares excluded (average price
$6.91 in 2005 and $85.34 in 2004)
    
    
    1,691,340
    
    
    
    94,938Series B warrants (exercise price of $4.34)
    
    
    917,067
    
    
    
    PIPE warrants (exercise price of $3.11)
    
    
    2,045,642
    
    
    
    Common warrants (average price of $147.41 in 2005
and $165.33 in 2004)
    
    
    32,064
    
    
    
    136,949
     Lease obligations
    
    $
    1,060,883Equipment lease termination
    
    
    747,053Abandonment of fixed assets
    
    
    11,452$
    1,819,388
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss
available to common stockholders, as reported
    
    $
    (6,104,643
    )
    
    $
    (3,626,456
    )
    
    $
    (12,100,664
    )
    
    $
    (7,236,906
    )Add:Stock-based employee compensation cost included in net
loss available to common stockholders, as reported
    
    
    
    
    
    
    
    
    
    
    793,930
    
    
    
    Deduct:Stock-based employee compensation expense under fair
value method of SFAS No. 123 for all awards
    
    
    (618,070
    )
    
    
    (939,398
    )
    
    
    (2,113,451
    )
    
    
    (1,280,225
    )Net loss pro forma
    
    $
    (6,722,713
    )
    
    $
    (4,565,854
    )
    
    $
    (13,420,185
    )
    
    $
    (8,517,131
    )Net loss per share basic and diluted  as reported
    
    $
    (0.27
    )
    
    $
    (0.23
    )
    
    $
    (0.54
    )
    
    $
    (0.58
    )Net loss per share basic and diluted  pro forma
    
    $
    (0.29
    )
    
    $
    (0.29
    )
    
    $
    (0.60
    )
    
    $
    (0.68
    )
   9




---



##### 



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Risk-free interest rates
    
    
    3.625
    %
    
    
    2.76
    %
    
    
    3.625
    %
    
    
    2.76
    %Expected lives (in years)
    
    
    3.0
    
    
    
    3.5
    
    
    
    3.25
    
    
    
    3.5Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    75.34
    %
    
    
    180.2
    %
    
    
    75.34
    %
    
    
    180.2
    %
   As ofJune 30, 2005
    
    
    December 31, 2004(unaudited)Components
    
    $
    1,394,677
    
    
    $
    1,628,496Finished goods
    
    
    1,067,236
    
    
    
    1,051,907Total Inventory
    
    
    2,461,913
    
    
    
    2,680,403Inventory reserve
    
    
    (292,150
    )
    
    
    (346,132
    )Total Inventory, net
    
    $
    2,169,763
    
    
    $
    2,334,271
  Commitments
  Payments Due by PeriodsTotal
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    ThereafterOperating Leases
    
    $
    2,248,636
    
    
    $
    613,811
    
    
    $
    1,056,749
    
    
    $
    578,077
    
    
    
    Restructuring Liability
    
    
    1,196,354
    
    
    
    713,542
    
    
    
    482,812
    
    
    
    
    
    
    
    $
    3,444,990
    
    
    $
    1,327,353
    
    
    $
    1,539,560
    
    
    $
    578,077
    
    
    $
    
  Contingencies
     10




---



##### 



Indemnification Provisions
          11




---



##### 



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Homestore
    
    
    0%
    
    
    
    9%
    
    
    
    0%
    
    
    
    10%UK Distributor
    
    
    47%
    
    
    
    35%
    
    
    
    34%
    
    
    
    22%
      
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OVERVIEW
 Our Business
  12




---



##### 



Products
    Target Markets
  Business Models
  Business Trends and Conditions
     CRITICAL ACCOUNTING POLICIES
  13




---



##### 



Revenue Recognition
        14




---



##### 



Allowances for Doubtful Accounts
  Reserve for Inventory Obsolescence
  Significant Accruals, including Restructuring Charges and Sales Tax
  Restructuring
    Lease obligations
    
    $
    1,060,883Equipment lease termination
    
    
    747,053Abandonment of fixed assets
    
    
    11,452$
    1,819,388
  15




---



##### 



RESULTS OF OPERATIONS
 THREE MONTHS ENDED JUNE 30, 2005 AND JUNE 30, 2004
 Three Months EndedJune 30,Percent2005
    
    
    2004*
    
    
    Difference
    
    
    ChangeRevenue:Hardware
    
    $
    1,024,261
    
    
    $
    594,657
    
    
    $
    429,604
    
    
    
    72
    %Licenses and other
    
    
    408,542
    
    
    
    417,918
    
    
    
    (9,376
    )
    
    
    (2
    )%Total revenue
    
    
    1,432,803
    
    
    
    1,012,575
    
    
    
    420,228
    
    
    
    42
    %Cost of revenue:Hardware
    
    
    559,163
    
    
    
    439,260
    
    
    
    119,903
    
    
    
    27
    %Licenses and other
    
    
    196,154
    
    
    
    145,387
    
    
    
    50,767
    
    
    
    35
    %Total cost of revenue
    
    
    755,317
    
    
    
    584,647
    
    
    
    170,670
    
    
    
    29
    %Gross profit
    
    
    677,486
    
    
    
    427,928
    
    
    
    249,558
    
    
    
    58
    %Operating expenses:Sales and marketing
    
    
    1,972,415
    
    
    
    1,073,319
    
    
    
    899,096
    
    
    
    84
    %General and administrative
    
    
    2,254,028
    
    
    
    924,617
    
    
    
    1,329,411
    
    
    
    144
    %Research and development
    
    
    659,482
    
    
    
    510,077
    
    
    
    149,405
    
    
    
    29
    %Restructuring charges
    
    
    1,819,388
    
    
    
    
    
    
    
    1,819,388
    
    
    
    100
    %Loss on impairment of asset
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    
    6,705,313
    
    
    
    2,508,013
    
    
    
    4,197,300
    
    
    
    167
    %Loss from operations
    
    
    (6,027,827
    )
    
    
    (2,080,085
    )
    
    
    (3,947,742
    )
    
    
    (190
    )%Interest and other income, net
    
    
    39,005
    
    
    
    16,472
    
    
    
    22,533
    
    
    
    137
    %Loss from continuing operations
    
    
    (5,988,822
    )
    
    
    (2,063,613
    )
    
    
    (3,925,209
    )
    
    
    (190
    )%Loss from
discontinued operations, net of taxes
    
    
    
    
    
    
    (1,339,107
    )
    
    
    1,339,107
    
    
    
    100
    %Net loss
    
    
    (5,988,822
    )
    
    
    (3,402,720
    )
    
    
    (2,586,102
    )
    
    
    (76
    )%Preferred stock dividends
    
    
    (115,821
    )
    
    
    (223,736
    )
    
    
    107,915
    
    
    
    48
    %Net loss available to common
shareholders
    
    $
    (6,104,643
    )
    
    $
    (3,626,456
    )
    
    $
    (2,478,187
    )
    
    
    (68
    )%
 
 *
    
    As adjusted for discontinued operations   16




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##### 



17




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##### 



SIX MONTHS ENDED JUNE 30, 2005 AND JUNE 30, 2004
 Six Months EndedJune 30,Percent2005
    
    
    2004*
    
    
    Difference
    
    
    ChangeRevenue:Hardware
    
    $
    1,340,883
    
    
    $
    807,752
    
    
    $
    533,131
    
    
    
    66
    %Licenses and other
    
    
    760,149
    
    
    
    681,058
    
    
    
    79,091
    
    
    
    12
    %Total revenue
    
    
    2,101,032
    
    
    
    1,488,810
    
    
    
    612,222
    
    
    
    41
    %Cost of revenue:Hardware
    
    
    729,742
    
    
    
    584,419
    
    
    
    145,323
    
    
    
    25
    %Licenses and other
    
    
    392,024
    
    
    
    297,690
    
    
    
    94,334
    
    
    
    32
    %Total cost of revenue
    
    
    1,121,766
    
    
    
    882,109
    
    
    
    239,657
    
    
    
    27
    %Gross profit
    
    
    979,266
    
    
    
    606,701
    
    
    
    372,565
    
    
    
    61
    %Operating expenses:Sales and marketing
    
    
    3,687,275
    
    
    
    1,920,418
    
    
    
    1,766,857
    
    
    
    92
    %General and administrative
    
    
    4,547,829
    
    
    
    1,617,281
    
    
    
    2,930,548
    
    
    
    181
    %Research and development
    
    
    1,325,977
    
    
    
    956,179
    
    
    
    369,798
    
    
    
    39
    %Restructuring charges
    
    
    1,819,388
    
    
    
    
    
    
    
    1,819,388
    
    
    
    100
    %Loss on impairment of asset
    
    
    253,358
    
    
    
    
    
    
    
    253,358
    
    
    
    100
    %Total operating expenses
    
    
    11,633,827
    
    
    
    4,493,878
    
    
    
    7,139,949
    
    
    
    159
    %Loss from operations
    
    
    (10,654,561
    )
    
    
    (3,887,177
    )
    
    
    (6,767,384
    )
    
    
    (174
    )%Interest and other income, net
    
    
    143,992
    
    
    
    19,972
    
    
    
    124,020
    
    
    
    621
    %Loss from continuing operations
    
    
    (10,510,569
    )
    
    
    (3,867,205
    )
    
    
    (6,643,364
    )
    
    
    (172
    )%Loss from
discontinued operations, net of taxes
    
    
    (1,359,726
    )
    
    
    (2,745,533
    )
    
    
    1,385,807
    
    
    
    50
    %Net loss
    
    
    (11,870,295
    )
    
    
    (6,612,738
    )
    
    
    (5,257,557
    )
    
    
    (80
    )%Preferred stock dividend
    
    
    (230,369
    )
    
    
    (624,168
    )
    
    
    393,799
    
    
    
    63
    %Net loss available to common
shareholders
    
    $
    (12,100,664
    )
    
    $
    (7,236,906
    )
    
    $
    (4,863,758
    )
    
    
    (67
    )%
 
 *
    
    As adjusted for discontinued operations   18




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##### 



LIQUIDITY AND CAPITAL RESOURCES
  19




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##### 



Common Stock
     Other Liquidity and Capital Resources
  Six Months Ended June 30,2005
    
    
    2004Net cash used in operating activities
    
    $
    (8,983,604
    )
    
    $
    (6,704,454
    )Net cash used in investing activities
    
    
    (1,676,753
    )
    
    
    (89,710
    )Net cash provided by financing activities
    
    
    11,418,250
    
    
    
    10,006,433Net increase in cash and cash equivalents
    
    
    757,893
    
    
    
    3,212,269Cash and cash equivalents, beginning of period
    
    
    12,784,058
    
    
    
    10,240,980Cash and cash equivalents, end of period
    
    $
    13,541,951
    
    
    $
    13,453,249
     20




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##### 



Payments Due by PeriodsTotal
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    ThereafterOperating Leases
    
    $
    2,248,636
    
    
    $
    613,811
    
    
    $
    1,056,749
    
    
    $
    578,077
    
    
    
    Restructuring Liability
    
    
    1,196,354
    
    
    
    713,542
    
    
    
    482,812
    
    
    
    
    
    
    
    $
    3,444,990
    
    
    $
    1,327,353
    
    
    $
    1,539,560
    
    
    $
    578,077
    
    
    $
    
  
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 Item 4. CONTROLS AND PROCEDURES
  
      21




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##### 



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
    
 
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
    22




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##### 



ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
    
 ITEM 6. EXHIBITS
 ExhibitNumber
    
    Exhibit Description31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32
    
    Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
 
 IPIX CORPORATION
SIGNATURES
  DATE: August 9, 2005
    
    IPIX CORPORATION
(Registrant)/s/ Charles A. CrewCharles A. Crew
Authorized Officer
Chief Financial Officer and
Chief Accounting Officer
 23




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##### 



IPIX CORPORATION
INDEX TO EXHIBITS FOR FORM 10-Q JUNE 30, 2005
 EXHIBIT NO.
    
    EXHIBIT DESCRIPTION31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32
    
    Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
 24