8-K: Coeptis Therapeutics Secures $1.1 Million in Convertible Note Financing and $10 Million in Series A Preferred Stock

Coeptis Therapeutics Holdings, Inc. has entered into a convertible promissory note agreement for $1.1 million and completed a $10 million Series A preferred stock offering.

Summary

• Coeptis Therapeutics Holdings, Inc. secured a $1.1 million convertible promissory note from YA II PN, LTD on January 17, 2025.
• The note carries an 8% annual interest rate, which increases to 18% upon default, and matures on December 31, 2025.
• Yorkville, the note holder, can convert the note into common stock at a price equal to the lower of $20.00 or 95% of the lowest daily VWAP during the 5 trading days prior to conversion, with a floor price of $1.00 per share.
• The company is obligated to make monthly payments of $250,000 plus a 5% premium if certain amortization events occur.
• Coeptis also completed a Series A preferred stock offering on January 23, 2025, raising approximately $10 million.
• The Series A investors received a 13.91% non-voting equity interest in two of Coeptis' subsidiaries, SNAP Biosciences Inc. and GEAR Therapeutics Inc.

Sentiment

Score: 4

Explanation: The document indicates a mix of positive and negative factors. While the company has successfully raised capital, the terms of the convertible note, including the high default interest rate and potential dilution, raise concerns. The sentiment is therefore cautiously negative.

Positives

• The company successfully raised $1.1 million through a convertible note, providing immediate capital.
• An additional $10 million was raised through the Series A preferred stock offering, further strengthening the company's financial position.
• The convertible note has a flexible conversion price, potentially benefiting the company if its stock price increases.
• The company has the option to redeem the note early under certain conditions, providing financial flexibility.

Negatives

• The convertible note carries a high interest rate of 18% upon default, which could be costly if the company fails to meet its obligations.
• The note includes a 10% original issue discount, reducing the net proceeds received by the company.
• The conversion of the note could lead to dilution of existing shareholders' equity.
• The company is obligated to make monthly payments if certain amortization events occur, which could strain cash flow.

Risks

• The company faces the risk of default on the convertible note, which would trigger a higher interest rate and potential acceleration of the debt.
• The conversion of the note could significantly dilute existing shareholders' equity.
• The company's stock price could fall below the floor price of $1.00, triggering an amortization event.
• The company's ability to meet its financial obligations is dependent on its future performance and market conditions.

Future Outlook

The company anticipates using the proceeds from the convertible note and Series A preferred stock offering for general corporate purposes and to advance its business objectives. The company's future financial and operating performance is subject to various risks and uncertainties.

Management Comments

• The company has not provided any direct quotes from management in this document.

Industry Context

This financing activity is common in the biotechnology and pharmaceutical industries, where companies often rely on debt and equity financing to fund research and development. The convertible note provides a flexible financing option, while the preferred stock offering brings in additional capital from investors.

Comparison to Industry Standards

• Convertible notes are a common financing tool for early-stage biotech companies, offering flexibility to both the company and investors.
• The 8% interest rate on the note is within the typical range for such financings, but the 18% default rate is high and reflects the risk associated with the company.
• The conversion terms, with a variable price and a floor, are designed to protect the investor while allowing the company to benefit from potential stock price appreciation.
• The $10 million Series A raise is a significant amount for a company at this stage, indicating investor confidence in the company's potential.
• Comparable companies in the biotech space often use similar financing strategies, including convertible debt and preferred stock offerings, to fund their operations and research.

Related Party Transactions

• Board member Christopher Calise, through CJC Investment Trust, invested in the Series A Preferred Stock offering.

Stakeholder Impact

• Shareholders may experience dilution due to the potential conversion of the promissory note.
• Creditors are impacted by the terms of the convertible note, including the interest rate and repayment schedule.
• Employees may be impacted by the company's financial stability and future growth prospects.
• Customers and suppliers may be impacted by the company's ability to continue operations and deliver products or services.

Next Steps

• The company will need to manage its debt obligations and ensure it meets the terms of the convertible note.
• The company will need to utilize the funds raised to advance its business objectives.
• The company may need to seek shareholder approval to increase the number of common shares available for conversion of the note.

Key Dates

Keywords

convertible note, preferred stock, financing, equity, debt, biotechnology, pharmaceuticals, investment, capital raise, dilution