Indaptus Therapeutics (INDP) Risk Analysis

At the special meeting held on February 26, 2026, our stockholders approved the issuance of common stock upon conversion of Preferred Stock to Mr. Lazar and the change in control of the Company associated with the conversion. Accordingly, our stockholders who owned shares of common stock prior to the conversion of the Preferred Stock will have a significantly lower percentage of ownership and correspondingly reduced voting power than they held immediately prior to the conversion. Although the Preferred Stock has not been converted into common stock yet and has no voting rights, following the conversion of the Preferred Stock, Mr. Lazar, or any transferee of the Preferred Stock, will own in the aggregate approximately 96.4% of the total number of shares of common stock outstanding on a fully diluted basis. Therefore, without taking into account future issuances of our securities (including pursuant to a Post-Investment Transaction), our stockholders will have significantly less ownership of our Company and voting power, and, therefore, they will have a substantially reduced ability to influence significant corporation decisions that require approval of holders of the outstanding common stock.

In addition to the ownership concentration that will result with the conversion of the Preferred Stock, Mr. Lazar was appointed as the Chairman to our Board and began serving as our Co-Chief Executive Officer in connection with the closing of the Investment Transaction. Additionally, since the closing of the Investment Transaction, four additional directors namely Mr. Avraham Ben-Tzvi, Mr. Jabbour, Mr. McMurdo and Mr. Natan, all designees of Mr. Lazar have joined the Board. As a result of Mr. Lazar's positions as Chief Executive Officer and a director, Mr. Lazar will have input on all matters before our Board. Separately, due to his ownership of Preferred Stock, Mr. Lazar, or any transferee of the Preferred Stock, would also have the ability to exercise significant influence and control over the outcome of all matters requiring Board and stockholder approval, including the election of directors. As a result of the voting power from the Preferred Stock, we may determine that we are a "controlled company" as defined in the Nasdaq Listing Rule 5615 and, therefore, are not subject to the Nasdaq Listing Rules that would otherwise require us to have (a) a majority of independent directors; (b) director nominees selected, or recommended for the Board selection, either by a majority of the independent directors or a nominating committee composed solely of independent directors; (c) a nominating committee composed solely of independent directors; (d) compensation of our chief executive officer and all other officers determined by a majority of the independent directors or a compensation committee composed solely of independent directors; and/or (e) a compensation committee charter which provides the compensation committee with the authority and funding to retain compensation consultants and other advisors.

On March 10, 2026, the closing sale price of our common stock on the Nasdaq was $1.87 per share of common stock. We expect that the reverse stock split, if effected, will increase the per share trading price of our common stock. However, the market price per share of our common stock after the reverse stock split may not rise (or remain constant) in proportion to the reduction in the number of shares of common stock outstanding before the reverse stock split. We cannot predict the effect of the reverse stock split on the per share trading price of our common stock, and the history of reverse stock splits for us and other companies is varied, particularly since some investors may view a reverse stock split negatively. In many cases, the market price of a company's shares declines after a reverse stock split, or the market price of a company's shares immediately after a reverse stock split does not reflect a proportionate or mathematical adjustment to the market price based on the ratio of the reverse stock split. Accordingly, our total market capitalization after a reverse stock split may be lower than our total market capitalization before the reverse stock split, and it is possible that a reverse stock split may not result in a per share trading price that would attract investors who do not trade in lower priced stocks. Even if we implement the reverse stock split, the per share trading price of our common stock may decrease due to factors unrelated to the reverse stock split. Other factors, such as our financial results, market conditions and the market perception of our business, may adversely affect the per share trading price of our common stock. As a result, we cannot assure you that the reverse stock split, if completed, will result in the benefits that we anticipate, that the per share trading price of our common stock will increase following the reverse stock split or that the per share trading price of our common stock will not decrease in the future.

The liquidity of our common stock may be harmed by the proposed reverse stock split, given the reduced number of shares that would be outstanding after the reverse stock split, particularly if the per share trading price does not increase proportionately as a result of the reverse stock split. While the Board believes that a higher stock price may help generate the interest of new investors, the reverse stock split may not result in a per share price that will attract certain types of investors, such as institutional investors or investment funds, and such share price may not satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of our common stock may not improve as a result of a reverse stock split and could be adversely affected by a higher per share price. Accordingly, the reverse stock split may not increase marketability of our common stock. In addition, investors might consider the increased proportion of unissued authorized shares to issued shares to have an anti-takeover effect under certain circumstances, because the proportion allows for dilutive issuances that could prevent certain stockholders from changing the composition of the Board or render tender offers for a combination with another entity more difficult.

If the proposed reverse stock split is implemented, it will increase the number of stockholders who own "odd lots" of less than 100 shares of common stock. A purchase or sale of less than 100 shares of common stock may result in incrementally higher trading costs through certain brokers, particularly "full service" brokers. Therefore, those stockholders who own less than 100 shares of our common stock following the reverse stock split may be required to pay higher transaction costs if they sell their shares of common stock.

All of the shares of Preferred Stock are convertible into 111.0 million shares of common stock. As a result of the full conversion of the Preferred Stock, 111.0 million shares of common stock will be issued, which collectively will represent approximately 96.4% of the total number of shares of common stock expected to be outstanding on a fully diluted basis immediately after the conversion. Upon the conversion of the Preferred Stock, our existing stockholders will experience significant dilution in their ownership percentage and their voting power, with Mr. Lazar, or any transferee of the Preferred Stock, receiving effective voting control over matters presented to stockholders in the future relating to our Company.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity and/or debt financings and collaborations, licensing agreements or other strategic arrangements. We may seek additional capital through a combination of private and public equity offerings, "at-the-market" issuances, equity-linked and structured transactions, debt (straight, convertible, or otherwise) financings, collaborations and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. For example, in December 2025, we entered into a securities purchase agreement with Mr. Lazar for sale of an aggregate of 700,000 shares of Preferred Stock, which are convertible into 111,000,000 shares of common stock. Additionally, we have consistently raised capital through private and public offerings over the last few years and may continue to raise additional capital as the need arises, which may result in further dilution to our shareholders. We may also issue in the future equity securities that provide for rights, preferences and privileges senior to those of our common stock. Given our need for cash and that equity issuances are the most common type of fundraising for similarly situated companies, the risk of dilution is particularly significant for our stockholders. Depending upon market liquidity at the time, additional sales of shares registered at any given time could cause the trading price of our common stock to decline. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that are not favorable to us.

We are considered a "smaller reporting company." We are therefore entitled to rely on certain reduced disclosure requirements, such as an exemption from providing selected financial data and executive compensation information. These exemptions and reduced disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects. We cannot predict whether investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock prices may be more volatile. Furthermore, as a result of voting power of the Preferred Stock, we may determine that we are a "controlled company" as defined in the Nasdaq Listing Rule 5615 and, therefore, are not subject to the Nasdaq Listing Rules that would otherwise require us to have (a) a majority of independent directors; (b) director nominees selected, or recommended for the Board selection, either by a majority of the independent directors or a nominating committee composed solely of independent directors; (c) a nominating committee composed solely of independent directors; (d) compensation of our chief executive officer and all other officers determined by a majority of the independent directors or a compensation committee composed solely of independent directors; and/or (e) a compensation committee charter which provides the compensation committee with the authority and funding to retain compensation consultants and other advisors.

Sales of a substantial number of our shares in the public market or the perception that these sales might occur, could depress the market price of our securities and could impair our ability to raise capital through the sale of additional equity securities. We are not able to predict the effect that sales may have on the prevailing market price of our securities.

The trading market for our common stock could be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not have any control over these analysts and cannot provide any assurance that analysts will cover us or provide favorable coverage. If any of the analysts who may cover us adversely change their recommendation regarding our common stock, or provide more favorable relative recommendations about our competitors, our share price would likely decline. If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could negatively impact our share price or trading volume.

An active public trading market for our common stock may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair value of your shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.

Our common stock currently trades on the Nasdaq Capital Market. The market price of our common stock has been, and is likely to continue to be, volatile. The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, such as: -   - announcements of any acquisition or consummation of any acquisition of a Target Company;   inability to obtain the approvals necessary to commence clinical trials;     - results of clinical and preclinical studies;- announcements of regulatory approval or the failure to obtain it, or specific label indications or patient populations for its use, or changes or delays in the regulatory review process;     - announcements of technological innovations, new products or product enhancements by us or others;     - adverse actions taken by regulatory agencies with respect to our clinical trials, manufacturing supply chain or sales and marketing activities;     - changes or developments in laws, regulations or decisions applicable to our product candidates or patents;     - any adverse changes to our relationship with manufacturers, suppliers or partners;     - announcements concerning our competitors or the pharmaceutical or biotechnology industries in general;- achievement of expected product sales and profitability or our failure to meet expectations;     - our commencement of or results of, or involvement in, litigation, including, but not limited to, any product liability actions or intellectual property infringement actions;     - any major changes in our board of directors, management or other key personnel;     - legislation in the United States, Europe and other foreign countries relating to the sale or pricing of pharmaceuticals;     - announcements by us of significant strategic partnerships, out-licensing, in-licensing, joint ventures, acquisitions or capital commitments;     - expiration or terminations of licenses, research contracts or other collaboration agreements;     - public concern as to the safety of therapeutics we, any licensees or others develop;     - success of research and development projects;     - developments concerning intellectual property rights or regulatory approvals;     - variations in us and our competitors' results of operations;     - changes in earnings estimates or recommendations by securities analysts, if our common stock is covered by analysts;     - future issuances of common stock or other securities;     - general market conditions, including the volatility of market prices for shares of biotechnology companies generally, and other factors, including factors unrelated to our operating performance;     - political and economic instability, war or acts of terrorism (such as Russia's invasion of Ukraine and the conflict in the Middle East) or natural disasters, emergence of a pandemic, or other widespread health emergencies (or concerns over the possibility of such an emergency, similar to the unprecedented COVID-19 pandemic); and     - the other factors described in this "Risk Factors" section. These factors and any corresponding price fluctuations may materially and adversely affect the market price of our common stock, which would result in substantial losses by our investors. Further, the stock market in general, the Nasdaq Capital Market and the market for biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like theirs. See also "General Risk Factors - "Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations." Broad market and industry factors may negatively affect the market price of our common stock regardless of our actual operating performance. In addition, a systemic decline in the financial markets and related factors beyond our control may cause our share price to decline rapidly and unexpectedly. Price volatility of our common stock might be worse if the trading volume of our common stock is low. In the past, following periods of market volatility, stockholders have often instituted securities class action litigation. This risk is especially relevant for us because biopharmaceutical companies have experienced significant stock price volatility in recent years. If we face such securities litigation, it could result in substantial costs and a diversion of management's resources and attention, which could harm our business. Future sales of our common stock could also reduce the market price of our stock. Moreover, the liquidity of our common stock will be limited, not only in terms of the number of shares of common stock that can be bought and sold at a given price, but by potential delays in the timing of executing transactions in our common stock and a reduction in security analyst and media's coverage of us, if any. These factors may result in lower prices for our common stock than might otherwise be obtained and could also result in a larger spread between the bid and ask prices for our common stock. In addition, without a large float, our common stock will be less liquid than the stock of companies with broader public ownership and, as a result, the trading prices of our common stock may be more volatile. In the absence of an active public trading market, an investor may be unable to liquidate their investment in our common stock. Trading of a relatively small volume of our common stock may have a greater impact on the trading price of our common stock than would be the case if our public float were larger. We cannot predict the prices at which our common stock will trade in the future.