ITEM 1A. RISK FACTORS
As a smaller reporting
company, we are not required to provide a statement of risk factors. Nonetheless, we are voluntarily providing risk factors herein. You
should consider carefully the following risk factors, together with all the other information in this Annual Report on Form 10-K, including
our consolidated financial statements and notes thereto, and in our other public filings with the SEC. The risk factors discussed below
cover not only our current products, product candidates and relationships, but also the risks we expect to encounter when and if we add
new product candidates and approved products to our proprietary portfolio, which new products, if added, we expect to be at various stages
of pre-clinical and perhaps clinical development. The occurrence of any of the following risks could harm our business, financial
condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking
statements we have made in this report and those we may make from time to time. You should consider all of the risk factors described
when evaluating our business.
We operate
in a highly competitive and highly regulated business environment. Our business can be expected to be affected by government regulation,
economic, political and social conditions, business’ response to new and existing products and services, technological developments
and the ability to obtain and maintain patent and/or other intellectual property protection for our products and intellectual property.
Our actual results could differ materially from management’s expectations because of changes both within and outside of our control.
Reviewers of this Annual Report on Form 10-K are cautioned not to place undue reliance upon such forward-looking statements. Such forward-looking
statements may include projections with respect to market size and acceptance, revenues and earnings, marketing and sales strategies and
business operations, as well as efficacy of our products. The risk factors discussed below cover not only our current products, product
candidates and relationships, but also the risks we expect to encounter when and if we add new product candidates and approved products
to our proprietary portfolio, which new products, if added, we expect to be at various stages of pre-clinical and perhaps clinical development.
Throughout
this section, references to “Company,” “Coeptis,” “we,” “us,” “our” and similar
terms refer collectively to Coeptis Therapeutics Holdings, Inc., a Delaware corporation, and its operating subsidiaries, as the context
so requires.
Risks Related to the Development
and Regulatory Approval of Our Product Candidates
Clinical trials are expensive,
time consuming, difficult to design and implement, and involve uncertain outcomes. Results of previous pre-clinical studies and clinical
trials may not be predictive of future results, and the results of our current and planned clinical trials may not satisfy the requirements
of the FDA or other regulatory authorities.
Positive or
timely results from pre-clinical or early-stage trials do not ensure positive or timely results in late-stage clinical trials or product
approval by the FDA or comparable foreign regulatory authorities. We will be required to demonstrate with substantial evidence through
well-controlled clinical trials that our product candidates are safe and effective for use in a diverse population before we can seek
regulatory approvals for their commercialization. Our planned clinical trials may produce negative or inconclusive results, and we or
any of our current and future strategic partners may decide, or regulators may require us, to conduct additional clinical or pre-clinical
testing.
Success in
pre-clinical studies or early-stage clinical trials does not mean that future clinical trials or registration clinical trials will be
successful because product candidates in later-stage clinical trials may fail to demonstrate sufficient safety and efficacy to the satisfaction
of the FDA and foreign regulatory authorities, despite having progressed through pre-clinical studies and initial clinical trials. Product
candidates that have shown promising results in early clinical trials may still suffer significant setbacks in subsequent clinical trials
or registration clinical trials. For example, a number of companies in the biopharmaceutical industry, including those with greater resources
and experience than us, have suffered significant setbacks in advanced clinical trials, even after obtaining promising results in earlier
clinical trials. Similarly, pre-clinical interim results of a clinical trial are not necessarily predictive of final results.
If clinical trials for our
product candidates are prolonged, delayed or stopped, we may be unable to obtain regulatory approval and commercialize our product candidates
on a timely basis, or at all, which would require us to incur additional costs and delay our receipt of any product revenue.
We may experience
delays in our ongoing or future pre-clinical studies or clinical trials, and we do not know whether future pre-clinical studies or clinical
trials will begin on time, need to be redesigned, enroll an adequate number of patients or be completed on schedule, if at all. The commencement
or completion of these planned clinical trials could be substantially delayed or prevented by many factors, including, but not limited
to:
· inability to obtain sufficient funds required for a clinical trial;
· slower than expected rates of patient recruitment and enrollment;
· failure of patients to complete the clinical trial;
· lack of efficacy during clinical trials;
· termination of our clinical trials by one or more clinical trial sites;
· inability to monitor patients adequately during or after treatment;
Changes in
regulatory requirements, policies and guidelines may also occur and we may need to significantly amend clinical trial protocols to reflect
these changes with appropriate regulatory authorities. These changes may require us to renegotiate terms with CROs or resubmit clinical
trial protocols to IRBs for re-examination, which may impact the costs, timing or successful completion of a clinical trial. Our clinical
trials may be suspended or terminated at any time by the FDA, other regulatory authorities, the IRB overseeing the clinical trial at issue,
any of our clinical trial sites with respect to that site, or us. Any failure or significant delay in commencing or completing clinical
trials for our product candidates may adversely affect our ability to obtain regulatory approval and our commercial prospects and our
ability to generate product revenue will be diminished.
The design or our execution
of clinical trials may not support regulatory approval.
The design
or execution of a clinical trial can determine whether its results will support regulatory approval and flaws in the design or execution
of a clinical trial may not become apparent until the clinical trial is well advanced. In some instances, there can be significant variability
in safety or efficacy results between different trials of the same product candidate due to numerous factors, including changes in trial
protocols, differences in size and type of the patient populations, adherence to the dosing regimen and other trial protocols and the
rate of dropout among clinical trial participants. We do not know whether any clinical trials we may conduct will demonstrate consistent
or adequate efficacy and safety to obtain regulatory approval to market our product candidates.
Further, the
FDA and comparable foreign regulatory authorities have substantial discretion in the approval process and in determining when or whether
regulatory approval will be obtained for any of our product candidates. Our product candidates may not be approved even if they achieve
their primary endpoints in future clinical trials. The FDA or foreign regulatory authorities may disagree with our trial design and our
interpretation of data from pre-clinical studies and clinical trials. In addition, any of these regulatory authorities may change requirements
for the approval of a product candidate even after reviewing and providing comments or advice on a protocol for clinical trial that has
the potential to result in FDA or other agencies’ approval. In addition, such regulatory authorities may also approve a product
candidate for fewer or more limited indications than we request or may grant approval contingent on the performance of costly post-marketing
clinical trials. The FDA or foreign regulatory authorities may not approve the labeling claims that we believe would be necessary or desirable
for the successful commercialization of our product candidates which may have a material adverse effect on our business.
We may find it difficult
to enroll patients in our clinical trials given the limited number of patients who have the diseases for which our product candidates
are being studied which could delay or prevent the start of clinical trials for our product candidates.
Identifying
and qualifying patients to participate in clinical trials of our product candidate is essential to our success. The timing of our clinical
trials depends in part on the rate at which we can recruit patients to participate in clinical trials of our product candidates, and we
may experience delays in our clinical trials if we encounter difficulties in enrollment. If we experience delays in our clinical trials,
the timeline for obtaining regulatory approval of our product candidates will most likely be delayed.
Many factors
may affect our ability to identify, enroll and maintain qualified patients, including the following:
· design of the clinical trial;
· size and nature of the patient population;
· the availability and efficacy of competing therapies and clinical trials;
· pendency of other trials underway in the same patient population;
· willingness of physicians to participate in our planned clinical trials;
· severity of the disease under investigation;
· proximity of patients to clinical sites;
· patients who do not complete the trials for personal reasons; and
· issues with CROs and/or with other vendors that handle our clinical trials.
General Risks
There is a substantial doubt
about our ability to continue as a going concern.
The report of our independent
registered public accounting firm that accompanies our consolidated financial statements includes an explanatory paragraph indicating
there is a substantial doubt about our ability to continue as a going concern, citing our need for additional capital for the future planned
expansion of our activities and to service our ordinary course activities (which may include servicing of indebtedness). The inclusion
of a going concern explanatory paragraph in the report of our independent registered public accounting firm will make it more difficult
for us to secure additional financing or enter into strategic relationships on terms acceptable to us, if at all, and likely will materially
and adversely affect the terms of any financing that we might obtain. Our consolidated financial statements do not include any adjustments
that may result from the outcome of this uncertainty.
We have incurred significant losses in prior
periods, and losses in the future could cause the quoted price of our Common Stock to decline or have a material adverse effect on our
financial condition, our ability to pay its debts as they become due, and on its cash flows.
For the year ended December
31, 2024, we incurred a net loss of $10,877,412 and, as of that date, we had an accumulated deficit of $98,233,673. For the year ended
December 31, 2023, we incurred a net loss of $21,266,537 and, as of that date, had an accumulated deficit of $87,356,260. Any losses in
the future could cause the quoted price of our Common Stock to decline or have a material adverse effect on our financial condition, its
ability to pay its debts as they become due, and on its cash flows.
To date, we have generated
only minimal product revenue. We expect that our planned product development and strategic expansion pursuits will increase losses significantly
over the next five years. In order to achieve profitability, we will be required to generate significant revenue. We cannot be certain
that we will generate sufficient revenue to achieve profitability. We anticipate that we will continue to generate operating losses and
experience negative cash flow from operations at least through the end of 2024. We cannot be certain that we will ever achieve profitability
or that, if profitability is achieved, that it will be maintained. If our revenue grows at a slower rate than we anticipate or if our
product development, marketing and operating expenses exceed our expectations or cannot be adjusted accordingly, our business, results
of operation and financial condition will be materially adversely affected, and we may be unable to continue operations.
We will not
be able to generate meaningful product revenue unless and until one of our product candidates or co-development products successfully
completes clinical trials and receives regulatory approval. As some of our current and projected future product candidates or co-development
products are, and we expect will be, at an early proof-of-concept stage, we do not expect to receive revenue from any of these products
for several years, if at all. We intend to seek to obtain revenue from collaboration or licensing agreements with third parties. We expect
that we will need to rely on key third-party agreements, in order to be in a position to realize material revenues in the future, and
we may never enter into any such agreements or realize material, ongoing future revenue. Even if we eventually generate revenues, we
may never be profitable, and, if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly
or annual basis.
If we are unable to manage
future expansion effectively, our business may be adversely impacted.
In the future,
we may experience rapid growth in our business, which could place a significant strain on our operations, in general, and our internal
controls and other managerial, operating and financial resources, in particular. If we are unable to manage future expansion effectively,
our business would be harmed. There is, of course, no assurance that we will enjoy rapid development in our business.
The Company’s ability
to be successful will depend upon the efforts of the Company’s Board and our key personnel and the loss of such persons could negatively
impact the operations and profitability of the Company’s business.
The Company’s
ability to be successful is dependent upon the efforts of the Company’s board members and key personnel, in particular our President
and Chief Executive Officer David Mehalick. We cannot assure you that the Company’s board members and key personnel will be effective
or successful or remain with the Company. In addition to the other challenges they will face, such individuals may be unfamiliar with
the requirements of operating a public company, which could cause the Company’s management to expend time and resources becoming
familiar with such requirements. We have employment agreements in place with Mr. Mehalick, Colleen Delaney and Daniel Yerace, but no other
persons. The loss of service of Mr. Mehalick, in particular, for any reason, could seriously impair our ability to effectuate our business
plan, which could have a materially adverse effect on our business and future results of operations. We also have not purchased any key-man
life insurance.
If we are unable to recruit
and retain key personnel, our business may be harmed.
If we are
unable to attract and retain key personnel, our business may be harmed. Our failure to enable the effective transfer of knowledge and
facilitate smooth transitions with regard to our key employees could adversely affect our long-term strategic planning and execution.
Our business plan is not
based on independent market studies.
We have not
commissioned any independent market studies concerning our business plans. Rather, our plans for implementing our business strategy and
achieving profitability are based on the experience, judgment and assumptions of our management. If these assumptions prove to be incorrect,
we may not be successful in our business operations.
Our Board of Directors may
change our policies without shareholder approval.
Our policies,
including any policies with respect to investments, leverage, financing, growth, debt and capitalization, will be determined by our Board
of Directors or officers to whom our Board of Directors delegate such authority. Our Board of Directors will also establish the amount
of any dividends or other distributions that we may pay to our shareholders. Our Board of Directors or officers to which such decisions
are delegated will have the ability to amend or revise these and our other policies at any time without shareholder vote. Accordingly,
our shareholders will not be entitled to approve changes in our policies, which policy changes may have a material adverse effect on our
financial condition and results of operations.
We need to obtain financing
in order to continue our operations and pursue strategic transactions.
On a prospective
basis, we will require both short-term financing for operations and long-term capital to fund our expected growth. We currently have no
existing bank lines of credit and have not established any definitive sources for additional financing. We believe that cash on hand will
be sufficient to meet our short-term financial requirements through the 2nd quarter of 2025 assuming that we elect not to pursue
and consummate strategic transactions prior to that time. However, we will require additional funds if we want to fully implement our
business plan and growth strategy, including strategic transactions, which funds could come in the form of equity, debt (including secured
debt) or a combination of the two. Additional financing may not be available to us, or if available, then it may not be available upon
terms and conditions acceptable to us. If adequate funds are not available, then we may be required to delay, reduce or eliminate product
development or clinical programs. Our inability to take advantage of opportunities in the industry because of capital constraints may
have a material adverse effect on our business and our prospects. If we fail to obtain the capital necessary to fund our operations, we
will be unable to advance our development programs and complete our clinical trials.
In addition,
our research and development expenses could exceed our current expectations. This could occur for many reasons, including:
While we expect
to seek additional funding through public or private financings, we may not be able to obtain financing on acceptable terms, or at all.
In addition, the terms of our financings may be dilutive to, or otherwise adversely affect, holders of our common stock and other capital
securities. We may also seek additional funds through arrangements with collaborators or other third parties. These arrangements would
generally require us to relinquish rights to some of our technologies, product candidates or products, and we may not be able to enter
into such agreements, on acceptable terms, if at all. If we are unable to obtain additional funding on a timely basis, we may be required
to curtail or terminate some or all of our development programs, including some or all of our product candidates.
We currently do not have
sufficient cash to fully implement our business plan.
We have experienced
a lack of adequate capital resources causing us to be unable to fully implement our full business plan. We believe that we need to raise
or otherwise obtain additional financing beyond our current cash position in order to satisfy our existing obligations and fully implement
our business plan. We do not expect to have positive cash flow for the foreseeable future. If we are not successful in obtaining additional
financing we will not be able to fully implement our business plan and we may not be able to continue our operations.
We have a limited operating
history and a history of operating losses, and expect to incur significant additional operating losses.
We began
our business in 2017 and have a limited operating history. Although we have enlisted the assistance of pharmaceutical experts, our lack
of experience may cause us to encounter unforeseen problems that could have a material adverse effect on our business and financial condition.
Further, there is limited historical financial information upon which to base an evaluation of our performance.
The drug development and
approval process is uncertain, time-consuming and expensive.
The process
of obtaining and maintaining regulatory approvals for new therapeutic products is lengthy, expensive and uncertain. It also can vary substantially
based on the type, complexity, and novelty of the product. We, or our co-development partners, must provide the FDA and foreign regulatory
authorities with preclinical and clinical data demonstrating that our products are safe and effective before they can be approved for
commercial sale. Clinical development, including preclinical testing, is a long, expensive and uncertain process. It may take us several years
to complete our testing, and failure can occur at any stage of testing. Any preclinical or clinical test may fail to produce results satisfactory
to the FDA. Preclinical and clinical data can be interpreted in different ways, which could delay, limit or prevent regulatory approval.
Negative or inconclusive results from a preclinical study or clinical trial, adverse medical events during a clinical trial or safety
issues resulting from products of the same class of drug could cause a preclinical study or clinical trial to be repeated or a program
to be terminated, even if other studies or trials relating to the program are successful.
We will be required to sustain
and further build our intellectual property rights.
We do not
currently have any intellectual property rights in our name in respect of our current assets, and instead have rights in respect of our
current assets through agreements with third parties. We intend to fully protect any product, formulation and process that we develop
with appropriate intellectual property registrations. If we fail to sustain and further build our direct and indirect intellectual property
rights, competitors will be able to take advantage of our research and development efforts to develop competing products. If we are not
able to protect our proprietary technology, trade secrets, and know-how, our competitors may use our inventions to develop competing products.
Our future patents and patent applications, even if granted, may not protect us against our competitors. Patent positions generally, including
those of other pharmaceutical and biotechnology companies, are or will be generally uncertain and involve complex legal, scientific and
factual questions. The standards which the United States Patent and Trademark Office uses to grant patents, and the standards which
courts use to interpret patents, are not always applied predictably or uniformly and can change, particularly as new technologies develop.
Consequently, the level of protection, if any, that will be provided by our direct or indirect patent rights from time to time if we attempt
to enforce them, and they are challenged, is uncertain. In addition, the type and extent of patent claims that will be issued to us in
the future is uncertain. Any patents that are issued may not contain claims that permit us to stop competitors from using similar technology.
In addition,
we may also rely on unpatented technology, trade secrets, and confidential information. We may not be able to effectively protect our
rights to this technology or information. Other parties may independently develop substantially equivalent information and techniques
or otherwise gain access to or disclose our technology. We will generally require each of our employees, consultants, collaborators, and
certain contractors to execute a confidentiality agreement at the commencement of an employment, consulting, collaborative, or contractual
relationship with us. However, these agreements may not provide effective protection of our technology or information or, in the event
of unauthorized use or disclosure, they may not provide adequate remedies.
Patent positions
are often uncertain and involve complex legal and factual questions. In addition, the laws of some foreign countries do not protect proprietary
rights to the same extent as the laws of the United States. Whether filed in the United States or abroad, our patent applications
may be challenged or may fail to result in issued patents. In addition, any future patents we obtain may not be sufficiently broad to
prevent others from practicing our technologies or from developing or commercializing competing products. Furthermore, others may independently
develop or commercialize similar or alternative technologies or drugs, or design around our patents. Our patents may be challenged, invalidated
or fail to provide us with any competitive advantages. We may not have the funds available to protect our patents or other technology;
such protection is costly and can result in further litigation expenses.
If we do not
obtain or we are unable to maintain adequate patent or trade secret protection for our products in the United States, competitors
could duplicate them without repeating the extensive testing that we will be required to undertake to obtain approval of the products
by the FDA. Regardless of any patent protection, under the current statutory framework the FDA is prohibited by law from approving
any generic version of any of our products for a period of years that would be determined based on the nature of the product (i.e.
an orphan drugs would get 7 years, a new chemical entity would get 5 years and a new clinical investigation would get 3 years).
Upon the expiration of that period, or if that time period is altered, the FDA could approve a generic version of our product unless we
have patent protection sufficient for us to block that generic version. Without sufficient patent protection, the applicant for a generic
version of our product would be required only to conduct a relatively inexpensive study to show that its product is bioequivalent to our
product and may not have to repeat the studies that we will need to conduct to demonstrate that the product is safe and effective. In
the absence of adequate patent protection in other countries, competitors may similarly be able to obtain regulatory approval in those
countries of products that duplicate our products.
We will be required to comply
with our obligations in our intellectual property licenses and other agreements with third parties.
If we fail
to comply with our obligations in our intellectual property licenses and other agreements with third parties, we could lose license rights
that are important to our business. We are not currently party to any intellectual property license agreement with any third parties,
but we anticipate that in-licensing and co-development will be strategies that we utilize as we continue to pursue our growth strategy.
We expect to enter into licenses and co-development and other agreements in the future, and we expect these agreements to impose, various
diligences, milestone payment, royalty, insurance and other obligations on us. If we fail to comply with these obligations, the licensor
may have the right to terminate the license, in which event we might not be able to market any product that is covered by the licensed
patents.
We may need
to resort to litigation to enforce or defend our intellectual property rights, including any patents issued to us. If a competitor or
collaborator files a patent application claiming technology also invented by us, in order to protect our rights, we may have to participate
in an expensive and time-consuming interference proceeding before the United States Patent and Trademark Office. We cannot guarantee
that our product candidates will be free of claims by third parties alleging that we have infringed their intellectual property rights.
Third parties may assert that we are employing their proprietary technologies without authorization and they may resort to litigation
to attempt to enforce their rights. Third parties may have or obtain patents in the future and claim that the use of our technology or
any of our product candidates infringes their patents. We may not be able to develop or commercialize combination product candidates because
of patent protection others have. Our business will be harmed if we cannot obtain a necessary or desirable license, can obtain such a
license only on terms we consider to be unattractive or unacceptable, or if we are unable to redesign our product candidates or processes
to avoid actual or potential patent or other intellectual property infringement. Obtaining, protecting and defending patent and other
intellectual property rights can be expensive and may require us to incur substantial costs, including the diversion of management and
technical personnel. An unfavorable ruling in patent or intellectual property litigation could subject us to significant liabilities to
third parties, require us to cease developing, manufacturing or selling the affected products or using the affected processes, require
us to license the disputed rights from third parties, or result in awards of substantial damages against us.
There can
be no assurance that we would prevail in any intellectual property infringement action, will be able to obtain a license to any third-party
intellectual property on commercially reasonable terms, successfully develop non-infringing alternatives on a timely basis, or license
non-infringing alternatives, if any exist, on commercially reasonable terms. Any significant intellectual property impediment to our ability
to develop and commercialize our products could seriously harm our business and prospects.
Patent litigation or other
litigation in connection with our intellectual property rights may lead to publicity that may harm our reputation and the value of our
common stock may decline.
During the
course of any patent litigation, there may be public announcements of the results of hearings, motions, and other interim proceedings
or developments in the litigation. If securities analysts or investors regard these announcements as negative, the value of our common
stock may decline. General proclamations or statements by key public figures may also have a negative impact on the perceived value of
our intellectual property.
Protecting and defending
against intellectual property claims may have a material adverse effect on our business.
From time
to time, we may receive notice that others have infringed on our proprietary rights or that we have infringed on the intellectual property
rights of others. There can be no assurance that infringement or invalidity claims will not materially adversely affect our business,
financial condition or results of operations. Regardless of the validity or the success of the assertion of claims, we could incur significant
costs and diversion of resources in protecting or defending against claims, which could have a material adverse effect on our business,
financial condition or results of operations. We may not have the funds or resources available to protect our intellectual property.
Our competitors and potential
competitors may develop products and technologies that make ours less attractive or obsolete.
Many companies,
universities, and research organizations developing competing product candidates have greater resources and significantly greater experience
in financial, research and development, manufacturing, marketing, sales, distribution, and technical regulatory matters than we have.
In addition, many competitors have greater name recognition and more extensive collaborative relationships. Our competitors could commence
and complete clinical testing of their product candidates, obtain regulatory approvals, and begin commercial-scale manufacturing of their
products faster than we or our co-development partners are able to for our products. They could develop products that would render our
product candidates and co-development candidates, and those of our collaborators, obsolete and noncompetitive. If we are unable to compete
effectively against these companies, then we may not be able to commercialize our product candidates or achieve a competitive position
in the market. This would adversely affect our ability to generate revenues.
Competition in the biotechnology
and pharmaceutical industries may result in competing products, superior marketing of other products and lower revenues or profits for
us.
There are
many companies that are seeking to develop products and therapies for the treatment of the same diseases that we are currently targeting.
Many of our competitors have substantially greater financial, technical, human and other resources than we do and may be better equipped
to develop, manufacture and market technologically superior products. In addition, many of these competitors have significantly greater
experience than we do in undertaking preclinical testing and human clinical studies of new pharmaceutical products and in obtaining regulatory
approvals of human therapeutic products. Accordingly, our competitors may succeed in obtaining FDA approval for superior products.
Other risks
and uncertainties include:
· market acceptance of our products and services.
· our ability to identify new patients for our products and services.
Positive or
timely results from preclinical studies and early clinical trials do not ensure positive or timely results in late-stage clinical trials
or product approval by the FDA or any other regulatory authority. Product candidates that show positive preclinical or early clinical
results often fail in later stage clinical trials. Data obtained from preclinical and clinical activities is susceptible to varying interpretations,
which could delay, limit, or prevent regulatory approvals.
We have limited
experience in conducting the clinical trials required to obtain regulatory approval. We may not be able to conduct clinical trials at
preferred sites, enlist clinical investigators, enroll sufficient numbers of participants, or begin or successfully complete clinical
trials in a timely fashion, if at all. Any failure to perform may delay or terminate the trials. Once Phase 1 human trials are initiated,
the pre-defined clinical outcome(s) may not be achieved. As a result, additional clinical trials may be required if clinical trial results
are negative or inconclusive, which will require us to incur additional costs and significant delays. If we do not receive the necessary
regulatory approvals, we will not be able to generate product revenues and may not become profitable.
The Company’s business
and operations could be negatively affected if it becomes subject to any securities litigation or shareholder activism, which could cause
the Company to incur significant expense, hinder execution of business and growth strategy and impact its stock price.
In the past,
following periods of volatility in the market price of a company’s securities, securities class action litigation has often been
brought against that company. Shareholder activism, which could take many forms or arise in a variety of situations, has been increasing
recently. Volatility in the stock price of the common stock or other reasons may in the future cause it to become the target of securities
litigation or shareholder activism. Securities litigation and shareholder activism, including potential proxy contests, could result in
substantial costs and divert management’s and board of directors’ attention and resources from the Company’s business.
Additionally, such securities litigation and shareholder activism could give rise to perceived uncertainties as to the Company’s
future, adversely affect its relationships with service providers and make it more difficult to attract and retain qualified personnel.
Also, the Company may be required to incur significant legal fees and other expenses related to any securities litigation and activist
shareholder matters. Further, its stock price could be subject to significant fluctuation or otherwise be adversely affected by the events,
risks and uncertainties of any securities litigation and shareholder activism.
Risk Related to Regulation
The regulatory approval
process is costly and lengthy, and we may not be able to successfully obtain all required regulatory approvals.
The preclinical
development, clinical trials, manufacturing, marketing and labeling of pharmaceuticals are all subject to extensive regulation by numerous
governmental authorities and agencies in the United States and other countries. We must obtain regulatory approval for each of our
product candidates before marketing or selling any of them. It is not possible to predict how long the approval processes of the FDA or
any other applicable federal or foreign regulatory authority or agency for any of our products will take or whether any such approvals
ultimately will be granted. The FDA and foreign regulatory agencies have substantial discretion in the drug approval process, and positive
results in preclinical testing or early phases of clinical studies offer no assurance of success in later phases of the approval process.
Generally, preclinical and clinical testing of products can take many years and require the expenditure of substantial resources,
and the data obtained from these tests and trials can be susceptible to varying interpretations that could delay, limit or prevent regulatory
approval. If we encounter significant delays in the regulatory process that result in excessive costs, this may prevent us from continuing
to develop our product candidates. Any delay in obtaining, or failure to obtain, approvals could adversely affect the marketing of our
products and our ability to generate product revenue. The risks associated with the approval process include:
· limitation on the indicated uses for which a product may be marketed;
· unforeseen safety issues or side effects; and
Even if we receive regulatory
approvals for marketing our product candidates, if we fail to comply with continuing regulatory requirements, we could lose our regulatory
approvals, and our business would be adversely affected.
The FDA continues
to review products even after they receive initial approval. If we receive approval to commercialize any product candidates, the manufacturing,
marketing and sale of these drugs will be subject to continuing regulation, including compliance with quality systems regulations, good
manufacturing practices, adverse event requirements, and prohibitions on promoting a product for unapproved uses. Enforcement actions
resulting from our failure to comply with government and regulatory requirements could result in fines, suspension of approvals, withdrawal
of approvals, product recalls, product seizures, mandatory operating restrictions, criminal prosecution, civil penalties and other actions
that could impair the manufacturing, marketing and sale of our potential products and our ability to conduct our business.
Even if we are able to obtain
regulatory approvals for any of our product candidates, if they exhibit harmful side effects after approval, our regulatory approvals
could be revoked or otherwise negatively impacted, and we could be subject to costly and damaging product liability claims.
Even if we
receive regulatory approval for our product candidates, we will have tested them in only a small number of patients during our clinical
trials. If our applications for marketing are approved and more patients begin to use our product, new risks and side effects associated
with our products may be discovered. As a result, regulatory authorities may revoke their approvals; we may be required to conduct additional
clinical trials, make changes in labeling of our product, reformulate our product or make changes and obtain new approvals for our and
our suppliers’ manufacturing facilities. We might have to withdraw or recall our products from the marketplace. We may also experience
a significant drop in the potential sales of our product if and when regulatory approvals for such product are obtained, experience harm
to our reputation in the marketplace or become subject to lawsuits, including class actions. Any of these results could decrease or prevent
any sales of our approved product or substantially increase the costs and expenses of commercializing and marketing our product.
Healthcare reform measures
could adversely affect our business.
The efforts
of governmental and third-party payers to contain or reduce the costs of healthcare may adversely affect the business and financial condition
of pharmaceutical companies. In the United States and in foreign jurisdictions there have been, and we expect that there will continue
to be, a number of legislative and regulatory proposals aimed at changing the healthcare system. For example, in some countries other
than the United States, pricing of prescription drugs is subject to government control, and we expect proposals to implement similar
controls in the United States to continue. The pendency or approval of such proposals could result in a decrease in our common stock
value or limit our ability to raise capital or to enter into collaborations or license rights to our products.
Federal legislation may
increase the pressure to reduce prices of pharmaceutical products paid for by Medicare, which could adversely affect our revenues, if
any.
The Medicare
Prescription Drug Improvement and Modernization Act of 2003, or MMA, expanded Medicare coverage for drug purchases by the elderly
and disabled beginning in 2006. The legislation uses formularies, preferred drug lists and similar mechanisms that may limit the number
of drugs that will be covered in any therapeutic class or reduce the reimbursement for some of the drugs in a class. More recently, the
Patient Protection and Affordable Care Act of 2010 also contained certain provisions with the potential to affect pricing of
pharmaceutical products.
As a result
of the expansion of legislation, including recent healthcare insurance legislation, and the expansion of federal coverage of drug products,
we expect that there will be additional pressure to contain and reduce costs. These cost reduction initiatives could decrease the coverage
and price that we receive for our products in the future and could seriously harm our business. While the MMA applies only to drug benefits
for Medicare beneficiaries, private payers often follow Medicare coverage policy and payment limitations in setting their own reimbursement
systems, and any limits on or reductions in reimbursement that occur in the Medicare program may result in similar limits on or reductions
in payments from private payers.
Federal laws or regulations
on drug importation could make lower cost versions of our future products available, which could adversely affect our revenues, if any.
The prices
of some drugs are lower in other countries than in the United States because of government regulation and market conditions. Various
proposals have been advanced to permit the importation of drugs from other countries to provide lower cost alternatives to the products
available in the United States. In addition, the MMA requires the Secretary of Health and Human Services to promulgate regulations for
drug reimportation from Canada into the United States under some circumstances, including when the drugs are sold at a lower price than
in the United States. A prime example of the effort to provide safe, lower cost drugs to consumers is Safe Importation Action Plan
that was released by the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA), which plan is describes
steps the HHS and FDA will take to allow the safe importation of certain drugs originally intended for non-US markets. If the laws or
regulations are changed to permit or more easily permit the importation of drugs into the United States in circumstances that are
currently not permitted, such a change could have an adverse effect on our business by making available lower priced alternatives to our
future products.
Failure to obtain regulatory
and pricing approvals in foreign jurisdictions could delay or prevent commercialization of our products abroad.
If we succeed
in developing any products, we intend to market them in the European Union and other foreign jurisdictions. In order to do so, we must
obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among
countries and can involve additional testing. The time required to obtain approval abroad may differ from that required to obtain FDA
approval. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval and additional risks
associated with requirements particular to those foreign jurisdictions where we will seek regulatory approval of our products. We may
not obtain foreign regulatory approvals on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities
in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign
countries or by the FDA. We and our collaborators may not be able to file for regulatory approvals and may not receive necessary approvals
to commercialize our products in any market outside the United States. The failure to obtain these approvals could materially adversely
affect our business, financial condition and results of operations.
Risks Related to Our Organization
and Structure
Our holding company structure
makes us dependent on our subsidiaries for our cash flow and could serve to subordinate the rights of our shareholders to the rights of
creditors of our subsidiaries, in the event of an insolvency or liquidation of any such subsidiary.
Our Company
acts as a holding company and, accordingly, substantially all of our operations are conducted through our subsidiaries. Such subsidiaries
will be separate and distinct legal entities. As a result, substantially all of our cash flow will depend upon the earnings of our subsidiaries.
In addition, we will depend on the distribution of earnings, loans or other payments by our subsidiaries. No subsidiary will have any
obligation to provide our company with funds for our payment obligations. If there is an insolvency, liquidation or other reorganization
of any of our subsidiaries, our shareholders will have no right to proceed against their assets. Creditors of those subsidiaries will
be entitled to payment in full from the sale or other disposal of the assets of those subsidiaries before our company, as a shareholder,
would be entitled to receive any distribution from that sale or disposal.
Delaware law and the Amended
and Restated Certificate of Incorporation and Bylaws contain certain provisions, including anti-takeover provisions that limit the ability
of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
The Company’s
Amended and Restated Certificate of Incorporation and Bylaws, and the DGCL, contain provisions that could have the effect of rendering
more difficult, delaying, or preventing an acquisition deemed undesirable by the Company Board and therefore depress the trading price
of the common stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors
who are not nominated by the current members of the Company Board or taking other corporate actions, including effecting changes in management.
Among other things, the Amended and Restated Certificate of Incorporation and Bylaws include provisions regarding:
These provisions,
alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Company Board or management.
In addition,
as a Delaware corporation, the Company will generally be subject to provisions of Delaware law, including Section 203 of the DGCL.
Any provision
of the Amended and Restated Certificate of Incorporation, Bylaws or Delaware law that has the effect of delaying or preventing a change
in control could limit the opportunity for stockholders to receive a premium for their shares of the Company’s capital stock and
could also affect the price that some investors are willing to pay for the common stock.
The Amended and Restated
Certificate of Incorporation designates a state or federal court located within the State of Delaware as the exclusive forum for substantially
all disputes between the Company and its stockholders, which could limit the Company’s stockholders’ ability to choose the
judicial forum for disputes with the Company or its directors, officers, or employees.
The Amended
and Restated Certificate of Incorporation will provide that, unless the Company consents in writing to the selection of an alternative
forum, the Court of Chancery of the State of Delaware, or if such court does not have subject matter jurisdiction, any other court located
in the State of Delaware with subject matter jurisdiction, will be the sole and exclusive forum for (i) any derivative action or
proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current
or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any
action asserting a claim against the Company or its officers or directors arising pursuant to any provision of the DGCL or the Amended
and Restated Certificate of Incorporation or Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State
of Delaware, or (iv) any action asserting a claim against the Company or any director or officer of the Company governed by the internal
affairs doctrine of the law of the State of Delaware; provided, that, if and only if the Court of Chancery of the State of Delaware dismisses
any such action for lack of subject matter jurisdiction, such action may be brought in another state court sitting in the State of Delaware.
Additionally, the Amended and Restated Certificate of Incorporation will provide that, unless the Company consents to the selection of
an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law,
be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act; provided,
however, that such provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, or any
other claim for which the federal courts have exclusive jurisdiction. However, there is uncertainty as to whether a court would enforce
this provision and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section
22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability
created by the Securities Act or the rules and regulations thereunder.
Any person
or entity purchasing or otherwise acquiring any interest in any of the securities of the Company will be deemed to have notice of and
consented to these provisions. These exclusive-forum provisions may limit or make more costly a stockholder’s ability to bring a
claim in a judicial forum of its choosing for disputes with the Company or its directors, officers, or other employees, which may discourage
lawsuits against the Company and its directors, officers, and other employees. If a court were to find these exclusive-forum provisions
to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with resolving the dispute in other
jurisdictions, which could harm its results of operations.
Risks Related to Our Capital
Requirements and Capital Structure
Nasdaq may delist the Company’s
securities from trading on its exchange, which could limit investors’ ability to make transactions in the Company’s securities
and subject the Company to additional trading restrictions.
The Company’s
securities are currently listed on The Nasdaq Capital Market (“Nasdaq”) effective as of the opening of business on June 13,
2023, and it is anticipated that the Company’s securities will continue to be listed on The Nasdaq Capital Market. However, there
can be no assurance that the Company’s securities will maintain such listing at all times. To maintain the listing of the Company’s
securities on Nasdaq, the Company must maintain certain financial, distribution, liquidity and stock price levels to satisfy Nasdaq’s
continued listing requirements. The Company must, among other things, maintain a minimum bid price of $1.00 per share, a minimum market
value of listed securities of $35 million and a minimum of 300 public shareholders. The foregoing is a brief description of The Nasdaq
Capital Market continued listing requirements applicable to the Company’s securities, and more detailed information about such requirements
is set forth in Nasdaq Rules 5550 and 5560. If the Company is unable to maintain a minimum bid price for its shares of $1.00 per share,
or to satisfy any other continued listing requirement, Nasdaq may delist the Company’s securities from trading on its exchange.
Such a delisting would likely have a negative effect on the price of the Company’s securities and may impair your ability to sell
or purchase the Company’s securities when you wish to do so.
On January 29, 2024, we received
notice from the Listing Qualifications Staff of Nasdaq indicating that, based upon the closing bid price of our common stock for the prior
30 consecutive business days, we were not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued
listing on Nasdaq as set forth In Nasdaq Listing Rule 5550(a)(2). At that time, the Company was provided a compliance period of 180 calendar
days, or until July 29, 2024, to regain compliance with the Minimum Bid Price Requirement, pursuant to Nasdaq Listing Rule 5810(c)(3)(A).
As previously disclosed, on July 30, 2024, Coeptis received a letter from the Listing Qualifications Staff of Nasdaq indicating that the
Company did not regain compliance with the Minimum Bid Price Requirement by July 29, 2024, and it was determined that the Company was
not eligible for another 180 calendar-day extension because it did not meet the minimum stockholders’ equity initial listing requirements
of $5,000,000 for Nasdaq, as set forth under Nasdaq Listing Rule 5505(b). The Company appealed the decision, as previously disclosed.
On September 17, 2024, the Company received a letter from Nasdaq advising the Company that the Company was granted an extension through
January 15, 2025, to regain listing compliance. On January 21, 2025, the Company was notified by Nasdaq that the Company has regained
compliance with the minimum bid price of $1.00, and that Nasdaq has determined to continue the listing of the Company’s securities.
If Nasdaq
delists the Company’s securities from trading on its exchange and the Company is not able to list its securities on another Nasdaq
trading tier or on another national securities exchange, the Company’s securities may be quoted on an over-the-counter market. However,
if this were to occur, the Company could face significant material adverse consequences, including:
· a limited availability of market quotations for its securities;
· reduced liquidity for its securities;
· a limited amount of news and analyst coverage; and
We have previously identified
weaknesses in our internal control over financial reporting and we may identify additional weaknesses in the future or otherwise fail
to maintain effective internal control over financial reporting, which may result in material misstatements of our Consolidated Financial
Statements or cause us to fail to meet our periodic reporting obligations or cause our access to the global markets to be impaired.
In connection
with the preparation of our 2022 financial statements, Management self-identified material weaknesses in our internal control over financial
reporting. In the past we have not designed and maintained an effective control environment or sufficient accounting and reporting protocols
or effectively selected and developed control activities that mitigate risks. The material weaknesses were self-diagnosed, and were not
issued by our independent auditors, Turner, Stone & Company, LLP. These self-diagnosed material weaknesses resulted in deficiencies
surrounding the controls related to the preparation, review, and analysis of accounting information and financial statements. Those controls
were not adequately designed or appropriately implemented to identify material misstatements in financial reporting on a timely basis.
We implemented a plan to remediate
these self-diagnosed material weaknesses. With the oversight of senior management and our audit committee, we hired additional accounting
personnel with technical accounting and financial reporting experience and have implemented improved process level and management review
controls with respect to the completeness, accuracy, and validity of complex accounting measurements on a timely basis. We also have supplemented
internal accounting resources with external advisors to assist with performing technical accounting activities.
Management
took deliberate actions and implemented a plan to remediate these self-diagnosed weaknesses. Our efforts may not remediate these self-diagnosed
material weaknesses in our internal control over financial reporting and may not prevent additional material weaknesses from being identified
in the future. Our failure to implement and maintain effective internal control over financial reporting could result in errors in
our Consolidated Financial Statements that could result in a restatement of our Consolidated Financial Statements, and could cause us
to fail to meet our reporting obligations, any of which could diminish investor confidence in us and cause a decline in our equity value.
If securities or industry
analysts do not publish research or reports about our business or publish negative reports about our business or our industry, the trading
price and volume of our securities could decline.
The trading
market for our securities will depend in part on the research and reports that securities or industry analysts publish about us or our
business, our market and our competitors. We do not have any control over these analysts. If one or more of the analysts who cover us
downgrade our shares or change their opinion of our shares, the trading price for our securities would likely decline. If one or more
of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial
markets, which could cause the trading price or volume of our securities to decline.
We are an “emerging
growth company” and the reduced disclosure requirements applicable to emerging growth companies may make our securities less attractive
to investors.
We are an
“emerging growth company,” as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted
and plan to rely on exemptions from certain disclosure requirements that are applicable to public companies that are not emerging growth
companies. These provisions include, but are not limited to: an exemption from compliance with the auditor attestation requirement in
the assessment of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act; reduced disclosure
obligations regarding executive compensation arrangements in our periodic reports, registration statements and proxy statements; and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. In addition, the JOBS Act permits emerging growth companies to take advantage of an extended transition
period to comply with new or revised accounting standards applicable to public companies. We intend to take advantage of the exemptions
discussed above. As a result, the information we provide will be different than the information that is available with respect to other
public companies that are not emerging growth companies or that are not taking advantage of such exemptions.
We will remain
an emerging growth company until the earliest of (i) December 31, 2025, (ii) the first fiscal year after our annual
gross revenue exceed $1.07 billion, (iii) the date on which we have, during the immediately preceding three-year period, issued
more than $1.00 billion in non-convertible debt securities, or (iv) the end of any fiscal year in which the market value of