[10-Q] Qualigen Therapeutics, Inc. Quarterly Earnings Report
On 21 Jul 2025 Microchip Technology (MCHP) submitted an amended Form 4 for COO Richard J. Simoncic covering equity grants dated 03 Apr 2024.
The filing shows no open-market buying or selling; instead Simoncic received 8,931 derivative units:
- 3,483 PSUs tied to 12-quarter cumulative non-GAAP operating margin; vest 15 May 2028.
- 3,482 RSUs vest 15 May 2028.
- 99 RSUs vest 16 Feb 2026.
- 934 PSUs with corrected 8-quarter performance period; vest 17 May 2027.
- 933 RSUs vest 17 May 2027.
Following the grants, Simoncic indirectly holds 131,735 common shares via trust, in addition to the newly granted units. The amendment solely clarifies the performance window for the 934-unit PSU block; award quantities and pricing remain unchanged. No cash changed hands, so the disclosure is informational and carries minimal immediate market impact.
Il 21 luglio 2025 Microchip Technology (MCHP) ha presentato un modulo 4 modificato per il COO Richard J. Simoncic riguardante concessioni di azioni datate 3 aprile 2024.
La documentazione non mostra acquisti o vendite sul mercato aperto; invece, Simoncic ha ricevuto 8.931 unità derivate:
- 3.483 PSU legate a un margine operativo cumulativo non-GAAP su 12 trimestri; maturano il 15 maggio 2028.
- 3.482 RSU maturano il 15 maggio 2028.
- 99 RSU maturano il 16 febbraio 2026.
- 934 PSU con periodo di performance corretto di 8 trimestri; maturano il 17 maggio 2027.
- 933 RSU maturano il 17 maggio 2027.
Dopo queste concessioni, Simoncic detiene indirettamente 131.735 azioni ordinarie tramite un trust, oltre alle unità appena assegnate. La modifica chiarisce esclusivamente la finestra di performance per il blocco di 934 PSU; quantità e prezzo delle assegnazioni rimangono invariati. Non sono stati effettuati scambi in denaro, quindi la comunicazione è informativa e ha un impatto minimo immediato sul mercato.
El 21 de julio de 2025 Microchip Technology (MCHP) presentó un Formulario 4 enmendado para el COO Richard J. Simoncic que cubre concesiones de acciones fechadas el 3 de abril de 2024.
La presentación no muestra compras ni ventas en el mercado abierto; en cambio, Simoncic recibió 8,931 unidades derivadas:
- 3,483 PSUs vinculadas a un margen operativo acumulado no-GAAP de 12 trimestres; vencen el 15 de mayo de 2028.
- 3,482 RSUs vencen el 15 de mayo de 2028.
- 99 RSUs vencen el 16 de febrero de 2026.
- 934 PSUs con un período de desempeño corregido de 8 trimestres; vencen el 17 de mayo de 2027.
- 933 RSUs vencen el 17 de mayo de 2027.
Tras estas concesiones, Simoncic posee indirectamente 131,735 acciones ordinarias a través de un fideicomiso, además de las unidades recién otorgadas. La enmienda aclara únicamente la ventana de desempeño para el bloque de 934 PSUs; las cantidades y precios de las concesiones permanecen sin cambios. No hubo intercambio de efectivo, por lo que la divulgación es informativa y tiene un impacto inmediato mínimo en el mercado.
2025년 7월 21일, 마이크로칩 테크놀로지(MCHP)는 COO 리처드 J. 시몬칙(Richard J. Simoncic)을 위한 2024년 4월 3일자 주식 부여에 관한 수정된 Form 4를 제출했습니다.
서류에는 공개 시장에서의 매수나 매도가 없으며, 대신 시몬칙은 8,931개의 파생 단위를 받았습니다:
- 3,483 PSU는 12분기 누적 비-GAAP 영업이익률과 연동되며, 2028년 5월 15일에 권리 확정됩니다.
- 3,482 RSU는 2028년 5월 15일에 권리 확정됩니다.
- 99 RSU는 2026년 2월 16일에 권리 확정됩니다.
- 934 PSU는 수정된 8분기 성과 기간을 가지며, 2027년 5월 17일에 권리 확정됩니다.
- 933 RSU는 2027년 5월 17일에 권리 확정됩니다.
이 부여 이후, 시몬칙은 신탁을 통해 간접적으로 131,735주의 보통주를 보유하고 있으며, 새로 부여된 단위도 포함됩니다. 이번 수정은 934 PSU 단위의 성과 기간만 명확히 한 것으로, 수량과 가격은 변동이 없습니다. 현금 거래는 없었으므로, 이 공시는 정보 제공 목적이며 즉각적인 시장 영향은 미미합니다.
Le 21 juillet 2025, Microchip Technology (MCHP) a soumis un formulaire 4 modifié pour le COO Richard J. Simoncic concernant des attributions d’actions datées du 3 avril 2024.
Le dépôt ne montre aucune opération d’achat ou de vente sur le marché libre ; Simoncic a reçu 8 931 unités dérivées :
- 3 483 PSU liées à une marge opérationnelle cumulée non-GAAP sur 12 trimestres ; acquisition au 15 mai 2028.
- 3 482 RSU acquises au 15 mai 2028.
- 99 RSU acquises au 16 février 2026.
- 934 PSU avec une période de performance corrigée de 8 trimestres ; acquisition au 17 mai 2027.
- 933 RSU acquises au 17 mai 2027.
Suite à ces attributions, Simoncic détient indirectement 131 735 actions ordinaires via un trust, en plus des unités nouvellement attribuées. L’amendement clarifie uniquement la période de performance pour le bloc de 934 PSU ; les quantités et les prix des attributions restent inchangés. Aucune transaction en espèces n’a eu lieu, donc cette divulgation est informative et a un impact immédiat minimal sur le marché.
Am 21. Juli 2025 reichte Microchip Technology (MCHP) ein geändertes Formular 4 für COO Richard J. Simoncic ein, das Aktienzuteilungen vom 3. April 2024 betrifft.
Die Einreichung zeigt keinen Kauf oder Verkauf am offenen Markt; stattdessen erhielt Simoncic 8.931 derivative Einheiten:
- 3.483 PSUs, gebunden an eine kumulative Non-GAAP-Betriebsmarge über 12 Quartale; Ausübung am 15. Mai 2028.
- 3.482 RSUs, Ausübung am 15. Mai 2028.
- 99 RSUs, Ausübung am 16. Februar 2026.
- 934 PSUs mit korrigiertem 8-Quartals-Leistungszeitraum; Ausübung am 17. Mai 2027.
- 933 RSUs, Ausübung am 17. Mai 2027.
Nach den Zuteilungen hält Simoncic indirekt 131.735 Stammaktien über einen Trust, zusätzlich zu den neu gewährten Einheiten. Die Änderung klärt ausschließlich den Leistungszeitraum für den Block von 934 PSUs; Menge und Preis der Zuteilungen bleiben unverändert. Es fand kein Geldfluss statt, daher ist die Offenlegung informativ und hat nur minimale unmittelbare Auswirkungen auf den Markt.
- None.
- None.
Insights
TL;DR: Equity compensation grant; no insider buying or selling; neutral for share-price outlook.
The amended Form 4 indicates that the COO was awarded 8,931 performance-linked or time-based units on 3 Apr 2024. All awards vest between 2026-2028 and were issued at zero cost under the company’s 2004 Equity Incentive Plan, leaving the executive with 131,735 shares indirectly plus the new units. Because the transaction does not involve open-market purchases or disposals, it provides no directional trading signal and has negligible dilution (<0.02 % of basic shares). The correction to an 8-quarter PSU performance period is administrative. Overall impact: neutral.
TL;DR: Routine compensation disclosure; aligns incentives, but not materially impactful.
The grant blends long-term PSUs tied to cumulative non-GAAP operating margin with time-based RSUs, supporting pay-for-performance principles and executive retention through 2028. The amendment merely restates the measurement window of one PSU tranche, demonstrating procedural accuracy rather than substantive change. No indication of governance concerns, related-party issues, or accelerated vesting. From a governance standpoint, the filing is standard and low-risk.
Il 21 luglio 2025 Microchip Technology (MCHP) ha presentato un modulo 4 modificato per il COO Richard J. Simoncic riguardante concessioni di azioni datate 3 aprile 2024.
La documentazione non mostra acquisti o vendite sul mercato aperto; invece, Simoncic ha ricevuto 8.931 unità derivate:
- 3.483 PSU legate a un margine operativo cumulativo non-GAAP su 12 trimestri; maturano il 15 maggio 2028.
- 3.482 RSU maturano il 15 maggio 2028.
- 99 RSU maturano il 16 febbraio 2026.
- 934 PSU con periodo di performance corretto di 8 trimestri; maturano il 17 maggio 2027.
- 933 RSU maturano il 17 maggio 2027.
Dopo queste concessioni, Simoncic detiene indirettamente 131.735 azioni ordinarie tramite un trust, oltre alle unità appena assegnate. La modifica chiarisce esclusivamente la finestra di performance per il blocco di 934 PSU; quantità e prezzo delle assegnazioni rimangono invariati. Non sono stati effettuati scambi in denaro, quindi la comunicazione è informativa e ha un impatto minimo immediato sul mercato.
El 21 de julio de 2025 Microchip Technology (MCHP) presentó un Formulario 4 enmendado para el COO Richard J. Simoncic que cubre concesiones de acciones fechadas el 3 de abril de 2024.
La presentación no muestra compras ni ventas en el mercado abierto; en cambio, Simoncic recibió 8,931 unidades derivadas:
- 3,483 PSUs vinculadas a un margen operativo acumulado no-GAAP de 12 trimestres; vencen el 15 de mayo de 2028.
- 3,482 RSUs vencen el 15 de mayo de 2028.
- 99 RSUs vencen el 16 de febrero de 2026.
- 934 PSUs con un período de desempeño corregido de 8 trimestres; vencen el 17 de mayo de 2027.
- 933 RSUs vencen el 17 de mayo de 2027.
Tras estas concesiones, Simoncic posee indirectamente 131,735 acciones ordinarias a través de un fideicomiso, además de las unidades recién otorgadas. La enmienda aclara únicamente la ventana de desempeño para el bloque de 934 PSUs; las cantidades y precios de las concesiones permanecen sin cambios. No hubo intercambio de efectivo, por lo que la divulgación es informativa y tiene un impacto inmediato mínimo en el mercado.
2025년 7월 21일, 마이크로칩 테크놀로지(MCHP)는 COO 리처드 J. 시몬칙(Richard J. Simoncic)을 위한 2024년 4월 3일자 주식 부여에 관한 수정된 Form 4를 제출했습니다.
서류에는 공개 시장에서의 매수나 매도가 없으며, 대신 시몬칙은 8,931개의 파생 단위를 받았습니다:
- 3,483 PSU는 12분기 누적 비-GAAP 영업이익률과 연동되며, 2028년 5월 15일에 권리 확정됩니다.
- 3,482 RSU는 2028년 5월 15일에 권리 확정됩니다.
- 99 RSU는 2026년 2월 16일에 권리 확정됩니다.
- 934 PSU는 수정된 8분기 성과 기간을 가지며, 2027년 5월 17일에 권리 확정됩니다.
- 933 RSU는 2027년 5월 17일에 권리 확정됩니다.
이 부여 이후, 시몬칙은 신탁을 통해 간접적으로 131,735주의 보통주를 보유하고 있으며, 새로 부여된 단위도 포함됩니다. 이번 수정은 934 PSU 단위의 성과 기간만 명확히 한 것으로, 수량과 가격은 변동이 없습니다. 현금 거래는 없었으므로, 이 공시는 정보 제공 목적이며 즉각적인 시장 영향은 미미합니다.
Le 21 juillet 2025, Microchip Technology (MCHP) a soumis un formulaire 4 modifié pour le COO Richard J. Simoncic concernant des attributions d’actions datées du 3 avril 2024.
Le dépôt ne montre aucune opération d’achat ou de vente sur le marché libre ; Simoncic a reçu 8 931 unités dérivées :
- 3 483 PSU liées à une marge opérationnelle cumulée non-GAAP sur 12 trimestres ; acquisition au 15 mai 2028.
- 3 482 RSU acquises au 15 mai 2028.
- 99 RSU acquises au 16 février 2026.
- 934 PSU avec une période de performance corrigée de 8 trimestres ; acquisition au 17 mai 2027.
- 933 RSU acquises au 17 mai 2027.
Suite à ces attributions, Simoncic détient indirectement 131 735 actions ordinaires via un trust, en plus des unités nouvellement attribuées. L’amendement clarifie uniquement la période de performance pour le bloc de 934 PSU ; les quantités et les prix des attributions restent inchangés. Aucune transaction en espèces n’a eu lieu, donc cette divulgation est informative et a un impact immédiat minimal sur le marché.
Am 21. Juli 2025 reichte Microchip Technology (MCHP) ein geändertes Formular 4 für COO Richard J. Simoncic ein, das Aktienzuteilungen vom 3. April 2024 betrifft.
Die Einreichung zeigt keinen Kauf oder Verkauf am offenen Markt; stattdessen erhielt Simoncic 8.931 derivative Einheiten:
- 3.483 PSUs, gebunden an eine kumulative Non-GAAP-Betriebsmarge über 12 Quartale; Ausübung am 15. Mai 2028.
- 3.482 RSUs, Ausübung am 15. Mai 2028.
- 99 RSUs, Ausübung am 16. Februar 2026.
- 934 PSUs mit korrigiertem 8-Quartals-Leistungszeitraum; Ausübung am 17. Mai 2027.
- 933 RSUs, Ausübung am 17. Mai 2027.
Nach den Zuteilungen hält Simoncic indirekt 131.735 Stammaktien über einen Trust, zusätzlich zu den neu gewährten Einheiten. Die Änderung klärt ausschließlich den Leistungszeitraum für den Block von 934 PSUs; Menge und Preis der Zuteilungen bleiben unverändert. Es fand kein Geldfluss statt, daher ist die Offenlegung informativ und hat nur minimale unmittelbare Auswirkungen auf den Markt.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
Or
For the transition period from _____________ to _____________
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
n/a
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| The
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes
As
of July 18, 2025, there were
TABLE OF CONTENTS
| Page | |||
| PART I. | Financial Information | ||
| Item 1. | Condensed Consolidated Financial Statements (Unaudited) | 3 | |
| Condensed Consolidated Balance Sheets | 3 | ||
| Condensed Consolidated Statements of Operations | 4 | ||
| Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) | 5 | ||
| Condensed Consolidated Statements of Cash Flows | 6 | ||
| Notes to Condensed Consolidated Financial Statements | 7 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 36 | |
| Item 4. | Controls and Procedures | 36 | |
| PART II. | Other Information | 38 | |
| Item 1. | Legal Proceedings | 38 | |
| Item 1A. | Risk Factors | 38 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 38 | |
| Item 3. | Defaults Upon Senior Securities | 38 | |
| Item 4. | Mine Safety Disclosures | 38 | |
| Item 5. | Other Information | 38 | |
| Item 6. | Exhibits | 39 |
| 2 |
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUALIGEN THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (Unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Short-term notes receivable,
net of allowance for credit losses of $ | ||||||||
| Other current assets | — | |||||||
| Total current assets | ||||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Warrant liabilities | ||||||||
| Promissory
notes, net of accrued penalty of $ | — | |||||||
| Total current liabilities | ||||||||
| Commitments and Contingencies (Note 10) | - | - | ||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Preferred stock, $ | $ | $ | ||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities & Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
QUALIGEN THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| 2025 | 2024 | |||||||
For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| EXPENSES | ||||||||
| General and administrative | $ | $ | ||||||
| Research and development | ||||||||
| Credit loss expense - short-term note receivable | ||||||||
| Total expenses | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER EXPENSE (INCOME), NET | ||||||||
| (Gain) loss on change in fair value of warrant liabilities | ( | ) | ||||||
| Gain on change in fair value of derivative liabilities | — | ( | ) | |||||
| Interest expense | ||||||||
| Interest income | ( | ) | ( | ) | ||||
| Loss on issuance of convertible debt | — | |||||||
| Loss on monthly redemptions of convertible debt into common stock | — | |||||||
| Total other expense (income), net | ( | ) | ||||||
| LOSS BEFORE PROVISION FOR INCOME TAXES | ( | ) | ( | ) | ||||
| (BENEFIT) PROVISION FOR INCOME TAXES | ||||||||
| NET LOSS FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ||||
| DISCONTINUED OPERATIONS | ||||||||
| Loss on disposal of discontinued operations, net of tax | — | — | ||||||
| GAIN (LOSS) FROM DISCONTINUED OPERATIONS | — | — | ||||||
| NET LOSS | ( | ) | ( | ) | ||||
| Deemed dividend arising from warrant down-round provision | $ | — | $ | ( | ) | |||
| Net loss attributable to Qualigen Therapeutics, Inc | $ | ( | ) | $ | ( | ) | ||
| Total net loss per common share, basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted-average number of shares outstanding, basic and diluted (after stock split) | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
QUALIGEN THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| Shares | Amount | Shares | Amount | Paid-In Capital | Accumulated Deficit | Equity (Deficit) | ||||||||||||||||||||||
| Series A-2 | ||||||||||||||||||||||||||||
| Convertible | Total | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | Stockholders’ | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Paid-In Capital | Accumulated Deficit | Equity (Deficit) | ||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Issuance of common stock for the conversion of Series A-2 preferred shares | ( | ) | ( | ) | — | — | ||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Series A-2 | ||||||||||||||||||||||||||||
| Convertible | Total | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | Stockholders’ | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Paid-In Capital | Accumulated Deficit | Equity (Deficit) | ||||||||||||||||||||||
| Balance at December 31, 2023 | — | $ | — | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Balance | — | $ | — | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Monthly redemptions of convertible debt into common stock | — | — | — | |||||||||||||||||||||||||
| Fair value of warrant modification for professional services | — | — | — | — | — | |||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2024 (after stock split) | — | $ | — | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Balance | — | $ | — | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
QUALIGEN THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| 2025 | 2024 | |||||||
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile loss from continuing operations to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Provision for credit losses of short-term note receivable | — | |||||||
| Accrued interest on short-term note receivable | ( | ) | — | |||||
| Loss on monthly redemptions of convertible debt into common stock | — | |||||||
| Accretion of discount on convertible debt | — | |||||||
| Loss on issuance of convertible debt | — | |||||||
| Gain on change in fair value of derivative liabilities | — | ( | ) | |||||
| Amortization of accrued penalty on notes payable | — | |||||||
| Fair value of warrant modification for professional services | — | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ||||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses and other current liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Issuance of short-term note receivable | ( | ) | — | |||||
| Net cash used in investing activities | ( | ) | — | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from the issuance of convertible notes payable | — | |||||||
| Proceeds from issuance of short term debt | — | |||||||
| Net cash provided by financing activities - continuing operations | ||||||||
| Net cash provided by financing activities - discontinued operations | — | — | ||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents from - beginning of period | ||||||||
| Cash and cash equivalents from - end of period | $ | $ | ||||||
| NONCASH FINANCING AND INVESTING ACTIVITIES: | ||||||||
| Monthly redemption of convertible debt into common stock | $ | — | ||||||
| Issuance of common stock for the conversion of Series A-2 preferred shares | $ | $ | — | |||||
| Deemed dividend arising from warrant down-round provision | $ | — | $ | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
QUALIGEN THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES
Organization
Ritter Pharmaceuticals, Inc. (the Company’s predecessor) was formed as a Nevada limited liability company on March 29, 2004 under the name Ritter Natural Sciences, LLC. In September 2008, this company converted into a Delaware corporation under the name Ritter Pharmaceuticals, Inc. On May 22, 2020, upon completing a “reverse recapitalization” transaction with Qualigen, Inc., Ritter Pharmaceuticals, Inc. was renamed Qualigen Therapeutics, Inc. (the “Company”). Qualisys Diagnostics, Inc. was formed as a Minnesota corporation in 1996, reincorporated to become a Delaware corporation in 1999, and then changed its name to Qualigen, Inc. in 2000. Qualigen, Inc. was a wholly-owned subsidiary of the Company. On July 20, 2023, the Company sold all of the issued and outstanding shares of common stock of Qualigen, Inc. to Chembio Diagnostics, Inc. (“Chembio”), a wholly-owned subsidiary of Biosynex, S.A. (“Biosynex”). Following the consummation of this transaction, Qualigen, Inc. became a wholly-owned subsidiary of Chembio (see Note 5 – Discontinued Operations).
In
2022, the Company acquired a
Basis of Presentation
Certain information or footnote disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2024 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The interim results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any future periods.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its former wholly-owned and majority owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to GAAP. The Company views its operations and manages its business in one operating segment. In general, the functional currency of the Company and its subsidiaries is the U.S. dollar. For NanoSynex, the functional currency was the local currency, New Israeli Shekels (NIS). As there were no transactions between the Company and Nanosynex during 2025 or 2024, there was no activity required to reflect the assets and liabilities for NanoSynex translated into U.S. dollars, with the effects of foreign currency translation adjustments reflected as a component of accumulated other comprehensive loss within the Company’s condensed consolidated statements of changes in stockholders’ equity (deficit).
As of July 20, 2023, NanoSynex was deconsolidated from these financial statements as the transactions contemplated by the NanoSynex Amendment resulted in a loss of control of a subsidiary that constitutes a business under ASC 810. The retained investment in NanoSynex is accounted for prospectively as an equity method investment.
Discontinued Operations
On July 20, 2023, the Company completed the sale of Qualigen, Inc. to Chembio Diagnostics, Inc. The sale of Qualigen Inc. constituted a significant disposition and as such, the Company concluded that the disposition of ownership in Qualigen, Inc. represented a strategic shift that had a major effect on its operations and financial results. Therefore, Qualigen, Inc. is classified as discontinued operations for all periods presented herein.
On
July 20, 2023, the Company entered into the NanoSynex Amendment, which amended the Master Funding Agreement for the Operational and Technology
Funding of NanoSynex Ltd., dated May 26, 2022, by and between the Company and NanoSynex (the “NanoSynex Funding Agreement”),
a former majority owned subsidiary of the Company, to, among other things, forfeit
| 7 |
Accounting Estimates
Management uses estimates and assumptions in preparing its condensed consolidated financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The most significant estimates relate to the estimated fair value of convertible notes, warrant liabilities, determination of the allowance for credit losses, and stock-based compensation. Actual results could vary from the estimates that were used.
Reverse Stock Splits
On
November 20, 2024, the Company effected a
All share and per share data for all periods presented in the accompanying financial statements and the related disclosures have been adjusted retrospectively to reflect both reverse stock splits. The number of authorized shares of common stock and the par value per share remains unchanged.
Cash
The Company considers all highly liquid investments purchased with an initial maturity of 90 days or less and money market funds to be cash equivalents.
The Company maintains the majority of its cash in government money market mutual funds and in accounts at banking institutions in the U.S. that are of high quality. Cash held in these accounts often exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits. If such banking institutions were to fail, the Company could lose all or a portion of amounts held in excess of such insurance limitations. As of March 31, 2025, the Company had not experienced losses on these accounts, and management believes the Company is not exposed to significant risk on such accounts.
Segment Reporting
The Company adopted Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures, as of January 1, 2024. Operating segments are identified as components of an enterprise about which separate discrete financial information is regularly reviewed for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed its operations and managed its business as one segment operating primarily within the United States (and in Israel prior to the NanoSynex deconsolidation). The Company is an early stage clinical therapeutics company focused on developing treatments for adult and pediatric cancer. The Company’s operations are organized and reported as a single reportable segment, which includes all activities related to the discovery, development, and commercialization of its products. The Company’s CODM, its chief executive officer, reviews operating results on an aggregate basis and manages the operations as a single operating segment. The accounting policies of the Company’s single operating and reportable segment are the same as those described in the summary of significant accounting policies. The measure of segment assets is reported on the consolidated balance sheets as total assets. The CODM evaluates performance and allocates resources based on consolidated net loss that also is reported on the consolidated statements of operations as net loss, and consolidated cash used in operations. The significant expenses regularly reviewed by the CODM are consistent with those reported on the Company’s consolidated statement of operations, and expenses are not regularly provided to or reviewed on a more disaggregated basis for purposes of assessing segment performance and deciding how to allocate resources.
General and Administrative Expenses
Beginning
in December 2024, the Company engaged IR Agency LLC to provide marketing and advertising services to communicate information about the
Company to the investment community. During the three months ended March 31, 2025, expenses related to the work performed by IR Agency
LLC totaled to $
| 8 |
Research and Development
Except for acquired in process research and development (IPR&D), the Company expenses research and development costs as incurred including therapeutics license costs.
Patent Costs
The Company expenses all costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses in the condensed consolidated statement of operations.
Derivative Financial Instruments and Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations and comprehensive loss. Depending on the features of the derivative financial instrument, the Company uses either the Black-Scholes option-pricing model or a Monte-Carlo simulation to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period (See Note 7-Warrant Liabilities and Note 8- Convertible Debt).
Fair Value Measurements
The Company determines the fair value measurements of applicable assets and liabilities based on a three-tier fair value hierarchy established by accounting guidance and prioritizes the inputs used in measuring fair value. The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:
| ● | Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date; | |
| ● | Level 2 - Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly, including inputs in markets that are not considered to be active; and | |
| ● | Level 3 - Inputs that are unobservable. |
Fair Value of Financial Instruments
Cash, prepaid expenses, and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. Short-term notes receivable are valued subject to a current expected credit loss (“CECL”) model (see Note 4 - Short-Term Notes Receivable).
Stock-Based Compensation
Stock-based compensation cost for equity awards granted to employees and non-employees is measured at the grant date based on the calculated fair value of the award using the Black-Scholes option-pricing model, and is recognized as an expense, under the straight-line method, over the requisite service period (generally the vesting period of the equity grant). If the Company determines that other methods are more reasonable, or other methods for calculating these assumptions are prescribed by regulators, the fair value calculated for the Company’s stock options could change significantly. Higher volatility, lower risk-free interest rates, and longer expected lives would result in an increase to stock-based compensation expense to employees and non-employees determined at the date of grant.
Income Taxes
Deferred income taxes are recognized for temporary differences in the basis of assets and liabilities for financial statement and income tax reporting that arise due to net operating loss carry forwards, research and development credit carry forwards and from using different methods and periods to calculate depreciation and amortization, allowance for doubtful accounts, accrued vacation, research and development expenses, and state taxes. A provision has been made for income taxes due on taxable income and for the deferred taxes on the temporary differences. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.
| 9 |
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Realization of the deferred income tax asset is dependent on generating sufficient taxable income in future years.
Accounting Standards
In December 2023, the FASB issued Accounting Standards Update 2023-09, Improvements to Income Tax Disclosures, which requires more detailed income tax disclosures. The guidance requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the disclosure requirements related to the new standard.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Expense Disaggregation Disclosures. This update requires entities to disaggregate operating expenses into specific categories, such as salaries and wages, depreciation, and amortization, to provide enhanced transparency into the nature and function of expenses. Accounting Standards Update 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. Accounting Standards Update 2024-03 may be applied retrospectively or prospectively. The Company is evaluating the disclosure requirements related to the new standard.
The Company does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on our consolidated financial statements or disclosures.
Global Economic Conditions
Ongoing Wars in Ukraine and Israel
In February 2022, Russia invaded Ukraine. While the Company has no direct exposure in Russia and Ukraine, the Company continues to monitor any broader impact to the global economy, including with respect to inflation, supply chains and fuel prices. The full impact of the conflict on the Company’s business and financial results remains uncertain and will depend on the severity and duration of the conflict and its impact on regional and global economic conditions.
In October 2023, Hamas conducted terrorist attacks in Israel resulting in ongoing war. There continue to be hostilities between Israel and Hezbollah in Lebanon and Hamas in the Gaza Strip, both of which have resulted in rockets being fired into Israel, causing casualties and disruption of economic activities. In early 2023, there were a number of changes proposed to the political system in Israel by the current government which, if implemented as planned, could lead to large-scale protests and additional uncertainty, negatively impacting the operating environment in Israel. Popular uprisings in various countries in the Middle East over the last few years have also affected the political stability of those countries and have led to a decline in the regional security situation. Such instability may also lead to deterioration in the political and trade relationships that exist between Israel and these countries. Any armed conflicts, terrorist activities or political instability involving Israel or other countries in the region could adversely affect the Company’s minority interest in NanoSynex, its results of operations, financial condition, cash flows and prospects (see Note 5 – Discontinued Operations).
Inflation and Global Economic Conditions
Beginning in 2022 and continuing into the current fiscal year, global commodity and labor markets experienced significant inflationary pressures attributable to government stimulus and recovery programs, government deficit spending and supply chain issues. The Company cannot provide assurance that it will be successful in fully offsetting increased costs resulting from inflationary pressure. In addition, the global economy suffers from slowing growth and rising interest rates, and some economists believe that there may be a global recession in the near future. If the global economy slows, the Company’s business may be adversely affected.
| 10 |
NOTE 2 — LIQUIDITY AND GOING CONCERN
As
of March 31, 2025, the Company had approximately $
From
January to June 2025, the Company borrowed a total of $
The Company expects to continue to have net losses and negative cash flow from operations, which will challenge its liquidity. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the one-year period following the date that these financial statements were issued.
There is no assurance that profitable operations will ever be achieved, or, if achieved, could be sustained on a continuing basis.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The financial statements do not include any adjustments that would be necessary should the Company be unable to continue as a going concern, and therefore, be required to liquidate its assets and discharge its liabilities in other than the normal course of business and at amounts that may differ from those reflected in the accompanying financial statements.
NOTE 3 — PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following at March 31, 2025 and December 31, 2024:
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Prepaid consulting | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Prepaid legal | — | |||||||
| Other current assets | ||||||||
| Prepaid expenses and other current assets | $ | $ | ||||||
NOTE 4 — SHORT-TERM NOTE RECEIVABLE
Short-term note receivable consisted of the following at March 31, 2025 and December 31, 2024:
SCHEDULE OF SHORT-TERM NOTE RECEIVABLE
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Short-term note receivable - Marizyme | $ | $ | ||||||
| Less allowance for credit losses | ( | ) | ( | ) | ||||
| Short-term notes receivable | $ | $ | ||||||
Allowance for credit losses consisted of the following at March 31, 2025 and December 31, 2024
SCHEDULE OF ALLOWANCE FOR CREDIT LOSSES
| March 31, | ||||
| 2025 | ||||
| Beginning Balance | $ | ( | ) | |
| Current period provision for expected credit losses | ( | ) | ||
| Ending Balance | $ | ( | ) | |
During
the three months ended March 31, 2025, the Company advanced to Marizyme, Inc., $
| 11 |
The
Marizyme Note bears interest the rate of eighteen percent (
Under
ASC 326-20, known as the CECLmodel, the Company was required to estimate credit losses expected over the life of an exposure (or pool
of exposures) based on historical information, current information, and reasonable and supportable forecasts. The Company is unable to
use its historical data to estimate losses as it has no relevant loss history to date. To determine the estimate of expected credit losses,
the Company used a probability-weighted approach that incorporates multiple settlement scenarios, including recovery of amounts due upon
an acquisition of the debtor, and recovery in different liquidation scenarios, and determines the expected recoverable amount of the
loan in each scenario. This model requires management to make certain assumptions including the likelihood of each outcome, the estimated
value of the debtor’s assets, and the Company’s expected claim and recovery rate on the debtor’s assets in the event
of an insolvency or a liquidation proceeding. As of March 31, 2025, the estimate for expected credit losses on the Marizyme Notes is
$
The Company is also party to a Co-Development Agreement with Marizyme (see Note 11 - Research and License Agreements).
NOTE 5 — DISCONTINUED OPERATIONS
On
July 20, 2023, the Company completed the sale of Qualigen, Inc., its formerly wholly-owned subsidiary, to Chembio Diagnostics, Inc. for
net cash consideration of $
There were no assets and liabilities remaining related to Qualigen, Inc. as of March 31, 2025 or December 31, 2024.
NOTE 6 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following at March 31, 2025 and December 31, 2024:
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| March 31 | December 31, | |||||||
| 2025 | 2024 | |||||||
| Board compensation | $ | $ | — | |||||
| License fees | ||||||||
| Professional fees | ||||||||
| Vacation | ||||||||
| Accrued expenses and other current liabilities | $ | $ | ||||||
NOTE 7 — WARRANT LIABILITIES
On
November 20, 2024, the Company closed its private placement transaction resulting in the issuance of newly designated Series A-2
Preferred Stock (see Note 12 – Stockholders Equity). As a result of the issuance of a new class of voting securities, the
Company evaluated its equity classified warrants’ respective terms, and concluded that warrants for
In
2004, the Company issued warrants to various investors and brokers for the purchase of Series C preferred stock in connection with a
private placement (the “Series C Warrants”). The Series C Warrants were subsequently extended and, upon closing of the reverse
recapitalization transaction with Ritter, exchanged for warrants to purchase common stock of the Company. On February 27, 2024, these
Series C Warrants were repriced as a result of a down-round provision triggered by a Securities Purchase Agreement with Alpha for the
purchase of the February 2024 Debentures described below, from an exercise price of $
| 12 |
The following table summarizes the activity in liability classified warrants for the three months ended March 31, 2025:
SCHEDULE OF WARRANTS ACTIVITY
| Common Stock Warrants | ||||||||||||||||
| Shares | Weighted– Average Exercise Price | Range of Exercise Price | Weighted– Average Remaining Life (Years) | |||||||||||||
| Total outstanding –December 31, 2024 | $ | $ | * | |||||||||||||
| Granted | — | — | — | — | ||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Reclassified from equity | — | — | — | — | ||||||||||||
| Reclassified to equity | — | — | — | — | ||||||||||||
| Expired | — | — | — | — | ||||||||||||
| Total outstanding – March 31, 2025 | $ | $ | * | |||||||||||||
| Exercisable | $ | $ | * | |||||||||||||
| * |
The following table summarizes the activity in liability classified warrants for the three months ended March 31, 2024:
| Common Stock Warrants | ||||||||||||||||
| Shares | Weighted– Average Exercise Price | Range of Exercise Price | Weighted– Average Remaining Life (Years) | |||||||||||||
| Total outstanding –December 31, 2023 | $ | $ | ||||||||||||||
| Granted | $ | $ | — | |||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Reclassified from equity | — | — | — | — | ||||||||||||
| Reclassified to equity | — | — | — | — | ||||||||||||
| Expired | — | — | — | — | ||||||||||||
| Total outstanding – March 31, 2024 | $ | $ | ||||||||||||||
| 13 |
The following table presents the Company’s fair value hierarchy for its warrant liabilities measured at fair value on a recurring basis as of March 31, 2025:
SCHEDULE OF FAIR VALUE HIERARCHY FOR WARRANT LIABILITIES
| Quoted | ||||||||||||||||
| Market | Significant | |||||||||||||||
| Prices for | Other | Significant | ||||||||||||||
| Identical | Observable | Unobservable | ||||||||||||||
| Assets | Inputs | Inputs | ||||||||||||||
| Common Stock Warrant Liabilities | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
| Balance as of December 31, 2024 | $ | — | $ | — | $ | $ | ||||||||||
| Granted | — | — | — | — | ||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Fair value of warrants reclassified to equity | — | — | — | — | ||||||||||||
| Gain on change in fair value of warrant liabilities | — | — | ( | ) | ( | ) | ||||||||||
| Balance as of March 31, 2025 | $ | — | $ | — | $ | $ | ||||||||||
The following table presents the Company’s fair value hierarchy for its warrant liabilities measured at fair value on a recurring basis as of December 31, 2024:
| Quoted | ||||||||||||||||
| Market | Significant | |||||||||||||||
| Prices for | Other | Significant | ||||||||||||||
| Identical | Observable | Unobservable | ||||||||||||||
| Assets | Inputs | Inputs | ||||||||||||||
| Common Stock Warrant liabilities | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
| Balance as of December 31, 2023 | $ | — | $ | — | $ | $ | ||||||||||
| Granted | — | — | ||||||||||||||
| Fair value of warrants reclassified to equity | — | — | ( | ) | ( | ) | ||||||||||
| Gain on change in fair value of warrant liabilities | — | — | ( | ) | ( | ) | ||||||||||
| Balance as of December 31, 2024 | $ | — | $ | — | $ | $ | ||||||||||
During the three months ended March 31, 2025, there were no warrants reclassified from equity to liabilities. There were no transfers of financial assets or liabilities between category levels for the three months ended March 31, 2025 and 2024.
The value of the warrant liabilities was based on a valuation received from an independent valuation firm determined using the Black-Scholes Model at March 31, 2025, and a Monte-Carlo simulation at March 31, 2024. For volatility, the Company considers comparable public companies as a basis for its expected volatility to calculate the fair value of common stock warrants and transitions to its own volatility as the Company develops sufficient appropriate history as a public company. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected term of the common stock warrant. The Company uses an expected dividend yield of zero based on the fact that the Company has never paid cash dividends and does not expect to pay cash dividends in the foreseeable future. Any significant changes in the inputs may result in significantly higher or lower fair value measurements.
The following are the weighted average and the range of assumptions used in estimating the fair value of warrant liabilities (weighted average calculated based on the number of outstanding warrants on each issuance) as of March 31, 2025 and 2024:
SCHEDULE OF ASSUMPTIONS OF WARRANT LIABILITIES
| March 31, 2025 | March 31, 2024 | |||||||||||
| Range | Weighted Average | Actual | ||||||||||
| Risk-free interest rate | % | % | % | |||||||||
| Expected volatility (peer group) | % | % | % | |||||||||
| Term of warrants (years) | ||||||||||||
| Expected dividend yield | % | % | % | |||||||||
| 14 |
NOTE 8 — CONVERTIBLE DEBT AND SHORT TERM DEBT
2022 Convertible Debenture (Related party)
On
December 22, 2022, the Company issued to Alpha an
Commencing
June 1, 2023 the Company was required to redeem $
In December 2022, pursuant to the terms of the 2022 Securities Purchase Agreement, the Company entered into a registration rights agreement with Alpha (the “Registration Rights Agreement”), pursuant to which the Company agreed to file one or more registration statements, as necessary, and to the extent permissible, to register under the Securities Act the resale of the remaining shares (underlying the 2022 Debenture and the 2022 Warrant) not otherwise registered under the Company’s registration statement on Form S-3 (File No. 333-266430). The Company filed a resale registration statement on Form S-3 pursuant to the requirements of the Registration Rights Agreement on December 2022 (File Number 333-269088), which registration statement was declared effective by the SEC on January 5, 2023. On September 1, 2023, the Company filed a Post-Effective Amendment No. 1 to Form S-3 on Form S-1 (File No. 333-269088), which Post-Effective Amendment was declared effective by the SEC on September 7, 2023. On May 1, 2024, the Company filed a Post-Effective Amendment No. 2 to Form S-1 on Form S-3 (File No. 333-269088), which Post-Effective Amendment was declared effective by the SEC on May 2, 2024.
The Company evaluated the 2022 Debenture and the 2022 Warrant and determined that the 2022 Warrant is a freestanding financial instrument. Initially, the 2022 Warrant is not considered indexed to the Company’s own stock, because the settlement amount would not equal the difference between the fair value of a fixed number of the Company’s equity shares and a fixed strike price and all of the adjustment features in Section 3(b) of the Alpha Warrant are not down round provisions, as defined in ASU 2017-11. Accordingly, the 2022 Warrant was classified as a liability and recognized at fair value, with subsequent changes in fair value recognized in earnings.
In
accordance with ASC 470-50, the Company determined that the modified terms of the 2022 Debenture were substantially different when compared
to the original terms that existed prior to the SPA Amendment, and thus the event was required to be accounted for as a debt extinguishment.
Accordingly, the Company derecognized the net carrying value of the original Debenture, and recorded the new debt instrument at its fair
value of $
On
February 27, 2024, in connection with the issuance of an additional warrant to Alpha with an exercise price of $
2024 Alpha Debenture (Related party)
On
February 27, 2024, pursuant to a Securities Purchase Agreement executed with Alpha on February 27, 2024 the “2024 Securities Purchase
Agreement, the Company issued to Alpha an
| 15 |
Pursuant
to the 2024 Securities Purchase Agreement, the Company also granted to Alpha an option, exercisable until July 1, 2024, to purchase from
us an additional
The Company evaluated the terms of the 2024 Securities Purchase Agreement and determined that the 2024 Alpha Warrant and the Option issued to Alpha are each considered freestanding financial instruments. The 2024 Alpha Warrant was further determined to initially (i) be indexed to the Company’s own stock, and (ii) meet all of the additional criteria for permanent equity classification. As the Option required the Company to issue convertible debt with multiple cash settlement alternatives, the Option was classified as a liability and recognized at fair value, with subsequent changes in fair value recognized in earnings.
The
net proceeds from the issuance of the 2024 Alpha Debenture were allocated first to the liability-classified Option and the bifurcated
embedded features in the 2024 Alpha Debenture (conversion option, contingent acceleration upon an Event of Default, and contingent interest
upon an Event of Default), with the resulting difference, if any, allocated to the loan host instrument and the equity-classified warrant
on a relative fair value basis. The fair value of the Option was estimated to be $
During
the three months ending March 31, 2024 in connection with the 2024 Alpha Debenture, the Company recorded initial derivative liabilities
with a fair value of $
As
of March 31, 2024, the fair value of derivative liabilities related to the 2024 Alpha Debenture was $
On November 20, 2024, in connection with the closing of the Company’s private placement transaction and issuance of Series A-2 Preferred Stock, the Company repaid the outstanding principal and accrued interest on the Alpha Debenture, in full settlement of the obligation. As of December 31, 2024, there were no amounts outstanding under the 2024 Alpha Debenture.
2024 Convertible Debenture
In
April 2024, Alpha assigned the Option to Yi Hua Chen (“Chen”) and Chen exercised the option in full, in exchange for $
In
November 2024, in connection with the closing of the Company’s private placement transaction and issuance of Series A-2 Preferred
Stock, the Company and Chen executed an Exchange Agreement (the “Exchange Agreement”), agreeing to convert all outstanding
principal and accrued interest on the 2024 Chen Debenture totaling approximately $
Short-Term Promissory Notes
During
the three months ended March 31, 2025 the Company issued short term notes payable totaling $
| 16 |
The Penalty would only be triggered upon nonpayment by the Company upon the Maturity Date. Therefore, the Company views the Penalty to be a contingent fee which would only be triggered upon the occurrence of non-payment. Under ASC 450-20, the Penalty should be viewed as a potential loss contingency which would require payment if the Company does not have the ability to repay the Note at the Maturity Date. As the Company’s financial position at March 31, 2025 is insufficient to pay the principal owed and future cash flows through fundraising are not guaranteed, the Company will accrue a liability for the Penalty through the Maturity Date. The difference between the face value of the note and the ultimate expected repayment will be treated as interest.
Promissory notes consisted of the following at March 31, 2025:
SCHEDULE OF PROMISSORY NOTES
| March 31, | ||||
| 2025 | ||||
| Promissory notes | $ | |||
| Accrued penalty | ||||
| Promissory notes, net | $ | |||
Interest
expense was $
There
were
NOTE 9 — EARNINGS (LOSS) PER SHARE
Basic loss per share (“EPS”) is computed by dividing net loss by the weighted-average number of common shares outstanding plus unexercised pre-funded warrants. Diluted EPS is computed based on the sum of the weighted-average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of shares issuable from preferred stock, convertible debt, stock options and warrants.
These potentially dilutive securities have been excluded from diluted net loss per share as of March 31, 2025 and 2024 because their effect would be anti-dilutive:
SCHEDULE OF DILUTIVE SECURITIES EXCLUDED FROM DILUTED NET LOSS PER SHARE
For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss used for basic earnings per share | $ | ( | ) | $ | ( | ) | ||
| Basic weighted-average common shares outstanding | ||||||||
| Dilutive potential shares issuable from preferred stock, convertible debt, stock options and warrants | — | — | ||||||
| Diluted weighted-average common shares outstanding | ||||||||
The following potentially dilutive securities have been excluded from diluted net loss per share as of March 31, 2025 and 2024 because their effect would be anti-dilutive:
| As of March 31, | ||||||||
| 2025 | 2024 | |||||||
| Shares of common stock subject to outstanding options | ||||||||
| Shares of common stock subject to outstanding warrants (excluding pre-funded warrants) | ||||||||
| Shares of common stock subject to outstanding preferred stock | — | |||||||
| Shares of common stock subject to outstanding convertible debt | — | |||||||
| Total common stock equivalents | ||||||||
| 17 |
NOTE 10 — COMMITMENTS AND CONTINGENCIES
Litigation and Other Legal Proceedings
On
January 29, 2025, the Company was named as a defendant in an action brought by LifeSci Capital LLC (“LifeSci”) in the U.S.
District Court for the Southern District of New York. The complaint alleges that the Company failed to pay $
The Company filed its answer on March 17, 2025, denying the material allegations in the complaint and asserting various affirmative defenses. As of May 29, 2025, the matter is in the discovery phase.
The Company disputes that any amount is owed and is vigorously defending the lawsuit. Based on the current stage of the proceedings and the information available at this time, the Company does not believe a loss is probable or reasonably estimable.
NOTE 11 — RESEARCH AND LICENSE AGREEMENTS
UCL Business Limited
In
January 2022, the Company entered into a License Agreement with UCL Business Limited to obtain an exclusive worldwide in-license of a
genomic quadruplex (G4)-selective transcription inhibitor drug development program which had been developed at University College London,
including lead and back-up compounds, preclinical data and a patent estate. (UCL Business Limited is the commercialization company for
University College London.) The program’s lead compound is now being developed at the Company under the name QN-302 as a candidate
for treatment for pancreatic ductal adenocarcinoma, which represents the vast majority of pancreatic cancers. The License Agreement required
a $
For
both the three months ended March 31, 2025 and 2024, there were license costs of $
QN-302 Phase 1 Study
In June 2023, the Company entered into a Master Clinical Research Services Agreement with Translational Drug Development, LLC (“TD2”) whereby TD2 agreed to perform certain clinical research and development services for the Company including but not limited to trial management, side identification and selection, site monitoring/management, medical monitoring, project management, data collection, statistical programming or analysis, quality assurance auditing, scientific and medical communications, regulatory affairs consulting and submissions, strategic consulting, and/or other related services. From time to time, the Company shall enter into statements of work with TD2 for the performance of specific services under this Master Clinical Research Services Agreement.
In June 2023, the Company entered into a Master Laboratory Services Agreement with MLM Medical Labs, LLC (“MLM”) whereby MLM agreed to perform certain clinical research and development services for the Company including but not limited to laboratory, supply, testing, validation, data management, and storage services. From time to time, the Company shall enter into work orders with MLM for the performance of specific services under this Master Laboratory Services Agreement.
In June 2023, the Company entered into a Master Services Agreement with Clinigen Clinical Supplies Management, Inc. (“Clinigen”) whereby Clinigen agreed to provide certain pharmaceutical products and/or services. From time to time, the Company shall enter into statements of work with Clinigen for the performance of specific services under this Master Services Agreement.
In July 2023, pursuant to the above agreements, the Company entered into work orders and statements of work for clinical trial services for the conduct of the QN-302 Phase 1 study. Given our financial situation, the company slowed the development of the QN-302 Phase 1 Study beginning in the second quarter of 2024.
| 18 |
The University of Louisville Research Foundation
In
March 2019, the Company entered into a sponsored research agreement and an option for a license agreement with University of Louisville
Research Foundation, Inc. (“ULRF”) for development of several small-molecule RAS interaction inhibitor drug candidates. Under
the terms of this agreement, the Company agreed to reimburse ULRF for sponsored research expenses of initially up to $
There
were
Between
June 2018 and April 2022, the Company entered into license and sponsored research agreements with ULRF for QN-247, a novel aptamer-based
compound that has shown promise as an anticancer drug.
The
sponsored research agreement for QN-247 expired in August 2022 and there were
Marizyme
On
April 11, 2024, the Company entered into a Co-Development Agreement with Marizyme. Under the Co-Development Agreement (as amended),
| 19 |
NOTE 12 — STOCKHOLDERS’ EQUITY
As of March 31, 2025 and December 31, 2024, the Company had two classes of authorized capital stock: common stock and preferred stock.
Common Stock
Holders of common stock generally vote as a class with the holders of the preferred stock and are entitled to one vote for each share held. Subject to the rights of the holders of the preferred stock to receive preferential dividends, the holders of common stock are entitled to receive dividends when and if declared by the Board of Directors. Following payment of the liquidation preference of the preferred stock, any remaining assets will be distributed ratably among the holders of the common stock and, on an as-if-converted basis, the holders of any preferred stock upon liquidation, dissolution or winding up of the affairs of the Company. The holders of common stock have no preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions.
At
March 31, 2025, the Company has reserved
SCHEDULE OF RESERVED SHARES
| Exercise of issued and future grants of stock options | ||||
| Conversion of Series A-2 preferred stock | ||||
| Exercise of stock warrants | ||||
| Total |
Preferred Stock
There
are a total of
On
November 20, 2024 in a private placement transaction, the Company sold and issued to certain institutional and accredited investors
The shares of Series A-2 Preferred Stock have the rights, preferences, powers, restrictions and limitations as set forth below.
Conversion
Rights – Each share of Series A-2 Preferred Stock is convertible at any time, at the option of the holder, into a number of shares
of common stock equal to $
| 20 |
Liquidation Preference – Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, the holders shall be entitled to an amount equal to the Stated Value for each share of Series A-2 Preferred Stock before any distribution or payment shall be made to the holders of common stock.
Voting Rights – The holders of Series A-2 Preferred Stock are entitled to vote, together as a single class with the common stock, on all matters presented to the common stockholders for a vote. Each share of Series A-2 Preferred Stock is entitled to a number of votes equal to the number of shares into which such share of Series A-2 Preferred Stock would be convertible, as of the record date for determination of stockholders entitled to vote as to such matter, if the conversion price was equal to the “Minimum Price” (as defined in Nasdaq Listing Rule 5635(d)) as of November 20, 2024, taking into account for such purposes the beneficial ownership limitation as then in effect.
Dividends – The holders of Series A-2 Preferred Stock are entitled to receive dividends, if and when such dividends are paid to holders of common stock, in the same form and at the same time on an as-converted to common stock basis.
Protective Provisions – At all times while the Series A-2 Preferred Stock are outstanding, without the consent of the holders of at least 67% of the Stated Value of the then-outstanding Series A-2 Preferred Stock, the Company is prohibited from amending its charter documents in any manner that adversely affects the rights of the Series A-2 Preferred Stock, repurchase junior securities of the Company, pay cash dividends or distributions on junior securities of the Company, or enter into a material transactions with an affiliate of the Company (unless it is at arm’s length and expressly approved by a majority of the disinterested directors).
Stock Options and Warrants
Stock Options
The Company recognizes all compensatory share-based payments as compensation expense over the service period, which is generally the vesting period.
In
April 2020, the Company adopted the 2020 Stock Incentive Plan (the “2020 Plan”), which provides for the granting of incentive
or non-statutory common stock options and other types of awards to qualified employees, officers, directors, consultants and other service
providers. At March 31, 2025 and December 31, 2024, there were
The following represents a summary of the options granted to employees and non-employee service providers that were outstanding at March 31, 2025, and changes during the three-month period then ended:
SCHEDULE OF STOCK OPTION ACTIVITY
| Shares | Weighted–Average Exercise Price | Range of Exercise Price | Weighted– Average Remaining Life (Years) | ||||||||||||
| Total outstanding – December 31, 2024 | $ | $ | |||||||||||||
| Granted | — | — | — | — | |||||||||||
| Expired | — | — | — | — | |||||||||||
| Forfeited | ( | ) | $ | $ | — | ||||||||||
| Total outstanding – March 31, 2025 | $ | $ | |||||||||||||
| Exercisable (vested) | $ | $ | |||||||||||||
| Non-Exercisable (non-vested) | $ | $ | |||||||||||||
| 21 |
The following represents a summary of the options granted to employees and non-employee service providers that were outstanding at March 31, 2024, and changes during the three-month period then ended:
| Weighted– | Weighted– | |||||||||||||||
| Average | Range of | Average | ||||||||||||||
| Exercise | Exercise | Remaining | ||||||||||||||
| Shares | Price | Price | Life (Years) | |||||||||||||
| Total outstanding – December 31, 2023 | $ | $ | ||||||||||||||
| Granted | — | — | — | — | ||||||||||||
| Expired | — | — | — | — | ||||||||||||
| Forfeited | — | — | — | — | ||||||||||||
| Total outstanding – March 31, 2024 | $ | $ | ||||||||||||||
| Exercisable (vested) | $ | $ | ||||||||||||||
| Non-Exercisable (non-vested) | $ | $ | ||||||||||||||
There
were approximately $
The exercise price for an option issued under the 2020 Plan is determined by the Board of Directors, but will be (i) in the case of an incentive stock option (A) granted to an employee who, at the time of grant of such option, is a 10% stockholder, no less than 110% of the fair market value per share on the date of grant; or (B) granted to any other employee, no less than 100% of the fair market value per share on the date of grant; and (ii) in the case of a non-statutory stock option, no less than 100% of the fair market value per share on the date of grant. The options awarded under the 2020 Plan will vest as determined by the Board of Directors but will not exceed a ten-year period. A forfeiture is recognized as incurred if the option holder does not exercise after 90 days following termination of service.
No stock options were granted or exercised during the three months ended March 31, 2025 and March 31, 2024.
Fair Value of Equity Awards
The Company utilizes the Black-Scholes option pricing model to value awards under its equity plans. Key valuation assumptions include:
| ● | Expected dividend yield. The expected dividend is assumed to be zero, as the Company has never paid dividends and has no current plans to pay any dividends on the Company’s common stock. |
| ● | Expected stock-price volatility. The Company’s expected volatility is derived from the average historical volatilities of publicly traded companies within the Company’s industry that the Company considers to be comparable to the Company’s business over a period approximately equal to the expected term, because the Company does not have sufficient stock price history over the expected term. |
| ● | Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected term. |
| ● | Expected term. The expected term represents the period that the stock-based awards are expected to be outstanding. The Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data. Therefore, the Company estimates the expected term by using the simplified method provided by the SEC. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the options. |
| 22 |
The Company recorded share-based compensation expense and classified it in the unaudited condensed consolidated statements of operations as follows:
SCHEDULE OF SHARE-BASED COMPENSATION EXPENSE
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| General and administrative | $ | $ | ||||||
| Research and development | — | |||||||
| Total | $ | $ | ||||||
Equity Classified Compensatory Warrants
As
part of the May 2020 reverse recapitalization transaction, the Company issued equity classified compensatory common stock warrants to
an advisor and its designees. In addition, various service providers hold equity classified compensatory common stock warrants issued
in 2017 and earlier (originally exercisable to purchase Series C convertible preferred stock, and now instead exercisable to purchase
common stock). These are to be differentiated from the Series C Warrants described in Note 7- Warrant Liabilities. As of March 31, 2025,
warrants to purchase
On
February 27, 2024, as a result of a down-round provision triggered by a Securities Purchase Agreement with Alpha for the purchase of
the February 2024 Debenture,
The following table summarizes the equity classified compensatory warrant activity for the three months ended March 31, 2025:
SCHEDULE OF COMPENSATORY WARRANT ACTIVITY
| Common Stock | ||||||||||||||||
| Shares | Weighted–Average Exercise Price | Range of Exercise Price | Weighted–Average Remaining Life (Years) | |||||||||||||
| Total outstanding – December 31, 2024 | $ | $ | ||||||||||||||
| Granted | — | — | — | — | ||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Expired | ( | ) | $ | $ | — | |||||||||||
| Forfeited | — | — | — | — | ||||||||||||
| Total outstanding – March 31, 2025 | $ | $ | ||||||||||||||
| Exercisable | $ | $ | ||||||||||||||
| Non-Exercisable | — | — | — | — | ||||||||||||
| 23 |
The following table summarizes the equity classified compensatory warrant activity for the three months ended March 31, 2024:
| Common Stock | ||||||||||||||||
| Shares | Weighted–Average Exercise Price | Range of Exercise Price | Weighted–
Average Remaining Life (Years) | |||||||||||||
| Total outstanding – December 31, 2023 | $ | $ | ||||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Expired | ( | ) | $ | $ | — | |||||||||||
| Forfeited | — | — | — | — | ||||||||||||
| Total outstanding – March 31, 2024 | $ | $ | ||||||||||||||
| Exercisable | $ | $ | ||||||||||||||
| Non-Exercisable | — | — | — | — | ||||||||||||
There
were
Noncompensatory Equity Classified Warrants
On
May 22, 2020, as a commitment fee, the Company issued noncompensatory equity classified warrants to Alpha for the purchase of common
stock, of which warrants for
On
December 22, 2022, in conjunction with the issuance of a debenture to Alpha (see Note 8 – Convertible Debt), the Company issued
to Alpha a warrant to purchase
On
February 27, 2024 the Company entered into a new Securities Purchase Agreement with Alpha for the purchase of the February 2024 Debenture
(see Note 8 – Convertible Debt). This Securities Purchase Agreement resulted in the reduction of the exercise price of the December
22, 2022 warrant and the May 2020 warrant from $
On
September 6, 2024 as a result of the down-round provision triggered by shares sold in a public offering, the above warrants were repriced
from $
As
a result of a partial voluntary conversion of the 2024 Alpha Debenture on September 9, 2024, the Company no longer had sufficient shares
to settle the 2024 Alpha Warrant in full until shareholder approval was obtained, and a portion (
| 24 |
On
September 6, 2024, upon the closing of a public offering, the Company issued pre-funded warrants to purchase
On
September 6, 2024, upon the closing of a public offering,
No new noncompensatory warrants were issued during the three months ended March 31, 2025 and March 31, 2024.
The following table summarizes the noncompensatory equity classified warrant activity for the three months ended March 31, 2025:
SCHEDULE OF NON COMPENSATORY WARRANT ACTIVITY
| Common Stock | ||||||||||||||||
| Shares | Weighted–
Average Exercise Price | Range of Exercise Price | Weighted–
Average Remaining Life (Years) | |||||||||||||
| Total outstanding – December 31, 2024 | $ | $ | ||||||||||||||
| Granted | — | — | — | — | ||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Expired | — | — | — | — | ||||||||||||
| Forfeited | — | — | — | — | ||||||||||||
| Total outstanding – March 31, 2025 | $ | $ | ||||||||||||||
| Exercisable | $ | $ | ||||||||||||||
| Non-Exercisable | — | — | — | — | ||||||||||||
The following table summarizes the noncompensatory equity classified warrant activity for the three months ended March 31, 2024:
| Common Stock | ||||||||||||||||
| Shares | Weighted– Average Exercise Price | Range of Exercise Price | Weighted–Average Remaining Life (Years) | |||||||||||||
| Total outstanding – December 31, 2023 | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Expired | — | — | — | — | ||||||||||||
| Forfeited | — | — | — | — | ||||||||||||
| Total outstanding – March 31, 2024 | $ | $ | ||||||||||||||
| Exercisable | $ | $ | ||||||||||||||
| Non-Exercisable | — | — | — | — | ||||||||||||
| 25 |
NOTE 13 — RELATED PARTY TRANSACTIONS
Convertible Debt
On
December 22, 2022, the Company issued to Alpha, an
On
February 27, 2024, the Company issued to Alpha, an
On
April 12, 2024, the Company issued to Chen an
See Note 8 – Convertible Debt for additional information concerning convertible debt – related party transactions.
Warrants
On
May 22, 2020, as a commitment fee, the Company issued warrants to Alpha for the purchase of common stock. As of March 31, 2025,
On
December 22, 2022, in conjunction with the issuance of a debenture to Alpha, the Company issued to Alpha a warrant to purchase
On
February 27, 2024, in conjunction with the issuance of a debenture to Alpha, the Company issued to Alpha, a warrant to purchase
On
September 6, 2024 as a result of the down-round provision triggered by shares sold in a public offering, the above warrants were repriced
from $
As
a result of a partial voluntary conversion of the 2024 Alpha Debenture on September 9, 2024, the Company no longer had sufficient shares
to settle the 2024 Alpha Warrant in full until shareholder approval was obtained, and a portion (
| 26 |
During the three months ended March 31, 2025, there were no exercises of this warrant. This warrant is included in equity on the Company’s consolidated balance sheets (see Note 12 – Stockholders’ Equity).
As
of March 31, 2025, the exercise price of all of the above warrants issued to Alpha was $
On
April 12, 2024, in connection with the issuance of a debenture to Chen (see Note 9 – Convertible Debt), the Company issued a liability
classified warrant to Chen to purchase
NOTE 14 — SUBSEQUENT EVENTS
In
April 2025, a total of
In
July 2025, a total of
In
April 2025, the Company received $
In April 2025, the Company borrowed a total of $
In May 2025,
the Company borrowed a total of $
From
April through July 2025, an additional $
| 27 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and the audited financial statements and notes thereto as of and for the twelve months ended December 31, 2024, which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 30, 2025. As used in this Quarterly Report, unless the context suggests otherwise, “we,” “us,” “our,” or “Qualigen” refer to Qualigen Therapeutics, Inc. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.
Cautionary Note Regarding Forward Looking Statements
This Quarterly Report contains forward-looking statements by the Company that involve risks and uncertainties and reflect the Company’s judgment as of the date of this Report. These statements generally relate to future events or the Company’s future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” or “continue” or the negative of these words or other similar terms or expressions that concern the Company’s expectations, strategy, plans or intentions. Such forward-looking statements may relate to, among other things, potential future development, testing and launch of products and product candidates. Actual events or results may differ from our expectations due to a number of factors.
Some of the factors that we believe could cause actual results to differ from those anticipated or predicted include:
| ● | our ability to procure sufficient working capital to continue and complete the development, testing and launch of our prospective drug products; | |
| ● | our ability to successfully develop any drugs; | |
| ● | our ability to progress our drug candidates through preclinical and clinical development; | |
| ● | our ability to obtain the requisite regulatory approvals for our clinical trials and to begin and complete such trials according to any projected timeline; | |
| ● | our ability to complete enrollment in our clinical trials as contemplated by any projected timeline; | |
| ● | the likelihood that future clinical trial data will be favorable or that such trials will confirm any improvements over other products or lack negative impacts; | |
| ● | our ability to successfully commercialize any drugs; | |
| ● | the likelihood that patents will issue on our in-licensed patent applications; | |
| ● | our ability to protect our intellectual property; and | |
| ● | our ability to compete. |
By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics, and healthcare, regulatory and scientific developments and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent in some future periods with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in other future periods. Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of this Quarterly Report, and we disclaim any intent or obligation to update these forward-looking statements beyond the date of this Quarterly Report, except as required by law. This caution is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Future filings with the Securities and Exchange Commission (the “SEC”), future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may also contain forward-looking statements. Because such statements include risks and uncertainties, many of which are beyond our control, actual results may differ materially from those expressed or implied by such forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.
| 28 |
Overview
We are an early-clinical-stage therapeutics company focused on developing treatments for adult and pediatric cancer. Our business now consists of one early-clinical-stage therapeutic program (QN-302) and one preclinical therapeutic program (Pan-RAS) , and a co-development agreement with Marizyme, Inc. (“Marizyme”).
Our lead program, QN-302, is an investigational small molecule G-quadruplexes (G4)-selective transcription inhibitor with strong binding affinity to G4s prevalent in cancer cells (such as pancreatic cancer). Such binding could, by stabilizing the G4s against DNA “unwinding,” help inhibit cancer cell proliferation.
Our Pan-RAS program, which is currently at the preclinical stage, consists of a family of RAS oncogene protein-protein interaction inhibitor small molecules believed to inhibit or block mutated RAS genes’ proteins from binding to their effector proteins thereby leaving the proteins from the mutated RAS unable to cause further harm. In theory, such mechanism of action may be effective in the treatment of about one quarter of all cancers, including certain forms of pancreatic, colorectal, and lung cancers. The investigational compounds within our Pan-RAS portfolio are designed to suppress the interaction of endogenous RAS with c-RAF, upstream of the KRAS, HRAS and NRAS effector pathways.
In addition, under a Co-Development Agreement dated April 11, 2024 with Marizyme, Inc. (“Marizyme”), we are entitled to receive quarterly a 33% payment in the nature of royalties (capped at double the amount of Funding Payment cash we provide to Marizyme) on any Net Sales (as defined with a meaning tantamount to gross profit on net sales) of Marizyme’s DuraGraft™ vascular conduit solution, which is indicated for adult patients undergoing coronary artery bypass grafting surgeries and is intended for the flushing and storage of the saphenous vein grafts used in coronary artery bypass grafting surgery. No such payments-in-the-nature-of-royalties would accrue until after DuraGraft has been launched in the United States and a cumulative total of $500,000 of DuraGraft Net Sales have been made in the United States. To date we have provided $1,750,000 of Funding Payments to Marizyme (inclusive of a $1,250,000 demand promissory note dated July 15, 2024 which bears interest at 18% per annum).
We do not expect to be profitable before products from our therapeutics pipeline are commercialized. To experience losses while therapeutic products are still under development is, of course, typical for biotechnology companies. Given our financial situation, the company slowed the development of the aforementioned therapeutic products beginning in the second quarter of 2024. We have also implemented dramatic expense controls in an effort to stem the rate of losses. Management and the board are strategically reviewing plans on how to best advance our therapeutics pipeline, and will ramp up development when properly funded through either capital markets or strategic partnerships.
Recent Developments
Marizyme
On April 11, 2024, we entered into a Co-Development Agreement with Marizyme. Under the Co-Development Agreement (as amended on August 6, 2024), we agreed to pay Marizyme a Funding Payment of up to $1,750,000 and an Exclusivity Fee of $200,000. The Exclusivity Fee of $200,000 and a Funding Payment of $500,000 was paid to Marizyme on April 12, 2024. The Exclusivity Fee entitled us to an exclusivity period until May 31, 2024 for purposes of proposing and outlining a broader strategic relationship with Marizyme with regard to Marizyme’s DuraGraft business. The Funding Payment is designed to provide financial support for commercialization of Marizyme’s DuraGraft™ vascular conduit solution, which is indicated for adult patients undergoing coronary artery bypass grafting surgeries and is intended for the flushing and storage of the saphenous vein grafts used in coronary artery bypass grafting surgery. In return for the Funding Payment we will receive quarterly a 33% payment in the nature of royalties on any Net Sales (as defined with a meaning tantamount to gross profit on net sales) of DuraGraft, capped at double the amount of the Funding Payment cash provided. No such payments-in-the-nature-of-royalties would accrue until after DuraGraft has been launched in the United States and a cumulative total of $500,000 of DuraGraft Net Sales have been made in the United States.
In addition, as of March 31, 2025, the Company has advanced had $2,562,400 to Marizyme, Inc., a Nevada corporation (“Marizyme”), against which Marizyme had previously delivered its demand promissory notes to the Company of like principal amounts (the “Marizyme Note”). The Marizyme Note bears interest the rate of eighteen percent (18%) per annum. Marizyme may pre-pay all or any part of the outstanding principal or interest of the Marizyme Note at any time and from time to time, in whole or in part, without premium or penalty.
| 29 |
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements historically have not separated our diagnostics-related activities from our therapeutics-related activities. All of our historically reported revenue was diagnostics-related
This discussion and analysis is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to determination of allowance for credit losses, fair value of derivative financial instruments and warrant liabilities, and stock-based compensation. We base our estimates on historical experience, known trends and events and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in Note 1 to our condensed consolidated financial statements, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our financial condition and results of operations:
| ● | Research and development | |
| ● | Derivative financial instruments and warrant liabilities | |
| ● | Stock-based compensation | |
| ● | Income taxes |
Derivative Financial Instruments and Warrant Liabilities
On April 12, 2024, in connection with an 8% Convertible Debenture in the principal amount of $1,100,000 issued to Yi Hua Chen (“Chen”) (see Note 7 Warrant Liabilities), we issued a liability classified warrant to Chen purchase 36,001 shares of our common stock, exercisable until February 27, 2029, which remains outstanding and exercisable as of September 30, 2024.
As a result of a partial voluntary conversion of the 2024 Alpha Debenture on September 9, 2024, as of September 30, 2024 the Company no longer had sufficient shares to settle the 2024 Alpha Warrant in full until shareholder approval was obtained, and a portion (2,314 warrant shares) was reclassified to liabilities (see Note 7 Warrant Liabilities and Note 12 - Stockholders’ Equity).
The fair value of liability classified warrants will be determined each quarter on a “mark-to-market” basis, it could result in significant variability in our future quarterly and annual consolidated statement of operations and consolidated balance sheets based on changes in our public market common stock price. Pursuant to U.S. GAAP, a quarter-to-quarter increase in our stock price would result in an increase in the fair value of the warrant liabilities and a quarter-to-quarter decrease in our stock price would result in a decrease in the fair value of the warrant liabilities.
Short-Term Notes Receivable
As of March 31, 2025, the Company had advanced to Marizyme $2,562,400, against which Marizyme delivered demand promissory notes to the Company of like principal amounts (the “Marizyme Notes”). As of March 31, 2025, accrued interest related to the Marizyme Notes was $224,163. Interest income of $110,871 for the three months ended March 31, 2025 was recognized in other income in the condensed consolidated statement of operations. As of March 31, 2024 there were no amounts due to the Company under the Marizyme Notes.
The Marizyme Notes bear at interest the rate of eighteen percent (18%) per annum. Marizyme may pre-pay all or any part of the outstanding principal or interest at any time and from time to time, in whole or in part, without premium or penalty.
Under ASC 326-20, known as the current expected credit loss (“CECL”) model, the Company was required to estimate credit losses expected over the life of an exposure (or pool of exposures) based on historical information, current information, and reasonable and supportable forecasts. The Company is unable to use its historical data to estimate losses as it has no relevant loss history to date. To determine the estimate of expected credit losses, the Company used a probability-weighted approach that incorporates multiple settlement scenarios, including recovery of amounts due upon an acquisition of the debtor, and recovery in different liquidation scenarios, and determines the expected recoverable amount of the loan in each scenario. This model requires management to make certain assumptions including the likelihood of each outcome, the estimated value of the debtor’s assets, and the Company’s expected claim and recovery rate on the debtor’s assets in the event of an insolvency or a liquidation proceeding. As of March 31, 2025, the estimate for expected credit losses on the Marizyme Notes is $557,000. Given the inherently uncertain nature of the debtor’s financial condition and future outcomes, actual credit losses may differ materially from this estimate. The Company will continue to monitor relevant events and conditions and update its assumptions and allowance as necessary.
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Results of Operations
Comparison of the Three Months Ended March 31, 2025 and 2024
The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024:
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| EXPENSES | ||||||||
| General and administrative | $ | 2,494,532 | $ | 1,057,364 | ||||
| Research and development | 33,167 | 364,385 | ||||||
| Credit loss expense - short-term note receivable | 197,000 | |||||||
| Total expenses | 2,724,699 | 1,421,749 | ||||||
| LOSS FROM OPERATIONS | (2,724,699 | ) | (1,421,749 | ) | ||||
| OTHER EXPENSE (INCOME), NET | ||||||||
| (Gain) loss on change in fair value of warrant liabilities | (39,224 | ) | 133,300 | |||||
| Gain on change in fair value of derivative liabilities | — | (164,497 | ) | |||||
| Interest expense | 73,615 | 136,556 | ||||||
| Interest income | (112,953 | ) | (1,619 | ) | ||||
| Loss on issuance of convertible debt | — | 358,279 | ||||||
| Loss on monthly redemptions of convertible debt into common stock | — | 147,197 | ||||||
| Total other expense (income), net | (78,562 | ) | 609,216 | |||||
| LOSS BEFORE PROVISION FOR INCOME TAXES | (2,646,137 | ) | (2,030,965 | ) | ||||
| (BENEFIT) PROVISION FOR INCOME TAXES | 35 | 1,786 | ||||||
| NET LOSS FROM CONTINUING OPERATIONS | (2,646,172 | ) | (2,032,751 | ) | ||||
| DISCONTINUED OPERATIONS | ||||||||
| Loss on disposal of discontinued operations, net of tax | — | — | ||||||
| GAIN (LOSS) FROM DISCONTINUED OPERATIONS | — | — | ||||||
| NET LOSS | (2,646,172 | ) | (2,032,751 | ) | ||||
| Deemed dividend arising from warrant down-round provision | $ | — | $ | (60,017 | ) | |||
| Net loss attributable to Qualigen Therapeutics, Inc | $ | (2,646,172 | ) | $ | (2,092,768 | ) | ||
| Total net loss per common share, basic and diluted | $ | (1.82 | ) | $ | (17.60 | ) | ||
| Weighted-average number of shares outstanding, basic and diluted | 1,456,714 | 118,876 | ||||||
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Expenses
General and Administrative Expenses
General and administrative expenses increased from $1.1 million for the three months ended March 31, 2024, to $2.5 million for the three months ended March 31, 2025, an increase of $1.4 million or 135%. This is primarily due to an increase in investor relations expense of $1.4 million as we raised funding, plus in professional fees of $0.5 million offset by a decrease in payroll expenses of $0.4 million.
Research and Development Costs
Research and development expenses decreased from $0.4 million for the three months ended March 31, 2024, to $33,000 for the three months ended March 31, 2025, a decrease of $0.3 million or 90%. This was primarily due all research and development being slowed down in 2025, resulting in decreases in QN-302 program expenses of $216,000, a decrease in RAS program expenses of $15,000, a decrease in payroll of $62,000 and a decrease in stock-based compensation of $25,000
Credit Loss Expense – Short-Term Note Receivable
Credit loss expense – short-term note receivable increased from $0 for the three months ended March 31, 2024, to $0.2 million for the three months ended March 31, 2025, an increase of $0.2 million or 100%. This is due to Marizyme notes first being recorded in July 2024, therefore no reserve was required for the the three months ended March 31, 2024
Other Expense (Income), Net
Gain on Change in Fair Value of Warrant Liabilities
During the three months ended March 31, 2025 and 2024, we experienced a gain of approximately $39,000 and a loss of approximately $0.1 million, respectively, on change in fair value of warrant liabilities, primarily due to changes in our stock price and expiration of warrants during the prior period, and changes in our stock price in the prior period. Typically, a decline in our stock price would result in a decline in the fair value of our warrant liabilities, generating a gain, while an increase in our stock price would result in an increase in the fair value of our warrant liabilities, generating a loss.
Gain on Change in Fair Value of Derivative Liabilities
During the three months ended March 31, 2025 we experienced $0 on change in fair value of derivative liabilities, compared to a gain of $0.2 million for the three months ended March 31, 2024. The fair value of derivative liabilities declined during the current period due to derivative liabilities all being settled in 2024.
Interest Expense
Interest expense decreased from $0.1 million for the three months ended March 31, 2024 to $0.1 million for the three months ended March 31, 2025 due to a $0.1 million decrease for to the settlement of convertible notes in 2024, offset by an increase in $74,000 in amortization of accrued penalty for promissory notes issued in 2025.
Interest Income
Interest income increased from $2,000 for the three months ended March 31, 2024 to $0.1 million for the three months ended March 31, 2025 due to a $0.1 million increase from the recording of interest on Marizyme notes receivable issued in 2024 and 2025.
Loss on Issuance of Convertible Debt
During the three months ended March 31, 2025 we experienced $0 on issuance on convertible debt, compared to a loss of $0.4 million for the three months ended March 31, 2024. No convertible stock was issued in 2025.
Loss on Monthly Redemptions of Convertible Debt into common stock
During the three months ended March 31, 2025 we experienced $0 on monthly redemptions of convertible debt into common stock, compared to a loss of $0.1 million for the three months ended March 31, 2024. All convertible debt was settled prior to 2025.
Other Income, Net
Other income, net was immaterial during the three months ended March 31, 2025 and 2024.
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Liquidity and Capital Resources
Our financial position is weak. As of March 31, 2025 we had approximately $30,000 in cash and net accounts payable of approximately $1.5 million. We are in arrears on accounts payable to important partners. We have incurred recurring losses from operations, and have an accumulated deficit of $125.7 million at March 31, 2025. We expect to continue to incur losses subsequent to the balance sheet date of March 31, 2025. For the three months ended March 31, 2025 and year ended December 31, 2024, we used cash of $1.6 million and $6.4 million, respectively, in operations.
Our current liabilities at March 31, 2025 include approximately $1.5 million of accounts payable, $0.8 million of short-term debt, $0.3 million of accrued expenses and other current liabilities, $0.2 million of warrant liabilities.
From January to June 2025, the Company borrowed a total of $3,515,000 from nine investors as short-term borrowings, each due within six months after the date of borrowing. Additionally, in July 2025, the Company plans to close a private placement transaction to raise additional funding through the sale of equity. We expect these proceeds to provide liquidity for the company through calendar year end. We expect to continue to have net losses and negative cash flow from operations, which will challenge our liquidity. These factors raise substantial doubt regarding our ability to continue as a going concern for the one-year period following the date that the financial statements in this Quarterly Report were issued.
Historically, our principal sources of cash have, in addition to previous revenue from product sales and license revenues from the FastPack product of line of Qualigen, Inc. (which we divested in July 2023), included proceeds from the issuance of common and preferred equity and proceeds from warrant exercises and the issuance of debt. There can be no assurance that further financing can be obtained on favorable terms, or at all. If we are unable to obtain funding, we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, and we could be unable to continue operations.
During the year ended December 31, 2024 we raised approximately $8.0 million in new equity consisting of $4.6 million from the sale of Preferred Series A-2 Preferred Stock, $3.0 million from the sale of sommon stock and prefunded warrants in a public offering, and $0.4 million from warrant exercises. We also raised $1.5 million in new convertible debt, and $2.0 million in short-term debt, of which $1.1 million in convertible debt and accrued interest was exchanged for Preferred Series A-2 Preferred Stock, and $0.5 million was repaid in cash. The $2.0 million in short-term debt was also repaid in cash during the year. These equity and debt capital raises resulted in approximately $9.0 million in cash provided by financing activities during the year ended December 31, 2024.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through third-party funding, commercialization, marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.
Delisting of our common stock from Nasdaq would have a serious negative effect on any future financing efforts. On April 24, 2025, the Company received a notice from Nasdaq notifying the Company that, because the Company was delinquent in filing its 2024 Form 10-K, the Company no longer complied with Nasdaq Listing Rule 5250(c), which requires companies with securities listed on Nasdaq to timely file all required periodic reports with the SEC. Therefore, in line with the Panel Monitor’s decision, the Company’s securities will be delisted from Nasdaq. If the Company did not request an appeal of this decision by May 1, 2025, trading of the Company’s common stock would have been suspended at the start of business on May 5, 2025. The Company appealed this decision to Nasdaq on May 1, 2025 and received a decision on June 24, 2025, stating that the Panel granted the Company’s request for continued listing on The Nasdaq Capital Market, subject to filing the 2024 10-K on June 30, 2025, and filing the form 10-Q for the period ended March 31, 2025 by July 18, 2025. The Company filed the Form 10-K for 2024 on June 30, 2025.
The accompanying financial statements have been prepared assuming that we will continue as a going concern. The financial statements do not include any adjustments that would be necessary should we be unable to continue as a going concern, and therefore, be required to liquidate its assets and discharge its liabilities in other than the normal course of business and at amounts that may differ from those reflected in the accompanying financial statements.
Contractual Obligations and Commitments
We have no material contractual obligations that are not fully recorded on our condensed consolidated balance sheets or fully disclosed in the notes to the financial statements.
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License and Sponsored Research Agreements
We have obligations under various license and sponsored research agreements to make future payments to third parties that become due and payable on the achievement of certain development, regulatory and commercial milestones (such as the start of a clinical trial, filing for product approval with the FDA or other regulatory agencies, product approval by the FDA or other regulatory agencies, product launch or product sales) or on the sublicense of our rights to another party. We have not included these commitments on our balance sheet because the achievement and timing of these events is not determinable. Certain milestones are in advance of receipt of revenue from the sale of products and, therefore, we may require additional debt or equity capital to make such payments.
We have multiple license agreements with ULRF. Under these agreements, we have taken over development, regulatory approval and commercialization of various drug compounds from ULRF and are responsible for maintenance of the related intellectual property portfolio. Under the terms of these agreements, we are required to make patent maintenance payments and payments based upon development, regulatory and commercial milestones for any products covered by the in-licensed intellectual property. The maximum aggregate milestone payments we may be obligated to make per product are $5 million. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low single digits. The royalty is subject to reduction for any third-party payments required to be made, with a minimum floor in the low single digits. We have the right to sublicense our rights under these agreements, but we will be required to pay ULRF a percentage of any sublicense income.
In January 2022, we entered into a License Agreement with UCL Business Limited to obtain an exclusive worldwide in-license of a genomic quadruplex (G4)-selective transcription inhibitor drug development program which had been developed at University College London, including lead and back-up compounds, preclinical data and a patent estate. (UCL Business Limited is the commercialization company for University College London.) We are further developing the program’s lead compound under the name QN-302. The License Agreement requires (if and when applicable) tiered royalty payments in the low to mid-single digits, clinical/regulatory/sales milestone payments, and sharing of a percentage of any non-royalty sublicensing consideration paid to the Company. In November 2023, we became obligated to pay $100,000 to UCL Business Limited upon the first patient dosing of QN-302, which was paid in January 2024.
2022 Convertible Debenture
On December 22, 2022, we issued to Alpha an 8% Senior Convertible Debenture in the aggregate principal amount of $3,300,000 for a purchase price of $3,000,000 pursuant to the terms of a Securities Purchase Agreement, dated December 21, 2022 (the “2022 Securities Purchase Agreement”). The 2022 Debenture has a maturity date of December 22, 2025 and is convertible, at any time, and from time to time, until the 2022 Debenture is no longer outstanding, at Alpha’s option, into shares of our common stock (the “Conversion Shares”), at a price initially equal to $1.32 per share, subject to adjustment as described in the 2022 Debenture and other terms and conditions described in the 2022 Debenture. On July 13, 2023, we obtained stockholder approval, for purposes of complying with Nasdaq Listing Rule 5635(d), for the issuance to Alpha of more than 20% of our issued and outstanding shares of common stock pursuant to the terms and conditions of (a) the 2022 Debenture, and (b) the common stock purchase warrant dated December 22, 2022 issued by us to Alpha. Between January 9 - 12, 2023, we issued 16,834 shares of common stock upon Alpha’s partial conversion of the 2022 Debenture at $66.00 per share for a total of $1,111,078 in principal. In October and December 2023, we issued 6,193 shares of common stock to Alpha in lieu of cash for monthly redemption payments on the 2022 Debenture at a weighted average price of $35.52 per share. During the three and nine months ending September 30, 2024, we issued 30,378 and 103,865 shares of common stock, respectively to Alpha in lieu of cash for monthly redemption payments on and voluntary conversions of the 2022 Debenture at a weighted average conversion price of $13.00 and $13.66 per share, respectively, and a weighted average fair value of $12.97 and $15.19 per share, respectively.
2024 Convertible Debentures
On February 27, 2024, upon our receipt of a cash purchase price payment of $500,000 (less expenses), we issued to Alpha an 8% Convertible Debenture (the “2024 Alpha Debenture”) in the principal amount of $550,000. The 2024 Alpha Debenture matures no later than December 31, 2024 and is convertible, at any time, and from time to time, at Alpha’s option, into shares of common stock of the Company, at $30.56 per share, subject to adjustment as described in the 2024 Alpha Debenture. Except in respect of an Exempt Issuance, the 2024 Alpha Debenture contains a “ratchet” antidilution provision, with a $5.82 per share floor. The 2024 Alpha Debenture accrues interest on its outstanding principal balance at the rate of 8% per annum, payable at maturity. In connection with this issuance, we also issued to Alpha a 5-year common stock purchase warrant to purchase 18,001 shares of our common stock with an exercise price of $6.50 per share as of September 30, 2024.
We also granted to Alpha an option, exercisable until July 1, 2024, to purchase from us additional 8% Convertible Debentures, of like tenor, with face amounts of up to an aggregate of $1,100,000 (and with a proportional number of accompanying common stock warrants of like tenor, up to a total of 36,002 additional warrants). On April 11, 2024, Alpha assigned this option to Yi Hua Chen, who exercised it in full on April 12, 2024 (see Note 8 - Convertible Debt to the Company’s condensed consolidated financial statements).
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Marizyme
On April 11, 2024, we entered into a Co-Development Agreement with Marizyme, Inc. (“Marizyme”). Under the Co-Development Agreement (as amended on August 6, 2024), we agreed to pay Marizyme a Funding Payment of up to $1,750,000 and an Exclusivity Fee of $200,000. The Exclusivity Fee of $200,000 and a Funding Payment of $500,000 was paid to Marizyme on April 12, 2024. The Exclusivity Fee entitled us to an exclusivity period until May 31, 2024 for purposes of proposing and outlining a broader strategic relationship with Marizyme with regard to Marizyme’s DuraGraft business. The Funding Payment is designed to provide financial support for commercialization of Marizyme’s DuraGraft™ vascular conduit solution, which is indicated for adult patients undergoing coronary artery bypass grafting surgeries and is intended for the flushing and storage of the saphenous vein grafts used in coronary artery bypass grafting surgery. In return for the Funding Payment we will receive quarterly a 33% payment in the nature of royalties on any Net Sales (as defined with a meaning tantamount to gross profit on net sales) of DuraGraft, capped at double the amount of the Funding Payment cash provided. No such payments-in-the-nature-of-royalties would accrue until after DuraGraft has been launched in the United States and a cumulative total of $500,000 of DuraGraft Net Sales have been made in the United States.
On July 15, 2024, the Company advanced to Marizyme, Inc., a Nevada corporation (“Marizyme”) $1,250,000 against which Marizyme had previously delivered its demand promissory note to the Company of like principal amount dated July 12, 2024 (the “Marizyme Note”). During the three month periods ending March 31, 2025 and December 31, 2024, the Company advanced additional funds of $0.3 million and $1.0 million, respectively. The Marizyme Note bears interest the rate of eighteen percent (18%) per annum. Marizyme may pre-pay all or any part of the outstanding principal or interest of the Marizyme Note at any time and from time to time, in whole or in part, without premium or penalty.
Other Service Agreements
We enter into contracts in the normal course of business, including with clinical sites, contract research organizations, and other professional service providers for the conduct of clinical trials, contract manufacturers for the production of our product candidates, contract research service providers for preclinical research studies, professional consultants for expert advice and vendors for the sourcing of clinical and laboratory supplies and materials. These contracts generally provide for termination on notice, and therefore are cancelable contracts.
Cash Flows
The following table sets forth the significant sources and uses of cash for the periods set forth below:
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash (used in) provided by: | ||||||||
| Operating activities | $ | (1,589,399 | ) | $ | (783,586 | ) | ||
| Investing activities | (305,000 | ) | — | |||||
| Financing activities | 750,000 | 475,000 | ||||||
| Net decrease in cash and restricted cash | $ | (1,144,399 | ) | $ | (308,586 | ) | ||
Net Cash Used in Operating Activities
During the three months ended March 31, 2025, operating activities used $1.6 million of cash, primarily resulting from a loss from continuing operations of $2.7 million. Cash flows from operating activities for the three months ended March 31, 2025 were positively impacted by adjustments for $0.2 million change in provision for credit losses of short-term notes receivable, $0.1 million in amortization of premium on notes payable, , a decrease in prepaid expenses of $0.9 millon, and an increase in accrued expenses of $0.1 million. Cash flows from operating activities for the three months ended March 31, 2025 were negatively impacted by adjustments for a $39,000 gain on change in fair value of warrant liabilities, a $0.1 million increase in accrued interest on short-term notes receivable, and a $40,000 increase in accounts payable.
During the three months ended March 31, 2024, operating activities used $0.8 million of cash, primarily resulting from a loss from continuing operations of $2.0 million. Cash flows from operating activities for the three months ended March 31, 2024 were positively impacted by adjustments for a $0.1 million loss on change in fair value of warrant liabilities, a $0.1 loss on monthly redemptions of convertible debt into common stock, $0.4 million non cash loss on voluntary conversion of convertible debt, accretion of discount of $0.1 million on convertible debt, $0.6 million in stock-based compensation expense, a $0.7 million decrease in prepaid expenses, and a $0.3 million increase in accrued expenses and other current liabilities. Cash flows from operating activities for the three months ended March 31, 2024 were negatively impacted by adjustments for a $0.2 million decrease in fair value of warrant liabilities and a $0.4 million decrease in accounts payable.
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Net Cash Provided by (Used in) Investing Activities
During the three months ended March 31, 2025, net cash used in investing activities resulted from advances to Marizyme of $0.3 million.
During the three months ended March 31, 2024, there was no change in cash due to investing activites.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the three months ended March 31, 2025 was $0.8 million, all of which resulted from the issuance of short term debt.
Net cash provided by financing activities for the three months ended March 31, 2024 was approximately $0.5 million, resulting from the issuance of convertible notes payable.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on our management’s evaluation (with the participation of the individuals serving as our principal executive officer and principal financial officer) of our disclosure controls and procedures as required by Rules 13a-15 and 15d-15 under the Exchange Act, each of the individuals serving as our principal executive officer and principal financial officer has concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2025, the end of the period covered by this Quarterly Report on Form 10-Q.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including the individuals serving as our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.
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Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework). Based on this assessment, our management concluded that, as of March 31, 2025, our internal control over financial reporting was not effective based on those criteria due to material weaknesses in our internal control over financial reporting described below.
Material Weakness in Internal Control over Financial Reporting
During the year ended December 31, 2024 audit, we identified the lack of sufficient number of personnel within the accounting function to adequately segregate duties, the Company did not have a designed and implemented effective Information Technology General Controls (“ITGC”) related to access controls to financial accounting system, and the Company did not have formalized documentation of its processes and controls that could be evaluated for proper design and implementation.
We lack the resources to employ additional personnel to help mitigate these material weaknesses and we foresee that these material weaknesses will not be remediated until we receive additional funding to support our accounting department.
We cannot assure you that these or other measures will fully remediate the material weakness in a timely manner. Notwithstanding the identified material weakness, our management believes that the consolidated financial statements included in this report fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.
Changes in Internal Control over Financial Reporting
Other than with respect to the remediation efforts discussed above, there was no change in our internal control over financial reporting that occurred during the first quarter of 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On January 29, 2025, the Company was named as a defendant in an action brought by LifeSci Capital LLC (“LifeSci”) in the U.S. District Court for the Southern District of New York. The complaint alleges that the Company failed to pay $503,483 in connection with offerings of the Company’s common stock that occurred during the tail period of the agreement, pursuant to an engagement under which the Company retained LifeSci to serve as its placement agent and financial advisor.
The Company filed its answer on March 17, 2025, denying the material allegations in the complaint and asserting various affirmative defenses. As of May 29, 2025, the matter is in the discovery phase.
The Company disputes that any amount is owed and is vigorously defending the lawsuit. Based on the current stage of the proceedings and the information available at this time, the Company does not believe a loss is probable or reasonably estimable.
We are not currently involved in any other legal matters. From time to time, we could become involved in disputes and various litigation matters that arise in the normal course of business. These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters.
ITEM 1A. RISK FACTORS
The Company’s business, reputation, results of operations and financial condition, as well as the price of its stock, can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the Company’s 2024 Annual Report under the heading “Risk Factors.” When any one or more of these risks materialize, the Company’s business, reputation, results of operations and financial condition, as well as the price of its stock, can be materially and adversely affected. Except as described below, there have been no material changes to the Company’s risk factors since the 2024 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable
ITEM 5. OTHER INFORMATION
None
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ITEM 6. EXHIBITS
| Item 6. | Exhibits |
| Exhibit Number |
Description | |
| 31.1 | Certification of Kevin Richardson II, Chief Executive Officer of Qualigen Therapeutics, Inc., Inc., pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |
| 31.2 | Certification of Kevin Richardson II, Chief Financial Officer of Qualigen Therapeutics, Inc., Inc., pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |
| 32.1 | Certification of Kevin Richardson II, Chief Executive Officer of Qualigen Therapeutics, Inc., pursuant to 18 U.S.C. Section 1350. | |
| 32.2 | Certification of Kevin Richardson II, Chief Financial Officer of Qualigen Therapeutics, Inc., Inc., pursuant to 18 U.S.C. Section 1350. | |
| 101 | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL: (i) Consolidated Statements of Cash Flows, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Balance Sheets, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags. | |
| 104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL (included as Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| July 21, 2025 | QUALIGEN THERAPEUTICS, INC. (REGISTRANT) | |
| By: | /s/ Kevin Richardson II | |
| Name: | Kevin Richardson II | |
| Title: | Chief Financial Officer | |
| 40 |
FAQ
How many equity units did MCHP COO Richard J. Simoncic receive on 4/3/2024?
What is the vesting schedule for the newly granted PSUs and RSUs?
Why was the Microchip Technology Form 4 amended?
Did the filing report any insider buying or selling of MCHP common shares?
What is Richard J. Simoncic’s current beneficial ownership in MCHP common stock?
