COEP Coeptis Therapeutics
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|x||Quarterly REPORT PURSUANT to Section 13 or 15(d) of the Securities Exchange Act of 1934|
|For the quarterly period ended June 30, 2021|
|¨||Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934|
|For the transaction period from _____________ to _____________|
|Commission File No. 000-56194|
|Coeptis Therapeutics, Inc.|
|(Exact name of registrant as specified in its charter)|
|(State or other jurisdiction of|
incorporation or organization)
105 Bradford Rd, Suite 420
|(Address of principal executive offices||(Zip Code)|
(Registrant’s telephone number, including area code)
(Former name or former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
|Title of each class||Trading Symbol(s)||Name of exchange on which registered|
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. Yes x No ¨
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). Yes x No ¨
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 ¨|
|Non-accelerated Filer x||Smaller Reporting Company x|
|Emerging Growth Company x|
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 ¨ No x
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 August 16, 2021, was.
COEPTIS THERAPEUTICS, INC.
For the Quarter Ended June 30, 2021
TABLE OF CONTENTS
|PART I -- FINANCIAL INFORMATION||3|
|Item 1.||Condensed Consolidated Unaudited Financial Statements||3|
|Statements of Operations||4|
|Statements of Stockholders' Equity (Deficit)||5|
|Statements of Cash Flows||6|
|Notes to Financial Statements||7|
|Item 2.||Management's Discussion and Analysis of Financial Condition and Results of Operations||13|
|Item 3.||Quantitative and Qualitative Disclosures About Market Risk||16|
|Item 4.||Controls and Procedures||16|
|PART II -- OTHER INFORMATION||17|
|Item 1.||Legal Proceedings||17|
|Item 1A.||Risk Factors||17|
|Item 2.||Unregistered Sales of Equity Securities and Use of Proceeds||17|
|Item 3.||Defaults Upon Senior Securities||17|
|Item 4.||Mine Safety Disclosures||17|
|Item 5.||Other Information||17|
PART I — FINANCIAL INFORMATION
|Item 1.||Unaudited Financial Statements|
COPETIS THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
|June 30, 2021||December 31, 2020|
|TOTAL CURRENT ASSETS||1,933,090||224,751|
|PROPERTY AND EQUIPMENT|
|Furniture and fixtures||25,237||25,237|
|Less: accumulated depreciation||(10,578||)||(9,730||)|
|Furniture and fixtures, net||14,660||15,507|
|Right of use asset, net of accumulated amortization||38,541||58,225|
|Total other assets||790,541||60,225|
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)|
|Notes payable, current portion||749,595||1,277,500|
|Notes payable, related parties, current portion||–||604,000|
|Right of use liability, current portion||21,276||41,618|
|TOTAL CURRENT LIABILITIES||4,713,900||5,279,104|
|LONG TERM LIABILITIES|
|Right of use liability, non-current portion||14,723||14,723|
|TOTAL LONG TERM LIABILITIES||164,723||164,723|
|COMMITMENTS AND CONTINGENCIES (NOTE 7)|
|STOCKHOLDERS' EQUITY (DEFICIT)|
|Series B Preferred Stock, $par value, shares authorized, and - - shares issued and outstanding, respectively||1||0|
|Common stock, $par value, shares authorized, and shares issued and outstanding, respectively||3,106||2,519|
|Additional paid-in capital||16,538,223||8,954,985|
|Common stock subscribed||82,500||–|
|TOTAL STOCKHOLDERS' EQUITY||(2,140,332||)||(5,143,342||)|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||2,738,290||$||300,484|
The accompanying notes are an integral part of the consolidated financial statements.
COEPTIS THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|3 Months Ended||6 Months Ended|
|June 30, 2021||June 30, 2020||June 30, 2021||June 30, 2020|
|Cost of goods, including inventory obsolescence||0||1,869||0||1,869|
|COST OF OPERATIONS|
|Research and development||0||3,543||0||3,543|
|General and administrative expenses||2,580,971||661,856||4,318,408||1,004,104|
|Selling and marketing||0||0||2,918||0|
|Total operating expenses||2,624,069||701,740||4,399,149||1,086,601|
|LOSS FROM OPERATIONS||(2,622,593||)||(687,244||)||(4,324,149||)||(1,067,597||)|
|OTHER INCOME (EXPENSE)|
|Royalties and licensing fees||(166,667||)||0||(416,667||)||(1,500,000||)|
|TOTAL OTHER INCOME (EXPENSE)||(89,167||)||1,990||(339,167||)||(1,500,000||)|
|LOSS BEFORE INCOME TAXES||(2,713,235||)||(685,254||)||(4,663,316||)||(2,567,597||)|
|PROVISION FOR INCOME TAXES (BENEFIT)||0||0||0||0|
|LOSS PER SHARE|
|Loss per share, basic and fully diluted||$||(0.09||)||$||(0.04||)||$||(0.16||)||$||(0.14||)|
|Weighted average number of common shares outstanding||30,412,242||18,125,566||29,543,639||18,041,535|
The accompanying notes are an integral part of the consolidated financial statements.
COEPTIS THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
|PREFERRED STOCK||COMMON STOCK||PAID-IN||STOCK||ACCUMULATED|
|BALANCE AT DECEMBER 31, 2019||–||$||–||16,196,000||$||1,620||5,464,465||$||100,000||$||(4,944,559||)||$||621,526|
|Retroactive application of recapitalization||–||1,588,800||–||(297,949||)||–||–||(297,949||)|
|Adjusted balance, beginning of period||–||–||17,784,800||1,620||5,166,516||100,000||(4,944,559||)||323,577|
|Shares issued for cash||–||–||200,000||20||99,980||(100,000||)||–||–|
|Net income (loss)||–||–||–||–||–||–||(1,896,399||)||(1,896,399||)|
|BALANCE AT MARCH 31, 2020||–||$||–||17,984,800||$||1,640||$||5,266,496||$||–||$||(6,840,958||)||$||(1,572,822||)|
|Shares issued for cash||–||–||–||–||–||–||–||–|
|Shares issued for services||–||–||667,840||67||333,853||–||–||333,920|
|Net income loss)||–||–||–||–||–||–||(685,254||)||(685,254||)|
|BALANCE AT JUNE 30, 2020||–||$||–||18,652,640||$||1,707||$||5,600,349||$||–||$||(7,526,212||)||$||(1,924,126||)|
|BALANCE AT DECEMBER 31, 2020||–||$||–||25,178,840||$||2,519||$||8,954,985||$||–||$||(14,100,846||)||$||(5,143,342||)|
|Retroactive application of recapitalization||8,000||1||1,589,400||–||(298,062||)||–||–||(298,061||)|
|Shares issued for cash||–||–||2,436,500||244||2,436,256||471,000||–||2,907,500|
|Shares issued for services||–||–||770,000||77||769,923||–||–||770,000|
|Net income (loss)||–||–||–||–||–||–||(1,950,081||)||(1,950,081||)|
|BALANCE AT MARCH 31, 2021||8,000||$||1||29,974,740||$||2,839||$||11,863,102||$||471,000||$||(16,050,404||)||$||(3,713,985||)|
|Shares issued for cash||–||–||1,281,664||128||1,922,368||(388,500||)||–||1,533,996|
|Shares issued for services||–||–||690,000||69||1,034,931||–||–||1,035,000|
|Warrants issued for services||–||–||–||–||676,892||–||–||676,892|
|Shares issued through conversion of debt||–||–||694,000||69||1,040,931||–||–||1,041,000|
|Net income (loss)||–||–||–||–||–||–||(2,713,235||)||(2,713,235||)|
|BALANCE AT JUNE 30, 2021||8,000||$||1||32,640,404||$||3,106||$||16,538,223||$||82,500||$||(18,764,162||)||$||(2,140,332||)|
The accompanying notes are an integral part of the consolidated financial statements.
COEPTIS THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|6 Months Ended|
|June 30, 2021||June 30, 2020|
|Net income (loss)||$||(4,663,316||)||$||(2,567,597||)|
|Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:|
|Depreciation and amortization||848||963|
|Forgiveness of debt||(77,500||)||0|
|Shares issued for non-employee services||1,805,000||–|
|Warrants issued for services||676,892||333,920|
|Shares issued for conversion of debt||1,041,000||0|
|(Increase) decrease in:|
|Right of use asset/liability||(658||)||2,274|
|Increase (decrease) in:|
|NET CASH USED IN OPERATING ACTIVITIES||(630,415||)||(1,637,778||)|
|Purchase of license right||(750,000||)||0|
|Purchase of property and equipment||0||0|
|NET CASH USED IN INVESTING ACTIVITIES||(750,000||)||0|
|Proceeds from notes payable||77,595||1,077,500|
|Repayment of notes payable|
|Repayment of notes payable, related parties||(604,000||)||500,000|
|Shares from merger transaction||(298,061||)||0|
|Shares issued for cash||4,358,624||0|
|Cash received for stock subscription||82,500||0|
|NET CASH PROVIDED BY FINANCING ACTIVITIES||3,088,753||1,577,500|
|NET INCREASE IN CASH||1,708,339||(60,278||)|
|CASH AT BEGINNING OF PERIOD||202,965||440,088|
|CASH AT END OF PERIOD||$||1,911,304||$||379,810|
|Taxes paid (refunded)||$||0||$||0|
The accompanying notes are an integral part of the consolidated financial statements.
COEPTIS THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business – Coeptis Pharmaceuticals, LLC (LLC) was formed in 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 (“Coeptis”). 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. The newly merged company was re-named to Coeptis Therapeutics Inc (“Coeptis” or the “Company”) see NOTE 10. 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”).
The Company is located in Wexford, PA, and engages primarily in the acquisition, development, and commercialization of pharmaceutical products.
Basis of Presentation - The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States of America for complete financial statements. In the opinion of the Company’s management, any adjustments contained in the accompanying unaudited consolidated financial statements are of a normal recurring nature, and are necessary to fairly present the financial position of the Company as of June 30, 2021, along with its results of operations for the three and six month periods ended June 30, 2021 and 2020 and cash flows for the six-month periods ended June 30, 2021 and 2020. Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements and should be read in conjunction with our Annual Report on Form 10-KT for the fiscal year ended December 31, 2020. Results of operations for the six-month period ended June 30, 2021, are not necessarily indicative of the operating results that may be expected for the full year ending December 31, 2021.
As a result of the Merger, the 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.
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 extent of the impact of COVID-19 on the Company’s operational and financial performance is currently uncertain and cannot be predicted.
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-KT filed with the U.S. Securities and Exchange Commission (“SEC”) on May 11, 2021. There have been no material changes to the significant accounting policies during the period ended June 30, 2021, except for items mentioned below.
Principles of Consolidation – The accompanying unaudited condensed consolidated financial statements include the accounts of Coeptis Therapeutics Inc, Coeptis Pharmaceuticals, Inc. and its wholly-owned subsidiary, Coeptis Pharmaceuticals, LLC. All material intercompany accounts, balances and transactions have been eliminated.
Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles 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.
Adoption of New Accounting Pronouncements –
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principals in Topic 740. The amendments also improve consistent application of and simplify generally accepted accounting principles (GAAP) for other areas of Topic 740 by clarifying and amending the existing guidance. For public business entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted, including adoption in any interim period. The adoption of this standard, effective January 1, 2021, did not have a material impact on these financial statements.
During the six months ended June 30, 2021, there were several new accounting pronouncements issued by the 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 financial statements.
NOTE 3 – LICENSE RIGHT
In 2019, 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 not met during six months ended June 30, 2021 and 2020.
During the fourth quarter of 2020, the Company determined that there was a reduction of the useful life of the asset, resulting in a full impairment of the asset. The carrying value of the license right at June 30, 2021 and December 31, 2020 was $0. Amortization expenses total $0 and $0 for the six months ended June 30, 2021 and 2020, respectively.
On May 6, 2021, the Company made initial payments under two definitive agreements. The two definitive option purchase agreements are with VyGen-Bio, Inc. (“Vy-Gen”), pursuant to which the Company has the exclusive option to acquire co-development rights with respect to two Vy-Gen product candidates. The Company paid a total of $750,000 to acquire the two exclusive options. On August 15, 2021, the Company entered into amendments to each of the two definitive option purchase agreements, in connection with such amendments the Company delivered promissory notes aggregating $3,250,000 with maturity dates of December 31, 2021. In connection with the two amendments the Company plans to pay a cash payment of $1,000,000, and thereby the Company will be deemed to have exercised the two options. In the event that the promissory notes are timely paid by December 31, 2021, the Company will maintain its 50% ownership interest in the two Vy-Gen product candidates, and if the promissory notes are not timely paid by December 31, 2021 the Company’s ownership interest in such assets will automatically be reduced to 20%, in which case the two promissory notes will be automatically cancelled and will no longer be due or payable.
NOTE 4 – LONG-TERM DEBT
The Company entered into a note payable agreement with an unrelated company with a conversion option. The principal amount of $200,000, which is unsecured, together with interest at 9% was due June 15, 2020. In lieu of cash repayment, the outstanding principal amount of the note, plus all accrued unpaid interest may be converted at the option of the party, in whole or in part, into shares of Common Stock. As of the December 31, 2020, the note had a balance of $200,000. The note and accrued interest were paid in full in the first quarter of 2021.
In January 2020, the Company entered into a Senior Secured Note agreement with an unrelated party. The principal amount of $500,000, which is secured by a security agreement, together with interest at 8%, plus additional 2% in the event of default, was due February 8, 2021. The balance of the note is $500,000 as of June 30, 2021 and December 31, 2020. This debt is currently in default.
In January 2020, the Company entered into a Senior Secured Note agreement with a related party stockholder. The principal amount of $250,000, which is secured by a security agreement, together with interest at 8%, plus additional 2% in the event of default, was due February 8, 2021. This debt was converted to equity in June 2021. The balance of the note was $0 and $250,000 as of June 30, 2021 and December 31, 2020, respectively.
In January 2020, the Company entered into another Senior Secured Note agreement with a stockholder. The principal amount of $250,000, which is secured by a security agreement, together with interest at 8%, plus additional 2% in the event of default, was due February 8, 2021. This debt was converted to equity in June 2021. The balance of the note is $0 and $250,000 as of June 30, 2021 and December 31, 2020, respectively.
In January 2020, the Company entered into a Senior Secured Note agreement with an unrelated party. The principal amount of $333,000, which is secured by a security agreement, together with interest at 8%, plus additional 2% in the event of default, was due February 8, 2021. This debt was converted to equity in June 2021. The balance of the note was $0 and $333,000 as of June 30, 2021 and December 31, 2020, respectively.
In January 2020, the Company entered into a Senior Secured Note agreement with an unrelated party. The principal amount of $167,000, which is secured by a security agreement, together with interest at 8%, plus additional 2% in the event of default, was due February 8, 2021. The balance of the note is $167,000 as of June 30, 2021 and December 31, 2020. This debt is currently in default.
In September 2020, the Company entered a non-interest bearing, unsecured note agreement with two shareholders for $104,000 with an unspecified due date. The note was converted to equity in June 2021. The balance was $0 and $104,000 as of June 30, 2021 and December 31, 2020.
Interest accrued on the related party notes at June 30, 2021 and December 31,2020 was $0 and $40,000, respectively.
Loans under the CARES Act -- On May 6, 2020, the Company received loan proceeds in the amount of approximately $77,500 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. In February 2021, an additional $77,595 was received by the Company under the second round of PPP (“PPP2”). The Company has used the proceeds for purposes consistent with its intended use. The initial loan was forgiven in the amount of $77,500 in principal and $893.40 in interest on June 25, 2021. The Company currently believes that its use of the PPP2 loan proceeds will also meet the conditions for forgiveness of the loans. As of June 30, 2021 and December 31, 2020, the balance of the notes totaled $77,595 and $77,500, respectively.
On July 8, 2020 the Company received a loan of $150,000 from the from the United States Small Business Administration (the “SBA”) under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. Proceeds are intended to be used for working capital purposes. Interest on the EIDL Loan accrues at the rate of 3.75% per annum and installment payments, including principal and interest, are due monthly beginning twelve months from the date of the EIDL Loan in the amount of $731. The balance of principal and interest is payable thirty years from the date of the promissory note. The balance of the loan is $150,000, as of June 30, 2021 and December 31, 2020.
Maturities of long-term debt for the quarter ended June 30, 2021 are as follows:
|Maturities of long-term debt|
|2021(remaining 6 months)||$||0|
|Total long-term debt||$||150,000|
NOTE 5 – CAPITAL STRUCTURE
The total number of shares of stock which the corporation shall have authority to issue isshares, 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 these 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.
Common Stock - As of June 30, 2021 the Company hadshares of its common stock issued and outstanding, and on June 30, 2020 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 splits unless stated otherwise.
In 2021 and 2020, the Company raised capital by issuance of common stock above the stated par value. The contributed capital recognized as additional paid in capital during the six months ended June 30, 2021 and 2020 was $4,358,624 and $99,980 respectively. During the six months ended June 30, 2021 and 2020, there were $0 in capital distributions.
Series A Preferred Stock - As of April 30, 2019, the Series A Preferred Stock had been canceled, and no shares remain outstanding. The rights and privileges of future issuances of the Series A Preferred stock will be determined at such time if and when they are issued. As of June 30, 2021, there wereshares of Series A Preferred outstanding.
Series B Convertible Preferred Stock - The Company designatedshares of Series B Convertible Preferred Stock with a par value of $ per share. Initially, there will be no dividends due or payable on the Series B Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly file or cause to be filed.
All shares of the Series B Preferred Stock shall rank (i) senior to the Corporation’s Common Stock and any other class or series of capital stock of the Corporation hereafter created, (ii) pari passu with any class or series of capital stock of the Corporation hereafter created and specifically ranking, by its terms, on par with the Series B Preferred Stock and (iii) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking, by its terms, senior to the Series B Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary.
The Series B Preferred shall have no liquidation preference over any other class of stock.
Each holder of outstanding shares of Series B Preferred Stock shall be entitled to the number of votes equal to equal to one thousand (1,000) Common Shares. Except as provided by law, or by the provisions establishing any other series of Preferred Stock, holders of Series B Preferred Stock and of any other outstanding series of Preferred Stock shall vote together with the holders of Common Stock as a single class.
Each holder of shares of Series B Preferred Stock may, at any time and from time to time, convert (an “Optional Conversion”) each of its shares of Series B Preferred Stock into a 1,000 of fully paid and nonassessable shares of Common Stock; provided, however, that any Optional Conversion must involve the issuance of at least 100 shares of Common Stock.
In the event of a reverse split, the conversion ratio shall not be changed. However, in the event a forward split shall occur then the conversion ratio shall be modified to be increased by the same ratio as the forward split.
The Company has evaluated the Series B Preferred Stock in accordance with ASC 815 and has determined their conversion options were for equity and ASC 815 did not apply as of June 30, 2021. The Company has evaluated the Series B Preferred Stock in accordance with FASB ASC Subtopic 47020 and has determined that there is no beneficial conversion feature that must be accounted for as of June 30, 2021.
As of June 30, 2021 , there wereshares of Series B Preferred outstanding.
Common Stock Warrants - On November 23, 2020, the Company issued a class A and a class B warrant to Coral Investment Partners, LP (“CIP”), with each warrant granting CIP the right to purchase 500,000 shares of common stock at a price of $2 for Class A or $5 for Class B. The warrants expire on November 30, 2023. The warrants also contain a cashless exercise provision and contained anti-dilution provisions. The warrants remain outstanding as of June 30, 2021.
On May 28, 2021, the Company issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 500,000 shares of common stock at a price of $1 per share, 500,000 shares at $2 per share, and 500,000 at $5 per share. The warrants expire on June 1, 2026. All warrants were outstanding on June 30, 2021.
NOTE 6 – ASSET PURCHASE AGREEMENT
On June 18, 2019, the Company entered into an Asset Purchase Agreement with ANI Pharmaceuticals, Inc. (ANI) for the sale of certain intellectual property and materials related to the research and development related to potential ANDA candidates. The Company recognized revenue of approximately $2,300,000 related to the Asset Purchase Agreement in the year ended December 31, 2019.
In addition to the original purchase price, the Company is due an additional $2,000,000 with respect to the Product that is Vigabatrin 500mg tablets (tablets) as follows; (A) $250,000 within 30 days following the completion of all bioequivalence studies related to tablets, (B) $250,000 within 45 days of the first date on which annual gross profit from the sale of tablets reaches $1,000,000 in a calendar year, (C) $500,000 within 45 days of the first date on which annual gross profit from the sale of tablets reaches $5,000,000 in a calendar year, (D) $1,000,000 within 45 days of the first date on which annual gross profit from the sale of tablets reaches $10,000,000 in a calendar year. As of six months ended June 30, 2021 and 2020, and through this date, none of these milestones have occurred. Because collection of these milestone payments is not reasonably assured, we have not recorded any revenues in the accompanying financial statements.
Also, the Company is due an additional $1,750,000 with respect to the Product that is Vigabatrin 500mg powder for Oral Solution (powder) as follows; (A) $250,000 within 45 days of the first date on which annual gross profit from the sale of powder reaches $1,000,000 in a calendar year, (B) $500,000 within 45 days of the first date on which annual gross profit from the sale of powder reaches $5,000,000 in a calendar year, (C) $1,000,000 within 45 days of the first date on which annual gross profit from the sale of powder reaches $10,000,000 in a calendar year. As of six months ended June 30, 2021 and 2020, and through this date, none of these milestones have occurred. Because collection of these milestone payments is not reasonably assured, we have not recorded any revenues in the accompanying financial statements.
NOTE 7 – 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 commending December 1, 2019 through May 31, 2020. The second lease extension extends the lease for twenty-four months, beginning on June 1, 2020 and ending on May 31, 2022. 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 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 the six months ended June 30, 2021 and 2020, rental expense totaled $11,250 and $10,500 respectively.
Future minimum rental payments required under the lease are as follows:
|Schedule of future minimum rental payments|
|2021 (remaining 6 months)||$||22,500|
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 financial statements.
Royalty Obligations - In connection with the product licensing agreement discussed in Note 3, the Company owes a minimum royalty payment of $1,000,000 following the first year of product sales. A minimum royalty amount is also due in subsequent years.
Royalty Advances - In the six months ended June 30, 2021 and 2020, the Company received royalty advances on future product sales of $0 and $250,000, respectively, from its pharmaceutical marketing partner. Interest is due on this advance and will continue to accrue at the rate of 10% until the payment is fully recouped from royalties.
Minimum Payment Obligation – In connection with a supply agreement with Coeptis’ drug product distributor related to Consensi, an amendment was entered into which (i) removes the requirement of a minimum payment obligation from such product distributor to Coeptis in regard to the sale of Consensi and (ii) clarifies that the upfront payment that was made from the product distributor to Coeptis may only be recouped by the product distributor through an offset against royalty payments that may otherwise become payable to Coeptis under the supply agreement.
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 six months ended June 30, 2021 and 2020, 0 employer contributions were made.
NOTE 9 – INCOME TAXES
For the six months ended June 30, 2021 and 2020, respectively, 0 income tax expense or benefit was recognized. The Company’s deferred tax assets are comprised primarily of net operating loss carryforwards. The Company maintains a full valuation allowance on its deferred tax assets since it has not yet achieved sustained profitable operations. As a result, the Company has not recorded any income tax benefit since its inception.
NOTE 10 – SUBSEQUENT EVENT
On July 12, 2021, the company has legally changed its name from Vinings Holdings, Inc. to Coeptis Therapeutics, Inc.
On August 15, 2021, the Company entered into amendments to each of the two VyGen-Bio definitive option purchase agreements. See FN 3 for a description of such amendments and related matters.
|Item 2.||Management’s Discussion and Analysis of Financial Condition and Results of Operations|
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, 2020.
When we use works 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 subsidiary Coeptis Pharmaceuticals, Inc. (“Coeptis”).
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 months ended June 30, 2021 and 2020, and the six months ended June 30, 2021 and 2020, included in Part I, Item 1 of this Form 10-Q.
Overview and Outlook
Coeptis Therapeutics, Inc. (“Coeptis Therapeutics”) is a holding company that conducts its current operations through its wholly-owned subsidiary Coeptis Pharmaceuticals, Inc. (“Coeptis”). 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 Coeptis’ inception in 2017, it has acquired and commercialized two drug products for the U S 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 are continually evaluating plans in 2021. 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 involving us and Coeptis, we continue to focus on identifying and investing resources into innovative products and technologies which we believe will significantly transform Coeptis’ current products and therapies.
During 2020 and continuing into 2021, Coeptis faced several operational challenges related to the COVID-19 global pandemic, which we continue to work to overcome. The launch of both 5050b2 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 continue to explore all possible marketing and sales options for the products.
We have recently entered into agreements that provide us with the opportunity to invest in and co-develop new technologies for the global cell therapy market. We cannot predict the success of these processes or the timing of when they may be available; however, we will work to understand how these products can affect current therapies to improve patient outcomes. See our Current Report on Form 8-K that was filed on May 11, 2021, which discusses this opportunity.
We expect to generate revenue from product sales and technology licensing. We cannot be certain of the timing of this revenue and will likely need funding to support continuing operations and support our growth strategy. We may have to finance operations by offering any combination of equity offerings, debt financing, collaborations, strategic alliances, or other licensing arrangements.
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. If our strategic business discussions progress to agreements we expect to generate additional revenue from collaboration partners.
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 June 30, 2021 and June 30, 2020
Revenues. Revenues, which were generated from product sales of $0 and $16,365 recorded in the three months ended June 30, 2021 and 2020 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.
Overview. Operating expenses increased from $701,740 in the three months ended June 30, 2020 to $2,624,093 in the three months ended June 30, 2021. The increase is mainly due to higher professional services fees, as well as new requirements for D&O insurance.
General and Administrative Expenses. For the three months ended June 30, 2020 and 2021, 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. Management may separate out G&A expenses in 2021 and 2022, especially if new personnel are hired consistent with the Company’s financial regulatory and filings obligations as a publicly traded entity.
Interest Expense. Interest expense was $36,341 for the three months ended June 30, 2020 and was $43,098 for the three months ended June 30, 2021. Interest was related to notes payable, which are discussed in detail in the Footnotes to the financial statements, incorporated by reference herein. Management expects that in 2021 and thereafter, interest expense will increase, as it may take on debt from insiders or independent third parties to fund operations either while awaiting receipt of the proceeds of equity capital financings or as a stand-alone strategy in addition to raising capital through equity capital financings.
Financial Resources and Liquidity. The Company had limited financial resources during the twelve months ended December 31, 2020 with cash and cash equivalents of just $202,965. For the period ending June 30, 2021, cash and cash equivalents increased to $1,911,304 as the Company raised capital in conjunction with its private placement and merger transaction. 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. During 2021, the Company believes that the ability to raise capital through equity transactions will increase liquidity and enable the execution of management’s operating strategy.
Comparison of the six months ended June 30, 2021 and June 30, 2020
Revenues. Revenues, which were generated from consulting agreements of $75,000 for the six months ended June 30, 2021 and $20,874 in product sales for the six months ended June 30, 2020. 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.
Overview. Operating expenses increased from $1,086,601 in the six months ended June 30, 2020 to $ 4,399,149
in the six months ended June 30, 2021. The increase is mainly due to higher professional services related to the merger transaction, as well as new requirements for D&O insurance.
General and Administrative Expenses. For the six months ended June 30, 2020 and 2021, 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. Management may separate out G&A expenses in 2021 and 2022, especially if new personnel are hired consistent with the Company’s financial regulatory and filings obligations as a publicly traded entity.
Interest Expense. Interest expense was $77,823 and $ 78,955 for the six months ended June 30, 2021 and 2020, respectively. Interest was related to notes payable, which are discussed in detail in the Footnotes to the financial statements, incorporated by reference herein. Management expects that in 2021 and thereafter, interest expense will increase, as it may take on debt from insiders or independent third parties to fund operations either while awaiting receipt of the proceeds of equity capital financings or as a stand-alone strategy in addition to raising capital through equity capital financings.
|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, and as a result of the material weaknesses described below, our principal executive officer and principal financial officer concluded that, as of June 30, 2021, our disclosure controls and procedures were not effective. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.
Our Annual Report on Form 10-K contains information regarding a material weakness in our internal control over financial reporting as of December 31, 2020. 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.
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.
PART II — OTHER INFORMATION
|Item 1.||Legal Proceedings|
|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 Transition Report on Form 10-KT for the ten-months ended December 31, 2020, which could materially affect our business, financial condition or future results. The risks described in our Transition 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|
During the three months ended June 30, 2021, we issued 2,665,664 shares of our common stock in connection with a private offering of our common stock. These shares were issued in reliance upon an exemption from registration provided by Section 506(b) of Regulation D.
We have previously disclosed all other sales of securities without registration under the Securities Act of 1933, as amended.
|Item 3.||Defaults Upon Senior Securities|
|Item 4.||Mine Safety Disclosures|
|Item 5.||Other Information|
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).|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|COEPTIS THERAPEUTICS, INC.|
|Date: August 16, 2021||By:||/s/ David Mehalick|
|Chief Executive Officer, Principal Executive Officer|
|Date: August 16, 2021||By:||/s/ Christine Sheehy|
|Chief Financial Officer, Principal Financial an Accounting Officer|