SEC Form 10-Q filed by Bull Horn Holdings Corp.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| Quarterly REPORT PURSUANT to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
or
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transaction period from _____________ to _____________
Commission File No.
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(
coeptistx.com
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered |
| Capital Market | ||
| Capital Market |
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.0001 per share
Indicate by check mark whether the registrant:
(1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ¨ | Accelerated Filer ¨ |
| Smaller Reporting Company | |
| Emerging Growth Company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12(b)-2 of the Exchange Act). Yes ¨
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
The number of shares outstanding of the registrant’s common stock, par value $0.0001 per share, as of November 8, 2023, was .
COEPTIS THERAPEUTICS, INC.
FORM 10-Q
For the Quarter Ended September 30, 2023
TABLE OF CONTENTS
| PART I -- FINANCIAL INFORMATION | 3 |
| Item 1. | Unaudited Financial Statements | 3 |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 26 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 32 |
| Item 4. | Controls and Procedures | 32 |
| PART II -- OTHER INFORMATION | 33 |
| Item 1. | Legal Proceedings | 33 |
| Item 1A. | Risk Factors | 33 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33 |
| Item 3. | Defaults Upon Senior Securities | 32 |
| Item 4. | Mine Safety Disclosures | 33 |
| Item 5. | Other Information | 33 |
| Item 6. | Exhibits | 33 |
| SIGNATURES | 34 |
| 2 |
PART I — FINANCIAL INFORMATION
| Item 1. | Unaudited Financial Statements |
COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| ASSETS | ||||||||
| As of | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Notes receivable | ||||||||
| Interest receivable | ||||||||
| Prepaid assets, current portion | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| PROPERTY AND EQUIPMENT | ||||||||
| Furniture and fixtures | ||||||||
| Less: accumulated depreciation | ||||||||
| Furniture and fixtures, net | ||||||||
| OTHER ASSETS | ||||||||
| Prepaid insurance | ||||||||
| License right, net of accumulated amortization | ||||||||
| Right of use asset, net of accumulated amortization | ||||||||
| Total other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Notes payable, current portion | ||||||||
| Right of use liability, current portion | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| LONG TERM LIABILITIES | ||||||||
| Notes payable | ||||||||
| Derivative liability warrants | ||||||||
| Right of use liability, non-current portion | ||||||||
| TOTAL LONG TERM LIABILITIES | ||||||||
| TOTAL LIABILITIES | $ | |||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 6) | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Series B preferred stock, $ par value, shares authorized, shares issued and outstanding, respectively | ||||||||
| Common stock, $ par value, shares authorized, shares issued and outstanding at September 30, 2023, and shares issued and outstanding at December 31, 2022 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS' EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| 3 |
COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| 3 Months Ended | 9 Months Ended | |||||||||||||||
| September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||
| SALES | ||||||||||||||||
| Consulting services | $ | $ | $ | $ | ||||||||||||
| Sales | ||||||||||||||||
| Total sales | ||||||||||||||||
| Cost of goods | ||||||||||||||||
| Gross profit | ||||||||||||||||
| COST OF OPERATIONS | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Selling and marketing | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Royalties and licensing fees | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expense | ( | ) | ( | ) | ||||||||||||
| Loss on extinguishment of debt | ( | ) | ||||||||||||||
| Gain on change in fair value of derivative liability warrants | ||||||||||||||||
| TOTAL OTHER INCOME (EXPENSE), NET | ( | ) | ( | ) | ||||||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| PROVISION (BENEFIT) FOR INCOME TAXES | ||||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| LOSS PER SHARE | ||||||||||||||||
| Loss per share, basic and fully diluted* | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of common shares outstanding* | ||||||||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| * | September 30, 2022 retroactively adjusted to reflect the impact of the 1 for 2.96851721 reverse stock split from October 28, 2022 |
| 4 |
COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three and Nine Months Ended September 30, 2023 and 2022
(Unaudited)
| SERIES B | ADDITIONAL | COMMON | ||||||||||||||||||||||||||||||||||
| PREFERRED STOCK | COMMON STOCK | PAID-IN | STOCK | TREASURY | ACCUMULATED | |||||||||||||||||||||||||||||||
| SHARES | AMOUNT | SHARES | AMOUNT | CAPITAL | SUBSCRIBED | STOCK | DEFICIT | TOTAL | ||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2021* | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
| Shares issued for cash* | – | |||||||||||||||||||||||||||||||||||
| Shares issued for services* | – | |||||||||||||||||||||||||||||||||||
| Retirement of shares | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Warrants converted to shares* | – | |||||||||||||||||||||||||||||||||||
| Warrants issued for services | – | – | ||||||||||||||||||||||||||||||||||
| Warrants issued for extinguishment of debt | – | – | ||||||||||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| BALANCE AT MARCH 31, 2022* | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Shares issued for cash | – | |||||||||||||||||||||||||||||||||||
| Shares issued for services | – | |||||||||||||||||||||||||||||||||||
| Warrants converted to shares | – | |||||||||||||||||||||||||||||||||||
| Warrants issued for services | – | – | ||||||||||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| BALANCE AT JUNE 30, 2022* | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Shares issued for cash | – | |||||||||||||||||||||||||||||||||||
| Shares issued for services | – | |||||||||||||||||||||||||||||||||||
| Warrants converted to shares | – | ( | ) | |||||||||||||||||||||||||||||||||
| Warrants issued for services | – | – | ||||||||||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| BALANCE AT SEPTEMBER 30, 2022* | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
Continued
| 5 |
COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three and Nine Months Ended September 30, 2023 and 2022
(Unaudited)
(Continued)
| SERIES B | ADDITIONAL | COMMON | ||||||||||||||||||||||||||||||||||
| PREFERRED STOCK | COMMON STOCK | PAID-IN | STOCK | TREASURY | ACCUMULATED | |||||||||||||||||||||||||||||||
| SHARES | AMOUNT | SHARES | AMOUNT | CAPITAL | SUBSCRIBED | STOCK | DEFICIT | TOTAL | ||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Shares issued for services | – | |||||||||||||||||||||||||||||||||||
| Warrants issued for services | – | – | ||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | ||||||||||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| BALANCE AT MARCH 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Shares issued for services | – | ( | ) | |||||||||||||||||||||||||||||||||
| Warrants issued for services | – | – | ||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | ||||||||||||||||||||||||||||||||||
| Issuance of common stock and warrants, net of issuance costs | – | |||||||||||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| BALANCE AT JUNE 30, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Shares issued for cash | – | |||||||||||||||||||||||||||||||||||
| Shares issued in exchange for note receivable | – | – | 250 | 2,499,750 | – | – | – | 2,500,000 | ||||||||||||||||||||||||||||
| Shares issued for services | – | |||||||||||||||||||||||||||||||||||
| Warrants issued for services | – | – | ||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | ||||||||||||||||||||||||||||||||||
| Issuance of common stock and warrants, net of issuance costs | – | |||||||||||||||||||||||||||||||||||
| Shares issued for the conversion of debt | – | |||||||||||||||||||||||||||||||||||
| Shares issued in connection with asset purchase agreement | – | |||||||||||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| BALANCE AT SEPTEMBER 30, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| * | Retroactively adjusted to reflect the impact of the 1 for 2.96851721 reverse stock split from October 28, 2022 |
The accompanying notes are an integral part of the condensed consolidated financial statements.
| 6 |
COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| 9 Months Ended | ||||||||
| September 30, 2023 | September 30, 2022 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Gain on change in value of warrant liability | ( | ) | ||||||
| Stock based compensation | ||||||||
| Shares issued for non-employee services | ||||||||
| Warrants issued for extinguishment of debt | ||||||||
| Warrants issued for services | ||||||||
| Shares issued in connection with asset purchase agreement | ||||||||
| (Increase) decrease in: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Interest receivable | ( | ) | ||||||
| Prepaid assets | ||||||||
| Right of use asset/liability | ( | ) | ||||||
| Increase (decrease) in: | ||||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| INVESTING ACTIVITIES | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | ||||||||
| FINANCING ACTIVITIES | ||||||||
| Proceeds from issuance of common stock and warrants, net of issuance costs | ||||||||
| Repayment of notes payable | ( | ) | ( | ) | ||||
| Shares issued for cash | ||||||||
| Shares issued for cash for the conversion warrants | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET INCREASE (DECREASE) IN CASH | ( | ) | ||||||
| CASH AT BEGINNING OF PERIOD | ||||||||
| CASH AT END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW DISCLOSURES | ||||||||
| Interest paid | $ | $ | ||||||
| Taxes paid (refunded) | $ | $ | ||||||
| SUPPLEMENTAL NON-CASH DISCLOSURES | ||||||||
| Shares issued in exchange for notes receivable | $ | $ | ||||||
| Shares issued for the conversion of debt | $ | $ | ||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| 7 |
COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2023 and 2022 (unaudited)
NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business
General. Coeptis Therapeutics Holdings, Inc. (“Coeptis”, the “Company” or “we” or “our”) was originally incorporated in the British Virgin Islands on November 27, 2018, under the name Bull Horn Holdings Corp. On October 27, 2022, Bull Horn Holdings Corp. domesticated from the British Virgin Islands to the State of Delaware. On October 28, 2022, in connection with the closing of the Merger, we changed our corporate name from Bull Horn Holdings Corp. to “Coeptis Therapeutics Holdings, Inc.”
The Merger Transaction. On October 28, 2022, a wholly owned subsidiary of Bull Horn Holdings Corp., merged with and into Coeptis Therapeutics, Inc., with Coeptis Therapeutics, Inc. as the surviving corporation of the Merger. As a result of the Merger, we acquired the business of Coeptis Therapeutics, Inc., which we now continue to operate as our wholly owned subsidiary.
About the Company’s Subsidiaries. We are now a holding company that currently operates through our direct and indirect wholly owned subsidiaries Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc. and Coeptis Pharmaceuticals, LLC.
Our current business model is designed around furthering the development of our current product portfolio. We are continually exploring partnership opportunities with companies that have novel therapies in various stages of development or companies with technologies that improve the way that drugs are delivered to patients. We seek the best strategic relationships, which relationships could include in-license agreements, out-license agreements, co-development arrangements and other strategic partnerships in new and exciting therapeutic areas such as auto-immune disease and oncology.
Basis of Presentation – The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company’s financial position, results of operations, and cash flows. The interim results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities and Exchange Commission (“SEC”). The accompanying interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 that was filed with the SEC on March 29, 2023.
As a result of the Merger, the accompanying condensed consolidated financial statements included in this report reflect (1) the historical operating results of Coeptis prior to the Merger; (2) the combined results of the Company and Coeptis following the closing of the Merger; (3) the assets and liabilities of Coeptis at their historical cost; and (4) the Company’s equity structure for all periods presented.
Principles of Consolidation – The accompanying unaudited condensed consolidated financial statements include the accounts of Coeptis Therapeutics Holdings Inc. (formerly Bullhorn Holdings, Inc.), Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc. and its wholly-owned subsidiary, Coeptis Pharmaceuticals, LLC. All material intercompany accounts, balances and transactions have been eliminated.
Risks and Uncertainties – In late 2019, an outbreak of a novel strain of the Coronavirus 2019 Disease (“COVID-19”) was identified and infections have been found in a number of countries around the world, including the United States. COVID-19 and its impact on trade including customer demand, travel, employee productivity, supply chain, and other economic activities has had, and may continue to have, a potentially significant effect on financial markets and business activity. The COVID-19 pandemic continues to evolve and the duration of its impact on the Company’s operational and financial performance is currently uncertain and cannot be predicted with confidence.
| 8 |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are described in Note 2 “Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2023. There have been no material changes to the significant accounting policies during the three-month and nine-month periods ended September 30, 2023, except for items mentioned below.
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Employee and Non-Employee Share-Based Compensation –
The Company applies Accounting Standards Codification (“ASC”) 718-10, “Share-Based Payment,” which requires the measurement and recognition of compensation expenses for all share-based payment awards made to employees and directors including employee stock options equity awards issued to employees and non-employees based on estimated fair values.
ASC 718-10 requires companies to estimate the fair value of equity-based option awards on the date of grant using an option-pricing model. The fair value of the award is recognized as an expense on a straight-line basis over the requisite service periods in the Company’s condensed consolidated statements of operations. The Company recognizes share-based award forfeitures as they occur.
The Company estimates the fair value of granted option equity awards using a Black-Scholes option pricing model. The option-pricing model requires a number of assumptions, of which the most significant are share price, expected volatility and the expected option term (the time from the grant date until the options are exercised or expire). Expected volatility is estimated based on volatility of the Company. The Company has historically not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based on the yield from governmental zero-coupon bonds with an equivalent term. The expected option term is calculated for options granted to employees and directors using the “simplified” method. Changes in the determination of each of the inputs can affect the fair value of the options granted and the results of operations of the Company.
Adoption of New Accounting Pronouncements
During the three months and nine months ended September 30, 2023 and 2022, there were several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”). Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s condensed consolidated financial statements.
Going Concern – The accompanying
condensed consolidated financial statements have been prepared in conformity with GAAP in the United States of America, which contemplate
continuation of the Company as a going concern, which is dependent upon the Company’s ability to obtain sufficient financials or
establish itself as a profitable business. As of September 30, 2023, the Company had an accumulated deficit of $
NOTE 3 – LICENSE RIGHT
Prior to 2022, the Company entered into an agreement with a foreign entity to market, distribute, and sell the Consensi product (“Product”) on an exclusive basis within the United States and Puerto Rico. Upon execution of the Agreement the Company paid $1,000,000 to the foreign entity. Milestone payments were due as follows; (1) $1,500,000 upon completion of the CMC Plan as reimbursements of costs incurred by the foreign entity, (2) $1,000,000 was due upon first commercial sale of the Product which occurred in June 2020. Milestones were met and paid in 2020.
| 9 |
In September of 2021, the Company executed a license
termination agreement with the foreign entity to cease all efforts for sales and promotion of the product in the United States and Puerto
Rico. The termination included (i) issuance of $1,500,000 of convertible debt due in 2023 to satisfy amounts owed for the license, (ii)
the issue of warrants (See Note 5) and (iii) transfer of inventory ownership back to the foreign entity. In conjunction with this termination,
the Company also terminated its marketing agreement with a third party for the Product’s sales and promotion. On July 14, 2023,
the Company executed an amendment to revise the note’s payment schedule. The revised payment schedule has four milestone payments
(the first two of which were paid on July 17, 2023 and September 30, 2023, with the remaining two due on December 31, 2023 and March 31,
2024). As of September 30, 2023, there was an outstanding balance of $
During the year ended December 31, 2021, the Company
and VyGen-Bio, Inc. (“Vy-Gen”) entered into agreements to jointly develop and commercialize two Vy-Gen product candidates,
CD38-GEAR-NK and CD38-Diagnostic (the “CD38 Assets”). The Company paid $
The Company made certain judgements as the basis in determining the accounting treatment of these options. The CD38 Assets represent a platform technology and a diagnostic tool which have multiple applications and uses. Both projects are intended to be used in more than one therapy or diagnostic option. For example, GEAR-NK is a technology which allows for the gene editing of human natural killer cells, so that these cells can no longer bind and be destroyed by targeted monoclonal antibody treatments. The GEAR-NK technology can be modified to work concomitantly with many different monoclonal antibody treatments in which there are currently over 100 approved by the FDA. Anti-CD38 is only the first class of monoclonal antibody treatments being developed under the GEAR-NK platform. Therefore, the pursuit of FDA approval for the use of CD38 assets for at least one indication or medical device approval is at least reasonably expected. Further, as the diagnostic asset may be used as an in vitro technology, it could be classified as a medical device, and therefore toxicity studies would not be a contingency to be resolved before reasonably establishing future value assumptions. In addition, there is perceived value in the CD38 assets, based on publicly disclosed current business deals in cell therapies, the developing market for these innovative technologies, and current interest from third parties in these technologies. The Company may sell or license its right to another party, with the written consent of VyGen Bio, which cannot be unreasonably withheld. Furthermore, the Company believes that any negative results from ongoing development of a single therapy or use, would not result in abandoning the project. Given these considerations, The Company has determined that these options have alternative future use and should be recorded as assets pursuant to ASC 730-10-25-2, Research and Development.
Related to the joint development, the Company, under the direction of the joint steering committee, is assessing market opportunities, intellectual property protection, and potential regulatory strategies for the CD38 Assets. VyGen Bio is responsible for development activities conducted and overseen by the scientists at Karolinska Institute. The agreement does not currently require additional payments for R&D costs by the Company and no additional payments are required upon development or regulatory milestones.
NOTE 4 – DEBT
In January 2020, the Company entered into a Senior
Secured Note agreement with an unrelated party. The principal amount of $
In January 2020, the Company entered into a Senior
Secured Note agreement with an unrelated party. The principal amount of $
| 10 |
In September 2021, as part of a termination of
a license agreement with Purple BioTech (“Purple”), the Company issued a convertible note in the principal amount of $
In May 2023, the Company entered into an
unsecured Note agreement with an unrelated party in the principal amount of $
In June 2023, the Company entered into an unsecured
Note agreement with an unrelated party in the principal amount of $
In September 2023, the Company entered into an
unsecured convertible Note agreement in the principal amount of $
Loans under the CARES Act -- On July 8,
2020, the Company received a loan of $
Maturities of notes payable are as follows for the years ended December 31,
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total notes payable | $ | |||
Derivative Liability Warrants -
At September 30, 2023, there were (i)
| 11 |
The Company may call the Public Warrants for redemption, in whole and not in part, at a price of $0.01 per warrant:
| · | at any time while the Public Warrants are exercisable, | |
| · | upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder, | |
| · | if, and only if, the reported last sale price of the ordinary shares equals or exceeds $16.50 per share, for any 20 trading days within a 30-trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and | |
| · | if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described above, the warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.
The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants only allow the holder thereof to one ordinary share. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Within ASC 815, “Derivative and Hedging,” Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s ordinary share. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s ordinary share if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the Company’s Private Placement Warrants and Public Warrants are not indexed to the Company’s ordinary share in the manner contemplated by ASC Section 815-40-15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. In addition, based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that certain warrant provisions preclude equity treatment as by ASC Section 815-10-15.
The Company accounts for its Public Warrants and Private Placement Warrants as liabilities as set forth in ASC 815-40-15-7D and 7F. See below for details over the methodology and valuation of the Warrants.
The Company follows the guidance in ASC Topic 820, Fair Value Measurement for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
| Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
| 12 |
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Description | Level | September 30, 2023 | December 31, 2022 | |||||||||
| Warrant Liability – Public Warrants | 1 | $ | $ | |||||||||
| Warrant Liability – Private Placement Warrants | 3 | $ | $ | |||||||||
The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying condensed consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented in the condensed consolidated statements of operations.
The Warrants were valued using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s primary unobservable input utilized in determining the fair value of the Warrants is the expected volatility of the ordinary shares. The expected volatility as of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price will be used as the fair value as of each relevant date.
The following table provides quantitative information regarding Level 3 fair value measurements:
| September 30, 2023 | December 31, 2022 | |||||||
| Risk-free interest rate | ||||||||
| Expected volatility | ||||||||
| Exercise price | $ | $ | ||||||
| Stock price | $ | $ | ||||||
The following table presents the changes in the fair value of warrant liabilities:
Private Placement | Public | Warrant Liabilities | ||||||||||
| Fair value as of December 31, 2022 | $ | $ | $ | |||||||||
| Change in valuation inputs | ||||||||||||
| Fair value as of March 31, 2023 | ||||||||||||
| Change in valuation inputs | ( | ) | ( | ) | ||||||||
| Fair value as of June 30, 2023 | ||||||||||||
| Change in valuation inputs | ( | ) | ( | ) | ( | ) | ||||||
| Fair value as of September 30, 2023 | $ | $ | $ | |||||||||
There were
NOTE 5 – CAPITAL STRUCTURE
The total number of shares of stock which the corporation shall have authority to issue is 160,000,000 shares, of which shares of $ par value shall be designated as common stock and shares of $ shall be designated as preferred stock. The preferred stock authorized by the Company’s Articles of Incorporation may be issued in one or more series. The Board of Directors of the Corporation is authorized to determine or alter the rights, preferences, privileges, and restrictions granted or imposed upon any wholly unissued series of preferred stock, and within the limitations or restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series, to determine the designation and par value of any series and to fix the numbers of shares of any series.
| 13 |
Common Stock - As of September 30, 2023 the Company had shares of its common stock issued and outstanding, and on December 31, 2022 the Company had shares of its common stock issued and outstanding. All references to the common shares outstanding have been retroactively adjusted to reflect the stock split unless stated otherwise.
In 2022, and again in 2023, Coeptis
Therapeutics Holdings, Inc., raised capital by issuance of common stock above the stated par value. The contributed capital
recognized as additional paid in capital during the nine months ended September 30, 2023 and 2022 was $
On June 16, 2023, the Company completed a
public offering issuing
Treasury Stock – As part of the
Merger in February of 2021, Coeptis Therapeutics, Inc., our wholly-owned subsidiary, repurchased
shares of its common stock previously held by shareholders of Vinings Holdings Inc. (the former name of Coeptis Therapeutics, Inc.).
The stock was recorded at the cost paid for it, of $
and held as Treasury stock for the duration of 2021. Subsequent to year end, the Company retired the
shares of Treasury Stock, as of February 18, 2022. There was
Preferred Stock – As of September 30, 2023 the Company had shares of preferred stock issued and outstanding. As of September 30, 2022, Coeptis Therapeutics, Inc., our wholly-owned subsidiary, had shares of its Series B preferred stock issued and outstanding. The Series B preferred stock was converted into common equity immediately prior to the consummation of the Business Combination, and the shares of common stock received in such conversion were exchanged for shares of common stock in the Company at the closing of the Business Combination.
Stock Based Compensation –
Stock Based Compensation
A summary of the Company’s stock option activity is as follows:
| Shares Underlying Options | Weighted Average Exercise Price | Weighted Average Contractual Life (Years) | Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2022 | ||||||||||||||||
| Granted | $ | $ | – | |||||||||||||
| Forfeited | ||||||||||||||||
| Exercised | ||||||||||||||||
| Outstanding at September 30, 2023 | $ | $ | ||||||||||||||
For the three months ended September 30, 2023 and 2022, the Company recorded $ and $, respectively, for stock-based compensation expense related to stock options. For the nine months ended September 30, 2023 and 2022, the Company recorded $ and $, respectively, for stock-based compensation expense related to stock options. As of September 30, 2023, unamortized stock-based compensation for stock options was $ to be recognized through December 31, 2026.
| 14 |
The options granted during the nine months ended September 30, 2023 were valued using the Black-Scholes option pricing model using the following weighted average assumptions:
| For the nine months ended September 30, 2023 | |||
| Expected term, in years | |||
| Expected volatility | |||
| Risk-free interest rate | |||
| Dividend yield |
Common Stock Warrants –
As a result of the Merger on October 28, 2022, all surviving warrants from Coeptis Therapeutics, Inc. were converted using a 2.9685:1 ratio, and became exercisable to acquire shares of the Company’s common stock.
On November 23, 2020, Coeptis Therapeutics, Inc.
(under its prior name Vinings Holdings Inc.) issued a class A and a class B warrant to Coral Investment Partners, LP (“CIP”),
with each warrant granting CIP the right to purchase
Warrant Holder 1 – On May 28, 2021, Coeptis
Therapeutics, Inc. issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase
shares of common stock at a price of $ per share, shares at $ per share, and shares at $ per share. The warrants
expire on
Warrant Holder 2 – On July 30, 2021, Coeptis
Therapeutics, Inc. issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase
shares of common stock at a price of $ per share, shares at $ per share, and shares at $ per share. The warrants
expire on
On September 22, 2021, Coeptis Therapeutics, Inc.
issued a warrant in conjunction with the termination of the license right (see Note 3) with Purple, granting Purple the right to purchase
Warrant Holder 3 – On December 20, 2021, Coeptis Therapeutics,
Inc. issued a warrant to a third party in exchange for services to be provided, granting the warrant holder the right to purchase
| 15 |
Warrant Holder 4 – On July 13, 2022,
Warrant Holder 3 transferred
Warrant Holder 5 – On September 6,
2022, Warrant Holder 3 transferred
Warrant Holder 6 – On January 28,
2022, Coeptis Therapeutics, Inc. issued a warrant to a third party in exchange for contemplation of a debt extension, granting the warrant
holder the right to purchase
Warrant Holder 7 – On January 28, 2022,
Coeptis Therapeutics, Inc. issued a warrant to a third party in exchange for contemplation of a debt extension, granting the warrant holder
the right to purchase
Warrant Holder 8 – On January 28,
2022, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder
the right to purchase
Warrant Holder 9 – On January 28, 2022,
Coeptis Therapeutics, Inc. issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase
Warrant Holder 10 – On January 28, 2022,
Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase
Warrant Holder 11 – On January 28, 2022,
Coeptis Therapeutics, Inc. issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase shares of common stock at a price of $ per share and shares at $ per share. The warrants expire on
Warrant Holder 12 – On January 28, 2022,
Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase
| 16 |
Warrant Holder 13 – On January 28, 2022,
Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase
Warrant Holder 14 – On January 28, 2022,
Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase
Warrant Holder 15 – On January 28, 2022,
Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase
Warrant Holder 16 – On January 28, 2022,
Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase
Warrant Holder 17 – On January 28, 2022,
Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase
Warrant Holder 18 – On March 30, 2022,
Coeptis Therapeutics, Inc., issued a warrant to a third party in conjunction with an investment, granting the warrant holder the right
to purchase
Warrant Holder 19 – On March 30, 2022,
Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase
Warrant Holder 20 – On January 3, 2023,
Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase
Warrant Holder 21 – On January 3, 2023,
Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right
to purchase
Warrant Holder 22 – On June 16, 2023, Coeptis
Therapeutics, Inc., issued a warrant to a third party in conjunction with an investment, granting the warrant holder the right to purchase
Warrant Holder 23 – On June 16, 2023, Coeptis
Therapeutics, Inc., issued a warrant to a third party in conjunction with an investment, granting the warrant holder the right to purchase
| 17 |
The warrants issued since May 28, 2021 and as of September 30, 2023 were valued using the Black-Scholes option pricing model using the following assumptions: 1) exercise price ranging from $1.00 to $5.00 per share, 2) fair value ranging from $4.80 to $6.00 per share, 3) discount rate ranging from 1.15% to 2.31%, 3) dividend rate of 0%, and 4) a term ranging from 2 to 5 years.
On April 19, 2022, Coeptis Therapeutics, Inc. initiated a warrant conversion call for certain warrants and on April 20, 2022, for additional warrants. The original expiration for the warrant conversions was set as May 19, 2022, and May 20, 2022. The expiration date was extended and moved to June 30, 2022. A second extension moved the expiration to July 15, 2022, and the third extension moved the expiration date for the warrant conversions to August 1, 2022. The final extension was extended and moved to September 13, 2022. Warrants that were part of the call and not exercised by this date expired.
| Warrant | $ | 0.0001 | $ | 1.00 | $ | 1.25 | $ | 1.50 | $ | 1.65 | $ | 1.90 | $ | 2.00 | $ | 2.50 | $ | 3.00 | $ | 5.00 | ||||||||||||||||||||||||
| contract | # Shares | $ | 2.97 | $ | 4.45 | $ | 5.94 | $ | 8.91 | $ | 14.84 | |||||||||||||||||||||||||||||||||
| Coral Investment Partners Warrants | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Coral Investment Partners Warrants, as converted | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Warrant Holder 1 | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||
| July 28, 2022 | ( | ) | – | ( | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||||
| Warrant Holder 1, as converted | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||
| Warrant Holder 2 | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||
| March 1, 2022 | ( | ) | – | ( | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| June 27, 2022 | ( | ) | – | ( | ) | – | – | – | – | ( | ) | – | – | – | ||||||||||||||||||||||||||||||
| Expired – September 13, 2022 | ( | ) | – | – | – | – | – | – | ( | ) | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Warrant Holder 2, as converted | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Purple BioTech | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Purple BioTech, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 3 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Transfer to Warrant Holder 4 | ( | ) | – | ( | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| Transfer to Warrant Holder 5 | ( | ) | – | ( | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| August 19, 2022 | ( | ) | – | ( | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| Expired – September 13, 2022 | ( | ) | – | ( | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 3, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 4 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfer from Warrant Holder 3 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| August 19, 2022 | ( | ) | – | ( | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 4, as converted | – | – | – | – | – | – | – | – | – |
| 18 |
| Warrant | $ | 0.0001 | $ | 1.00 | $ | 1.25 | $ | 1.50 | $ | 1.65 | $ | 1.90 | $ | 2.00 | $ | 2.50 | $ | 3.00 | $ | 5.00 | ||||||||||||||||||||||||
| contract | # Shares | $ | 2.97 | $ | 4.45 | $ | 5.94 | $ | 8.91 | $ | 14.84 | |||||||||||||||||||||||||||||||||
| Warrant Holder 5 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfer from Warrant Holder 3 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Transfer from Warrant Holder 9 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||
| Warrant Holder 5, as converted | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Warrant Holder 6 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 6, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 7 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 7, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 8 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| September 14, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 8, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 9 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Transfer to Warrant Holder 5 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 9, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 10 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| March 1, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| August 19, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| September 14, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 10, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 11 | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| April 14, 2022 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||||
| Warrant Holder 11, as converted | – | – | – | – | – | – | – |
| 19 |
| Warrant | $ | 0.0001 | $ | 1.00 | $ | 1.25 | $ | 1.50 | $ | 1.65 | $ | 1.90 | $ | 2.00 | $ | 2.50 | $ | 3.00 | $ | 5.00 | ||||||||||||||||||||||||
| contract | # Shares | $ | 2.97 | $ | 4.45 | $ | 5.94 | $ | 8.91 | $ | 14.84 | |||||||||||||||||||||||||||||||||
| Warrant Holder 12 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| August 19, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| September 14, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 12, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 13 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| March 1, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| September 14, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 13, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 14 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| August 19, 2022 | ( | ) | – | ( | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 14, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 15 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| September 14, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 15, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 16 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| June 27, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| September 14, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 16, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 17 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| September 14, 2022 | ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 17, as converted | – | – | – | – | – | – | – | – | – |
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| Warrant | $ | 0.0001 | $ | 1.00 | $ | 1.25 | $ | 1.50 | $ | 1.65 | $ | 1.90 | $ | 2.00 | $ | 2.50 | $ | 3.00 | $ | 5.00 | ||||||||||||||||||||||||
| contract | # Shares | $ | 2.97 | $ | 4.45 | $ | 5.94 | $ | 8.91 | $ | 14.84 | |||||||||||||||||||||||||||||||||
| Warrant Holder 18 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 18, as converted | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Warrant Holder 19 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| ( | ) | – | – | – | ( | ) | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 19, as converted | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 20 | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| January 3, 2023 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 20 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 21 | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| January 20, 2023 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 21 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Pre-Funded Warrant | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| June 21, 2023 | ( | ) | ( | ) | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| Pre-Funded Warrant | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Series A – Warrant | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| June 16, 2023 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Series A – Warrant | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Series B – Warrant | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| June 16, 2023 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Series B – Warrant | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Warrant Holder 25 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| June 16, 2023 | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Warrant Holder 22 | – | – | – | – | – | – | – | – |
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| Warrant | $ | 0.0001 | $ | 1.00 | $ | 1.25 | $ | 1.50 | $ | 1.65 | $ | 1.90 | $ | 2.00 | $ | 2.50 | $ | 3.00 | $ | 5.00 | ||||||||||||||||||||||||
| contract | # Shares | $ | 2.97 | $ | 4.45 | $ | 5.94 | $ | 8.91 | $ | 14.84 | |||||||||||||||||||||||||||||||||
| Warrant Holder 26 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| June 16, 2023 | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Warrant Holder 23 | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Total warrants outstanding for purchase of shares: | ||||||||||||||||||||||||||||||||||||||||||||
| Total warrants outstanding for purchase of shares, as converted: |
Options/Stock Awards – On January 27, 2023, the Company granted options to purchase an aggregate of 1,357,500 shares of our common stock under the 2022 Equity Incentive Plan, to various officers, directors, employees and consultants, at an average exercise price of $1.63 per share. The Company has also granted a stand-alone option to a former employee to purchase up to 100,000 shares of our common stock at an exercise price of $10 per share.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
Leases – The Company leases office
space under an operating lease commencing December 1, 2017 through November 30, 2019 and a first lease extensions commencing December
1, 2019 through May 31, 2020. The second lease extension extends the lease for twenty-four months, beginning on June 1, 2020 and ended
on May 31, 2022. The third lease extension extends the lease for twenty-four months, beginning on June 1, 2022 and ending on May 31,
2024. The monthly rent is $3,750. On January 1, 2019, the Company adopted ASC Topic 842, Leases, requiring this lease to be recorded
as an asset and corresponding liability on its condensed consolidated balance sheet. The Company records rent expense associated with
this lease on the straight-line basis in conjunction with the terms of the underlying lease. During both the nine-month periods ended
September 30, 2023 and 2022, rents paid totaled $
Future minimum rental payments required under the lease are as follows:
| 2023 | $ | |||
| 2024 | ||||
| Total minimum lease payments: | ||||
| Less amount representing interest | ( | ) | ||
| Present value of minimum lease payments: | $ | |||
As of September 30, 2023, the Company had recorded
a right of use asset of $
Legal Matters – The Company is currently not a defendant in any litigation or threatened litigation that could have a material effect on the Company’s condensed consolidated financial statements.
University of Pittsburgh Option Agreement – On April 29, 2022, the Company entered into an exclusive option agreement with University of Pittsburgh for rights to three chimeric antigen receptor T cell (“CAR-T”) technologies that offer the potential to address a range of hematologic and solid tumors. Among the initial cancer indications under development are pre-clinical programs targeting breast cancer and ovarian cancer. The exclusive option agreement involves the intellectual property rights to three technologies jointly developed in the laboratories of Jason Lohmueller, Ph.D., Assistant Professor of Immunology; Alexander Deiters, Ph.D., Professor of Chemistry; and Olivera Finn, Ph.D., Professor of Immunology: 1) mSA2 affinity-enhanced biotin-binding CAR, 2) universal self-labeling SynNotch and CARs for programable antigen-targeting, and 3) conditional control of universal CAR-T cells through stimulus-reactive adaptors. Per the option agreement, the Company paid the University of Pittsburgh a non-refundable fee of $5,000 for the exclusive option to license the patent rights to each of the three technologies. On October 16, 2023, the Company terminated the remaining portion of the option agreement with the University of Pittsburgh.
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CAR T License – On August 31, 2022, the
Company entered into an exclusive license agreement with the University of Pittsburgh for certain intellectual property rights related
to the universal self-labeling SynNotch and CARs for programable antigen-targeting technology platform. The Company paid the University
of Pittsburgh a non-refundable fee in the amount of $75,000 for the exclusive patent rights to the licensed technology. Under the terms
of the agreement, the Company has been assigned the worldwide development and commercialization rights to the licensed technology in the
field of human treatment of cancer with antibody or antibody fragments using SNAP-CAR T cell technology, along with (i) an intellectual
property portfolio consisting of issued and pending patents and (ii) options regarding future add-on technologies and developments. In
consideration of these rights, the Company paid an initial license fee of $
In September 2023, the Company expanded its exclusive
license agreement with the University of Pittsburgh to include the SNAP-CAR technology platform in natural killer (NK) cells. The Company
agreed to pay $
Deverra Therapeutics, Inc. – On August 16, 2023, the Company entered into an exclusive licensing arrangement (the “License Agreement”) with Deverra Therapeutics Inc. (“Deverra”), pursuant to which the Company completed the exclusive license of key patent families and related intellectual property related to a proprietary allogeneic stem cell expansion and directed differentiation platform for the generation of multiple distinct immune effector cell types, including natural killer (NK) and monocyte/macrophages. The License Agreement provides the Company with exclusive rights to use the license patents and related intellectual property in connection with development and commercialization efforts in the defined field of use (the “Field”) of (a) use of unmodified NK cells as anti-viral therapeutic for viral infections, and/or as a therapeutic approach for treatment of relapsed/refractory AML and high-risk MDS; (b) use of Deverra’s cell therapy platform to generate NK cells for the purpose of engineering with Coeptis SNAP-CARs and/or Coeptis GEAR Technology; and (c) use of Deverra’s cell therapy platform to generate myeloid cells for the purpose of engineering with the Company’s current SNAP-CAR and GEAR technologies. In support of the exclusive license, the Company also entered into with Deverra (i) an asset purchase agreement (the “APA”) pursuant to which the Company purchased certain assets from Deverra, including but not limited to two Investigational New Drug (IND) applications and two Phase 1 clinical trial stage programs (NCT04901416, NCT04900454) investigating infusion of DVX201, an unmodified natural killer (NK) cell therapy generated from pooled donor CD34+ cells, in hematologic malignancies and viral infections and (ii) a non-exclusive sublicense agreement (the “Sublicense Agreement”), in support of the assets obtained by the exclusive license, pursuant to which the Company sublicensed from Deverra certain assets which Deverra has rights to pursuant a license agreement (“FHCRC Agreement”) by and between Deverra and The Fred Hutchinson Cancer Research Center (“FHCRC”).
As consideration for the transactions
described above, the Company paid Deverra approximately $
On October 26, 2023, the Company entered into a Shared Services Agreement (“SSA”) with Deverra, in accordance with requirements set forth in the APA. Under the terms of the SSA, Coeptis and Deverra will share resources and collaborate to further the development of Coeptis’ GEAR and SNAP-CAR platforms, as well as the purchased and licensed assets under the License Agreement and APA. The term of the SSA is six months from the effective date.
Registration Rights
Pursuant to a registration rights agreement entered into on October 29, 2020, the holders of the founder shares, the Private Placement Warrants and underlying securities, and any securities issued upon conversion of Working Capital Loans (and underlying securities) would be entitled to registration rights pursuant to a registration rights agreement. The holders of at least a majority in interest of the then-outstanding number of these securities were entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. Notwithstanding the foregoing, Imperial, I-Bankers and Northland did not exercise their demand and “piggyback” registration rights after five (5) and seven (7) years after the effective date of the registration statement and did not exercise its demand rights on more than one occasion. The registration rights agreement did not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company would bear the expenses incurred in connection with the filing of any such registration statements.
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The Company sponsors a qualified profit-sharing
plan with a 401(k) feature that covers all eligible employees. Participation in the 401(k) feature of the plan is voluntary. Participating
employees may defer up to 100% of their compensation up to the maximum prescribed by the Internal Revenue Code. The plan permits for employee
elective deferrals but has no contribution requirements for the Company. During the three and nine-month periods ended September 30, 2023
and 2022,
NOTE 8 – INCOME TAXES
For the three and nine months ended September 30, 2023 and 2022, respectively,
NOTE 9 – NOTE RECEIVABLE
On July 19, 2023 the Company (“Lender”) entered into a Promissory Note agreement with Deverra (“Borrower”). The Company agreed to make advances of principal to the Borrower of up to an aggregate amount equal to $572,000. Any advances are at the sole discretion of the Company. The outstanding unpaid principal balance of the Note bears interest at 3% per annum and was due and payable on the Maturity Date, September 30, 2023.
In the event that a certain business transaction between the Lender and Borrower as contemplated by that certain binding term sheet dated April 13, 2023, and referenced in Note 6, is consummated prior to the Maturity Date, the full amounts due under this Note shall be applied against the cash portion of any closing payment due from the Lender in connection with such transaction and any excess amounts under this Note shall be treated as additional purchase price in connection with the transaction.
As of September 30, 2023, and in relation to the Deverra asset purchase referenced in Note 6, $567,609 of principal and $2,892 of interest were applied against the cash portion of the closing payment with the Lender in connection with such transaction. The Note is considered paid in full.
In September 2023, the Company
entered into a Note agreement with a third party borrower. The Company agreed to issue shares of common stock
to the borrower for a principal sum amount of $
In September 2023, the Company
entered into a Note agreement with a third party borrower. The Company agreed to issue shares of common stock
to the borrower for a principal sum amount of $
NOTE 10 – RELATED PARTY TRANSACTION
In September 2023, the Company entered into
a transaction with AG Bio Life Capital I LP (“AG”), a Delaware limited partnership, where an employee of the Company is the
general partner. The Company agreed to issue shares of common stock of the Company (“AG Shares”) to AG, in exchange
for $
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NOTE 11 – SUBSEQUENT EVENTS
Management has performed a review of items and transactions occurring after September 30, 2023 to determine if there were any that would require adjustment to or disclosure in the accompanying condensed consolidated financial statements, noting no such items or transactions other than the following items.
On October 16, 2023, the Company terminated the exclusive option agreement with the University of Pittsburgh for rights to three chimeric antigen receptor T cell (“CAR-T”) technologies that offer the potential to address a range of hematologic and solid tumors. See Note 6, Commitments and Contingencies, for further information.
On October 26, 2023, the Company completed a private placement of 777,000 shares of our common stock, pre-funded warrants exercisable to acquire up to 1,223,000 shares of our common stock, Series A Warrants exercisable to acquire up to 2,000,000 shares of our common stock and Series B Warrants exercisable to acquire up to 2,000,000 shares of our common stock, for net proceeds of approximately $1.78 million, after offering costs. The Pre-funded warrants are immediately exercisable, at a price of $0.0001 per share, with no expiration date. The Series A Warrants and the Series B Warrants are referred to herein together as the “Series Warrants.” The shares of common stock and Series Warrants were purchased together and then immediately separable and were issued separately. The Series A Warrants and Series B Warrants are exercisable on or after the earlier of (i) the date on which the Company’s stockholders approve the issuance of the shares issuable upon exercise of the Series Warrants or (ii) April 26, 2024 at an exercise price of $1.36 per share. The Series A Warrants have a term of exercise equal to eighteen (18) months and the Series B Warrants have a term of exercise equal to 5 and one-half (5.5) years. This private placement was conducted with the same underwriter as the June public offering, and as a result, each Series Warrant issued in connection with the June offering was repriced from an exercise price of $1.65 per share to $1.36 per share. In connection with the private placement the Company also issued to the exclusive placement agent warrants exercisable to acquire up to 120,000 shares of our common stock at an exercise price of $1.40 per share.
On October 26, 2023, the Company entered into a Shared Services Agreement (“SSA”) with Deverra, in accordance with requirements set forth in the APA. Under the terms of the SSA, Coeptis and Deverra will share resources and collaborate to further the development of Coeptis’ GEAR and SNAP-CAR platforms, as well as the purchased and licensed assets under the License Agreement and APA. The term of the SSA is six months from the effective date. See Note 6, Commitments and Contingencies, for further information.
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
As discussed elsewhere in this Quarterly Report on Form 10-Q, pursuant to the Merger, we acquired our primary operating subsidiary Coeptis Therapeutics, Inc. The Merger was accounted for as a “reverse merger,” and Coeptis Therapeutics, Inc. was deemed to be the accounting acquirer in the Merger. Consequently, the financial condition, results of operations and cash flows discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations discussed below are those of Coeptis Therapeutics, Inc. and its consolidated subsidiaries. When we use words in this section like “we,” “us”, “our,” the “Company” and words of the like, unless otherwise indicated, we are referring to the operations of our wholly-owned subsidiaries, including Coeptis Therapeutics, Inc.
Forward-Looking Statements
This Report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 12E of the Securities Exchange Act of 1934, including or related to our future results, certain projections and business trends. Assumptions relating to forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. When used in this Report, the words “estimate,” “project,” “intend,” “believe,” “expect” and similar expressions are intended to identify forward-looking statements. Although we believe that assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate, and we may not realize the results contemplated by the forward-looking statement. Management decisions are subjective in many respects and susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause us to alter our business strategy or capital expenditure plans that may, in turn, affect our results of operations. In light of the significant uncertainties inherent in the forward-looking information included in this Report, you should not regard the inclusion of such information as our representation that we will achieve any strategy, objective or other plans. The forward-looking statements contained in this Report speak only as of the date of this Report as stated on the front cover, and we have no obligation to update publicly or revise any of these forward-looking statements. These and other statements which are not historical facts are based largely on management’s current expectations and assumptions and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by such forward-looking statements. These risks and uncertainties include, among others, the failure to successfully develop a profitable business, delays in identifying customers, and the inability to retain a significant number of customers, as well as the risks and uncertainties described in “Risk Factors” section to our Annual Report for the fiscal year ended December 31, 2022.
When we use words like “we,” “us”, “our,” the “Company” and words of the like, unless otherwise indicated, we are referring to the operations of us and our wholly-owned subsidiaries Coeptis Therapeutics, Inc. and Coeptis Pharmaceuticals, Inc. (“Coeptis”).
Objective
The objective of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide users of our financial statements with the following:
| · | A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results; | |
| · | Useful context to the financial statements; and | |
| · | Information that allows assessment of the likelihood that past performance is indicative of future performance. |
Our MD&A is provided as a supplement to, and should be read together with, our unaudited financial statements for the three and nine months ended September 30, 2023 and 2022, included in Part I, Item 1 of this Form 10-Q.
Company History
General. The Company was originally incorporated in the British Virgin Islands on November 27, 2018 under the name Bull Horn Holdings Corp. On October 27, 2022, Bull Horn Holdings Corp. domesticated from the British Virgin Islands to the State of Delaware. On October 28, 2022, in connection with the closing of the Merger, the Company changed its corporate name from Bull Horn Holdings Corp. to “Coeptis Therapeutics Holdings, Inc.”
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The Merger Transaction. On October 28, 2022, a wholly-owned subsidiary of Bull Horn Holdings Corp., merged with and into Coeptis Therapeutics, Inc., with Coeptis Therapeutics, Inc. as the surviving corporation of the Merger. As a result of the Merger, the Company acquired the business of Coeptis Therapeutics, Inc., which now continues its existing business operations as the Company’s wholly-owned subsidiary.
About the Company’s Subsidiaries. The Company now operates through its direct and indirect wholly-owned subsidiaries Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc. and Coeptis Pharmaceuticals, LLC.
Issuance under Merger Transaction. Simultaneously with the closing of the Merger, all of the issued and outstanding shares of Coeptis Therapeutics, Inc. common stock (including the shares of common stock underlying Coeptis’ series B preferred stock) converted, on a 2.96851721 for 1 basis, into shares of our Common Stock. As of the Merger, there were no Coeptis options outstanding, and there were warrants outstanding to purchase an aggregate of 4,642,500 shares of Coeptis common stock at an average exercise price of $2.67 per share, which warrants converted on the closing of the Merger into warrants to purchase an aggregate of 1,563,912 shares of our common stock at an average exercise price of $7.93 per share.
On the closing of the Merger, the former Coeptis common stock was exchanged for the right to receive 17,270,079 shares of our common stock (including 2,694,948 shares of common stock issued in exchange for the Coeptis series B preferred stock issued and outstanding). Our common stockholders before the Merger retained 2,246,760 shares of our common stock. As a result, immediately following the closing of the Merger, Coeptis’ former stockholders and our then existing stockholders held approximately 88% and 12%, respectively, of the total combined voting power of all classes of our stock entitled to vote.
As discussed in our Annual Report on Form 10-K, the Merger was treated as a recapitalization of the Company, and was accounted for as a “reverse merger,” and Coeptis was deemed to be the acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the Merger will be those of Coeptis, and the condensed consolidated financial statements after completion of the Merger will include the assets and liabilities of Coeptis, historical operations of Coeptis and operations of Coeptis from the closing of the Merger.
Company History of Coeptis Therapeutics, Inc.
Coeptis Pharmaceuticals, LLC was formed on July 12, 2017 as a Pennsylvania multi-member limited liability company. On December 1, 2018, the members of LLC contributed their interest to a newly formed corporation, Coeptis Pharmaceuticals, Inc. As of December 1, 2018, the LLC became a disregarded single-member limited liability company which is wholly owned by the newly formed corporation. On February 12, 2021, Vinings Holdings, Inc., a Delaware corporation (“Vinings”), merged (the “Merger”) with and into Coeptis Pharmaceuticals, Inc. On July 12, 2021, the company has legally changed its name from Vinings Holdings, Inc. to Coeptis Therapeutics, Inc. Coeptis was the surviving corporation of that Merger. As a result of the Merger, Vinings acquired the business of Coeptis and will continue the existing business operations of Coeptis as a wholly owned subsidiary. The Merger was treated as a recapitalization of the Company for financial accounting purposes. The historical financial statements of Vinings before the Merger were replaced with the historical financial statements of Coeptis before the Merger in all future filings with the Securities and Exchange Commission (the “SEC”).
Overview and Outlook
We are a pharmaceutical company which owns, acquires, and develops drug products and pharmaceutical technologies which offer improvements to current therapies. Our products and technologies are intended to be commercialized in the US and worldwide markets. Since our inception in 2017, it has acquired and commercialized two drug products for the US market, which were approved as 505b2 applications. These anti-hypertension products were launched into the US market during 2020 through a marketing partner. At launch, the sales and promotional efforts were significantly impeded by the limitation of the global pandemic and as such, we have since abandoned all activities and ownership pertaining to both products. We also began the development of several ANDA products which we divested in 2019 to a larger generic pharmaceutical drug manufacturer, and have moved away from focusing on the commercialization of generic products. In early 2021, we entered into strategic partnerships to co-develop improved therapies for the auto-immune and oncology markets. Following the reverse merger transaction, we continue to focus on identifying and investing resources into innovative products and technologies which we believe will significantly transform our current products and therapies.
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During 2020 and continuing through 2021, we faced several operational challenges related to the COVID-19 global pandemic, which we continue to work to overcome. The launch of both 505b2 products was impacted because of various COVID-19 limitations, most notably field sales personnel were not able to make healthcare provider visits in person; thereby limiting the awareness of the availability of these products. We explored and implemented several non-personal promotion efforts, but given the global limitations and dynamics, it was challenging to achieve expected sales. We have since abandoned all activities and ownership pertaining to both products.
In May 2021, we entered into two exclusive option agreements (the “CD38 Agreements”) relating to separate technologies designed to improve the treatment of CD38-related cancers (e.g., multiple myeloma, chronic lymphocytic leukemia, and acute myeloid leukemia) with VyGen-Bio, Inc. (“Vy-Gen”), a majority-owned subsidiary of Vycellix, Inc., a Tampa, Florida-based private, immuno-centric discovery life science company focused on the development of transformational platform technologies to enhance and optimize next-generation cell and gene-based therapies, including T cell and Natural Killer (“NK”) cell-based cancer therapies.
The CD38 Agreements relate to two separate Vy-Gen drug product candidates, as follows:
CD38-GEAR-NK. This Vy-Gen drug product candidate is designed to protect CD38+ NK cells from destruction by anti-CD38 monoclonal antibodies, or mAbs. CD38-GEAR-NK is an autologous, NK cell-based therapeutic that is derived from a patient’s own cells and gene-edited to enable combination therapy with anti-CD38 mAbs. We believe CD38-GEAR-NK possesses the potential to minimize the risks and side effects from CD38-positive NK cell fratricide.
Market Opportunity. We believe CD38-GEAR-NK could potentially revolutionize how CD38-related cancers are treated, by protecting CD38+ NK cells from destruction by anti-CD38 mAbs, thereby promoting the opportunity to improve the treatment of CD38-related cancers, including multiple myeloma, chronic lymphocytic leukemia, and acute myeloid leukemia.
Multiple myeloma is the first cancer indication targeted with CD38-GEAR-NK. The global multiple myeloma market was $19.48B in 2018 and is expected to reach $31B by 2026 [Source: Fortune Business Reports].
CD38-Diagnostic. This Vy-Gen product candidate is an in vitro diagnostic tool to analyze if cancer patients might be appropriate candidates for anti-CD38 mAb therapy. CD38-Diagnostic is an in vitro screening tool that provides the ability to pre-determine which cancer patients are most likely to benefit from targeted anti-CD38 mAb therapies, either as monotherapy or in combination with CD38-GEAR-NK. CD38-Diagnostic also has the potential to develop as a platform technology beyond CD38, to identify patients likely to benefit for broad range of mAb therapies across myriad indications.
Market Opportunity. We believe CD38-Diagnostic provides opportunity to make more cost-effective medical decisions for the treatment of B cell malignancies with high CD38 expression, including multiple myeloma, which may help to avoid unnecessary administration of anti-CD38 therapies. CD38-Diagnostic could prevent patients from being subjected to ineffective therapy and enable significant savings to healthcare systems.
CD38-Diagnostic could be offered as a companion diagnostic for determining patient suitability and likelihood of positive treatment outcomes for CD38-GEAR-NK and/or CD38 monoclonal antibody therapies.
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On September 28, 2023, we received FDA’s response to our 513(g) request for information submission pertaining to the classification of the CD38-Diagnostic. The CD38-Diagnostic has been designated a Class II type device. The confirmation of this classification is beneficial as we’re now better able to plan for and execute future development activities.
GEAR-NK Product Overview. GEAR-NK is an autologous, gene-edited, natural killer cell-based therapeutic development platform that allows for modified NK cells to be co-administered with targeted mAbs, which, in the absence of the GEAR-NK, would otherwise be neutralized by mAb therapy.
In May 2021, we made initial payments totaling $750,000 under the CD38 Agreements, to acquire the exclusive options to acquire co-development rights with respect to CD38-GEAR-NK and CD38-Diagnostic. On August 15, 2021, we entered into amendments to each of the CD38 Agreements. In connection with the two amendments, we delivered to VyGen promissory notes aggregating $3,250,000 with maturity dates of December 31, 2021, and made a cash payment of $1,000,000, upon which cash payment we exercised the two definitive option purchase agreements. In December 2021, we completed our payment obligations to secure the 50% ownership interest in the CD38-Diagnostic, and subsequently in November 2022 we completed our purchase of the 50% ownership interest for the CD38-GEAR-NK product candidate. Details of the two August amendments and the December amendment are summarized in the amendments attached at Exhibits 4.1 and 4.2 to our Current Report on Form 8-K dated August 19, 2021 and Exhibits 4.2 to the our Current Report on Form 8-K dated December 27, 2021.
In connection with the Vy-Gen relationship and the Company’s ownership in the two product candidates described above, in December 2021 the Company and Vy-Gen entered into a co-development and steering committee agreement. The co-development and steering committee agreement provides for the governance and economic agreements between the Company and Vy-Gen related of the development of the two Vy-Gen drug product candidates and the revenue sharing related thereto, including each company having a 50% representation on the steering committee and each company receiving 50% of the net revenues related to the Vy-Gen product candidates. Details of the co-development and steering committee agreement are summarized in our Current Report on Form 8-K dated December 27, 2021, including Exhibits 4.1 and 4.2 thereto.
Vici Health Sciences, LLC. In 2019, we entered into a co-development agreement with Vici Health Sciences, LLC (“Vici”). Through this partnership, we would co-develop, seek FDA approval and share ownership rights with Vici to CPT60621, a novel, ready to use, easy to swallow, oral liquid version of an already approved drug used for the treatment of Parkinson’s Disease (PD). As we continue to direct its operational focus towards the Vy-Gen opportunities previously described, we have recently stopped allocating priority resources to the development of CPT60621. We are currently in negotiations in which Vici intends to buy-out most or all of our remaining ownership rights.
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Our Results of Operations
Revenue. To date, we have generated minimal revenue mostly from consulting arrangements and product sales. Due to the COVID-19 global pandemic and the resulting market dynamics, it is uncertain if the current marketed products can generate sufficient sales to cover expenses.
Operating Expenses. General and administrative expenses consist primarily of salaries and related costs for personnel and professional fees for consulting services related to regulatory, pharmacovigilance, quality, legal, and business development. We expect that our general and administrative expenses will increase in the future as we increase our headcount to support the business growth. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, insurance, and investor relation expenses associated with operating as a public company.
Research and developments costs will continue to be dependent on the strategic business collaborations and agreements will are anticipating in the future.
We expect development costs to increase to support our new strategic initiatives.
Comparison of the three months ended September 30, 2023 and September 30, 2022
Revenues. Revenues, which were $0 and $0 during the three months ended September 30, 2023 and 2022 respectively, continue to be minimal. The Company’s activities primarily include product development, raising capital, and building infrastructure. Management does not expect the Company to generate any significant revenue for at least the next two years, during which time drug development will continue toward the goal of commercializing, through a partnership or otherwise, one or more of the Company’s target products or technologies.
Operating Expenses
Overview. Operating expenses increased from $5,568,709 in the three months ended September 30, 2022 to $7,831,431 in the three months ended September 30, 2023. The increase is mainly due to the increase in research and development costs related to the August 2023 asset purchase agreement with Deverra Therapeutics, Inc., discussed in Note 6, Commitments and Contingencies.
General and Administrative Expenses. For the three months ended September 30, 2023 and 2022, general and administrative expenses are included in operating expenses. All costs incurred can be attributed to the planned principal operations of product development, raising capital, and building infrastructure.
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Interest Expense. Interest expense was $56,423 for the three months ended September 30, 2022 and was $19,800 for the three months ended September 30, 2023. Interest was related to notes payable, which are discussed in detail in the notes to the condensed consolidated financial statements, incorporated by reference herein.
Comparison of the nine months ended September 30, 2023 and September 30, 2022
Revenues. Revenues, which were $0 and $0 during the nine months ended September 30, 2023 and 2022 respectively, continue to be minimal. The Company’s activities primarily include product development, raising capital, and building infrastructure. Management does not expect the Company to generate any significant revenue for at least the next two years, during which time drug development will continue toward the goal of commercializing, through a partnership or otherwise, one or more of the Company’s target products or technologies.
Operating Expenses
Overview. Operating expenses decreased from $31,152,697 in the nine months ended September 30, 2022 to $17,950,241 in the nine months ended September 30, 2023. The decrease is mainly due to lower professional services expense related to equity transactions.
General and Administrative Expenses. For the nine months ended September 30, 2023 and 2022, general and administrative expenses are included in operating expenses. All costs incurred can be attributed to the planned principal operations of product development, raising capital, and building infrastructure.
Interest Expense. Interest expense was $176,068 for the nine months ended September 30, 2022 and was $93,853 for the nine months ended September 30, 2023. Interest was related to notes payable, which are discussed in detail in the notes to the condensed consolidated financial statements, incorporated by reference herein.
Financial Resources and Liquidity. The Company had limited financial resources during the year ended December 31, 2022 with cash and cash equivalents of $3,791,302. For the nine months ended September 30, 2023, cash and cash equivalents decreased to $1,411,510, primarily as a result of the cash paid in connection with the deals related to the Company’s public offering that closed in June 2023. During both these time periods, the Company continues to operate a minimal infrastructure in order to maintain its ability to fund operations, keep full focus on all product development targets and to stay current with all of the Company’s scientist consultants, legal counsel, and accountants. David Mehalick, our President and Chief Executive Officer, and Daniel A. Yerace, our Vice President of Operations, both agreed to waive their rights to a 2023 guaranteed bonus payment under their respective employment agreements to further maintain our ability to fund operations. During 2023, the Company believes that the ability to raise capital through equity transactions will increase liquidity and enable the execution of management’s operating strategy.
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| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this Item.
| Item 4. | Controls and Procedures |
Disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer) evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report on Form 10-Q. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2023, our disclosure controls and procedures were operating effectively.
Our Annual Report on Form 10-K contains information regarding a material weakness in our internal control over financial reporting as of December 31, 2022. For example, the Company lacked adequate segregation of duties which led to situations where individuals had access to both initiate and approve transactions with no additional formal review process. This material weakness was self-diagnosed, and was not issued by our independent auditors, Turner, Stone & Company, LLP. Management believes that as a result of actions taken by the Company, as discussed below, our internal controls over financial reporting are operating effectively as of September 30, 2023.
In an effort to address the Company’s internal accounting personnel deficiencies, in February 2021 we hired a consulting group to assist our Chief Financial Officer. Accordingly, the Company believes, based on its knowledge, that: (i) this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading with respect to the period covered by this report; and (ii) the financial statements, and other financial information included in this quarterly report, fairly present in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in this quarterly report.
On May 17, 2023, the Company announced that Brian Cogley was appointed as the Company’s new Chief Financial Officer, effective immediately. He replaced Christine Sheehy, who remains with the Company to support the finance team and also in her new role as Vice President of Compliance and Corporate Secretary.
Mr. Cogley has over 15 years of accounting and finance experience, having previously held positions of increasing authority at two “Big 4” accounting firms and served on the management teams of multiple companies in diverse industries. An accountant by training, Mr. Cogley arrives at Coeptis with a career in corporate finance and accounting during which he advised and led the financial operations for companies in multiple industries including life sciences, pharmaceuticals, financial services, and manufacturing. Mr. Cogley’s diverse experience and knowledge of the Sarbanes-Oxley control environment and SEC reporting requirements will help bolster the Company’s internal controls and operational efficiency.
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PART II — OTHER INFORMATION
| Item 1. | Legal Proceedings |
None.
| Item 1A. | Risk Factors |
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
All prior sales of unregistered securities have been properly disclosed in prior SEC filing.
| Item 3. | Defaults Upon Senior Securities |
Not applicable.
| Item 4. | Mine Safety Disclosures |
Not applicable.
| Item 5. | Other Information |
None.
| Item 6. | Exhibits |
The following exhibits are attached hereto or incorporated by reference herein (numbered to correspond to Item 601(a) of Regulation S-K, as promulgated by the Securities and Exchange Commission) and are filed as part of this Form 10-Q:
| 31.1 | Rule 13a-14(a)/15(d)-14(a) Certification of Chief Executive Officer, Principal Executive Officer. Filed herewith. |
| 31.2 | Rule 13a-14(a)/15(d)-14(a) Certification of President, Principal Financial Officer. Filed herewith. |
| 32.1 | Section 1350 Certification of Principal Executive Officer. Filed herewith. |
| 32.2 | Section 1350 Certification of Principal Financial Officer. Filed herewith. |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| COEPTIS THERAPEUTICS HOLDINGS, INC. | ||
| Registrant | ||
| Date: November 9, 2023 | By: | /s/ David Mehalick |
| David Mehalick | ||
| Chief Executive Officer, Principal Executive Officer | ||
| Date: November 9, 2023 | By: | /s/ Brian Cogley |
| Brian Cogley | ||
| Chief Financial Officer, Principal Financial and Accounting Officer | ||
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