What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-04-08 compared with 2023-05-02 · 368 added, 431 removed, 95 unchanged (89% of the section changed)

11 unchanged sentences

give effect to the reverse stock split.

are a diversified life sciences company focused on developing treatments for adult and pediatric cancers with potential for Orphan Drug

designation, while also commercializing diagnostics.

cancer therapeutics pipeline includes QN-302, RAS and QN-247.

lead oncology therapeutics program, QN-302, is an investigational small molecule G4-selective transcription inhibitor with strong binding

affinity to G4s prevalent in cancer cells.

Such binding could, by stabilizing the G4s against DNA “unwinding,” help inhibit

cancer cell proliferation.

QN-302 is currently undergoing Good Laboratory Practice (GLP) toxicology studies.

RAS portfolio 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.

Preventing this binding could stop tumor growth, especially

in RAS-driven tumors such as pancreatic, colorectal and lung cancers.

investigational QN-247 compound binds nucleolin, a key multi-functional regulatory phosphoprotein that is overexpressed in cancer cells.

Such binding could inhibit the cancer cells’ proliferation.

The foundational aptamer of QN-247 is QN-165 (formerly referred to

as AS1411), which the Company has deprioritized as a drug candidate for treating COVID-19 and other viral-based infectious diseases.

May 26, 2022, we acquired 2,232,861 shares of Series A-1 Preferred Stock of NanoSynex from Alpha in exchange for 3,500,000 shares of

our common stock and a prefunded warrant to purchase 3,314,641 shares of our common stock at an exercise price of $0.001 per share.

These warrants were subsequently exercised on September 13, 2022 and the shares of our common stock were subsequently subject to a 1 for 10 reverse split on November 23, 2022.

Concurrently with this

transaction, we also purchased 381,786 shares of Series B preferred stock from NanoSynex for a total purchase price of $600,000.

transactions resulted in our acquiring a 52.8% interest in NanoSynex.

NanoSynex is a micro-biologics diagnostics company domiciled

our therapeutic candidates are all still in the pre-clinical development stage, our only products that are currently commercially available

are the for sale FastPack System diagnostic instruments and test kits.

Our FastPack System diagnostic instruments and test kits are sold

commercially primarily in the United States, as well as certain European countries.

The FastPack System menu includes a rapid, highly

accurate immunoassay diagnostic testing system for cancer, men’s health, hormone function, and vitamin D status.

We provide analyzers

to our customers (physician offices, clinics and small hospitals) at low cost in order to increase sales volumes of higher-margin test

have always utilized a “razor and blades” pricing strategy, providing analyzers to our customers (physician offices, clinics

and small hospitals) at low cost in order to increase sales volumes of higher-margin test kits.

Through the first quarter of 2022, we

relied on our diagnostics distribution partner, Sekisui, for most FastPack distribution worldwide pursuant to a distribution agreement.

We maintained direct distribution for certain house accounts, including selling our total testosterone test kits to Low T, the largest

men’s health group in the United States, with 40 locations.

The Distribution Agreement with Sekisui expired on March 31, 2022,

and after that date the activities previously provided by Sekisui have reverted back to us and we have recognized 100% of the revenue

from the sales of our FastPack diagnostic instruments and test kits.

We have licensed and technology-transferred our FastPack System

technology to Yi Xin Zhen Duan Jishu (Suzhou) Ltd.

for the China diagnostics market.

do not expect to be profitable before products from our therapeutics pipeline are commercialized, because we foresee that research and

development expenses on the therapeutics programs will significantly exceed the profits, if any, that we will generate from our diagnostics

To experience losses while therapeutic products are still under development is, of course, typical for biotechnology companies.

consolidated financial statements do not separate our diagnostics-related activities from our therapeutics-related activities.

to date all of our reported revenue is diagnostics-related, our reported expenses represent the total of our diagnostics-related and

therapeutics-related expenses

November 23, 2022, we effected a 1-for-10, as determined by our board of directors, reverse stock split of our outstanding shares of

common stock (the “Reverse Stock Split”).

The Reverse Stock Split reduced our shares of outstanding common stock, stock options,

and warrants to purchase shares of our common stock.

Fractional shares of common stock that would have otherwise resulted from the Reverse

Stock Split were rounded down to the nearest whole share and cash in lieu of payments were made to stockholders.

All share and per share

data for all periods presented in this section and the accompanying financial statements and related disclosures have been adjusted retrospectively

to reflect the Reverse Stock Split.

The number of authorized shares of common stock and the par value per share remains unchanged.

of COVID-19 Pandemic

COVID-19 pandemic had, and it or similar pandemics, epidemics or infectious disease outbreaks may, in the future, have, adverse impacts

and world economy, health care systems, personnel availability, supply chains, social and political assumptions, and capital

The impacts from the pandemic were particularly serious for smaller companies such as ours.

Sales of our diagnostic products

fell significantly during 2020 as deferral of patients’ non-emergency visits to physician offices, clinics and small hospitals

sharply reduced demand for our FastPack tests.

While our FastPack sales began to rebound in 2021, the extent to which the COVID-19 pandemic,

or similar pandemics, epidemic or infectious disease outbreak, could impact us in the future will depend on numerous evolving factors

and future developments that we are unable to predict at this time, including:

the timing, extent, trajectory and duration of the pandemic;

the emergence of new variants;

the development, availability, distribution and effectiveness of vaccines and treatments;

the imposition

of protective public safety measures;

and the impact of the pandemic on the global economy and demand for our products and services.

We could again experience adverse impacts to our business as a result of any related economic recession that may occur in the future

from COVID-19 or other similar global pandemic, epidemic or infectious disease outbreak.

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).

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.

QN-302 is currently undergoing a Phase 1a clinical trial at START

Midwest in Grand Rapids, Michigan, and HonorHealth in Scottsdale, Arizona.

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.

November 23, 2022, we effected a 1-for-10, reverse stock split of our outstanding shares of common stock (the “Reverse Stock Split”).

The Reverse Stock Split reduced our shares of outstanding common stock, stock options, and warrants to purchase shares of our common

Fractional shares of common stock that would have otherwise resulted from the Reverse Stock Split were rounded down to the nearest

whole share and cash in lieu of fractional shares was paid to stockholders.

All share and per share data for all periods presented in

this Annual Report on Form 10-K have been adjusted retrospectively to reflect the Reverse Stock Split.

The number of authorized shares

of common stock and the par value per share remains unchanged.

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.

1 Clinical Trial of QN-302

August 1, 2023, we announced that the FDA has cleared our IND application for QN-302.

Based on this clearance, we chose Translational Drug Development, LLC (“TD2”) to serve

as our contract research organization to conduct a Phase 1 clinical trial in patients with advanced or metastatic solid tumors.

Phase 1 trial (NCT06086522) is designed as a multicenter, open-label, dose escalation, safety, pharmacokinetic, and pharmacodynamic

study with dose expansion to evaluate safety, tolerability, and antitumor activity of QN-302 in patients with advanced solid tumors

that have not responded to or that have recurred following treatment with available therapies.

On November 7, 2023, we announced

that the first patient had been enrolled and dosed in the dose escalation (Phase 1a) portion of the study.

Subject to available

funding (which is, however, not all currently in hand), we anticipate that Phase 1a of the trial can be completed by the end of

The exact number of patients to be enrolled in the trial will depend on the observed safety profile, which will

determine the number of patients per dose level, as well as the number of dose escalations required to meet the Maximum Tolerated

Dose (“MTD”).

Once the MTD has been established in dose escalation, dose expansion will begin.

of Diagnostics Business

July 20, 2023, we sold all of the issued and outstanding shares of common stock of Qualigen, Inc., a wholly-owned subsidiary and the

legal entity operating our FastPack™ diagnostic business, to Chembio Diagnostics, Inc.

(“Chembio”), a subsidiary of

Biosynex, S.A.

As consideration for the shares of Qualigen, Inc., we received cash payments of approximately $4.9 million, which payment

is subject to post-closing adjustments.

An additional $450,000 was delivered by Chembio to an escrow account to satisfy our indemnification

Any amounts remaining in the escrow account that have not been offset or reserved for claims will be released to us within

five business days following January 20, 2025.

Following the consummation of the transaction, Qualigen, Inc.

became a wholly-owned subsidiary

and Settlement Agreement with NanoSynex Ltd.

July 20, 2023, we entered into and effectuated the NanoSynex Amendment, by which we agreed to, among other things, forfeit 281,000 Series

B Preferred Shares of NanoSynex held by us, resulting in our ownership in NanoSynex being reduced from approximately 52.8% to approximately

49.97% of the voting equity of NanoSynex.

In addition, we agreed to cancel approximately $3.0 million of promissory notes which NanoSynex

had issued to us under the NanoSynex Funding Agreement, relieving NanoSynex of any repayment obligations to us with respect to such notes.

The NanoSynex Amendment superseded any NanoSynex Funding Agreement obligations to provide funding to NanoSynex, except we agreed to provide

future loans as follows:

(i) $560,000 on or before November 30, 2023, and (ii) $670,000 on or before March 31, 2024.

However, on November

22, 2023, in full settlement of any additional funding obligations to NanoSynex, we forfeited certain of our shares of Series A-1 Preferred

Stock of NanoSynex in an amount that reduced our ownership in NanoSynex from approximately 49.97% to 39.90%.

Accordingly, NanoSynex was

deconsolidated from our financial statements as of July 20, 2023, and is reported as Discontinued Operations in this Annual Report.

investment in NanoSynex will be accounted for in the future as an equity method investment.

Accounting Policies and Estimates

consolidated financial statements historically have not separated our diagnostics-related activities from our therapeutics-related

All of our historically reported revenue was diagnostics-related.

Before the third quarter of 2023, our reported

expenses represented the total of our diagnostics-related and therapeutics-related expenses.

In this Annual Report, all

diagnostics-related revenues and expenses have been reclassified to discontinued operations (See Note 5 - Discontinued

discussion and analysis is based on our consolidated financial statements, which have been prepared in accordance with U.S.

1 unchanged sentence

assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements.

On an ongoing basis, we evaluate our estimates and judgments, including those related to impairment of goodwill and other intangible assets, fair value of warrant liabilities, stock-based

compensation, amortization and depreciation, inventory reserves, allowances for doubtful accounts and returns, and warranty costs.

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.

On an ongoing basis, we evaluate our estimates and judgments, including those related to impairment of goodwill and other intangible

assets, fair value of 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.

our significant accounting policies are more fully described in Note 1 to our consolidated financial statements appearing in “Item

1 unchanged sentence

you in fully understanding and evaluating our financial condition and results of operations:

● Convertible

and development

for doubtful accounts and returns

● Impairment of long-lived

● Derivative financial instruments and warrant

● Stock-based compensation

of long-lived assets

financial instruments and warrant liabilities

2004, Qualigen, Inc.

issued Series C preferred stock warrants to investors and brokers in connection with a private placement.

warrants were subsequently extended and survived the May 2020 Ritter reverse recapitalization transaction and are now exercisable for

Qualigen Therapeutics common stock.

These warrants contain a provision that if Qualigen, Inc.

issues shares (except in certain defined

scenarios) at a price below the warrants’ exercise price, the exercise price will be re-set to such new price and the number of

shares underlying the warrants will be increased in the same proportion as the exercise price decrease.

For accounting purposes, such

warrants give rise to warrant liabilities.

The operation of the “double-ratchet” provisions in these warrants in connection

with the NanoSynex acquisition and the convertible debenture financing transaction in 2022 now allow the holders to exercise for a significantly

higher number of shares than before.

Accounting principles generally accepted in the United States of America (“U.S.

require us to recognize the fair value of these warrants as warrant liabilities on our Consolidated Balance Sheets and to reflect period-to-period

changes in the fair value of the warrant liabilities on our Consolidated Statements of Operations.

The estimated fair value of these

warrant liabilities was $0.8 million and $1.7 million at December 31, 2022 and 2021, respectively.

There were 1,349,571 of these

warrants outstanding at December 31, 2022 and 248,162 of these warrants outstanding at December 31, 2021.

On December 22, 2022, as part of the convertible debenture financing, the Company issued to

Alpha a common stock warrant to purchase a number of shares of the common stock of the Company equal to the number of Conversion Shares

issuable upon conversion of the Debenture as of the closing date.

The exercise price of the warrant is $1.65 (equal to 125% of the Conversion

Price of the Debenture on the closing date).

The warrant entitles Alpha to purchase up to 2,500,000 shares of common stock of the Company

and may be exercised by Alpha, in whole or in part, at any time on or after June 22, 2023 and before June 22, 2028.

GAAP requires

us to recognize the fair value of these warrants as warrant liabilities on our Consolidated Balance Sheets and to reflect period-to-period

changes in the fair value of the warrant liabilities on our Consolidated Statements of Operations.

The estimated fair value of this warrant

liability was $2.8 million and $0 at December 31, 2022 and 2021, respectively.

the fair value of the above 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.

warrants were subsequently extended and survived the May 2020 Ritter reverse recapitalization transaction and are now exercisable

for Qualigen Therapeutics common stock.

These warrants contain a provision that if the Company issues shares (except in certain

defined scenarios) at a price below the warrants’ exercise price, the exercise price will be re-set to such new price and the

number of shares underlying the warrants will be increased in the same proportion as the exercise price decrease.

For accounting

purposes, such warrants give rise to warrant liabilities.

Accounting principles gene rally

accepted in the United States of America (“U.S.

GAAP”) require us to recognize the fair value of these warrants as

warrant liabilities on our Consolidated Balance Sheets and to reflect period-to-period changes in the fair value of the warrant

liabilities on our Consolidated Statements of Operations.

The estimated fair value of these warrant liabilities was approximately

$0.1 million and $3.6 million at December 31, 2023 and 2022, respectively.

There were 455,623 of these warrants outstanding at

December 31, 2023 and 1,349,571 of these warrants outstanding at December 31, 2022.

the fair value of the above liability classified warrants will be determined each quarter on a

“mark-to-market” basis , significant variability in our future quarterly and annual Consolidated Statement of Operations

and Consolidated Balance Sheets could occur 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 (possibly quite large) in the fair value of the warrant liabilities and a quarter-to-quarter decrease in

our stock price would result in a decrease (possibly quite large) in the fair value of the warrant liabilities.

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.

December 22, 2022, as part of the 2022 Debenture financing, we issued to Alpha a common stock warrant (exercisable from June 22, 2023

through June 22, 2028) to purchase 2,500,000 shares of our common stock.

The exercise price of the warrant was modified from $1.65 to

$0.73 on December 5, 2023, and was further modified to $0.26 on February 27, 2024.

The warrant may be exercised by Alpha, in whole or

in part before June 22, 2028.

The warrant was originally liability classified, but was modified on December 5, 2023 to allow for equity

classification.

The estimated fair value of this warrant upon reclassification from warrant liabilities to equity was approximately $1.6

million and the estimated fair value of this warrant which was included in warrant liabilities-related party on December 31, 2022 was

approximately $2.8 million.

of Operations

1 unchanged sentence

For the Years Ended

Net product sales

License revenue

Total revenues

Cost of product sales

General and administrative

Research and development

Sales and marketing

Goodwill and fixed asset impairment

Total expenses

3 unchanged sentences

OTHER EXPENSE (INCOME), NET

(Gain) loss on change in fair value of warrant liabilities

Interest (income) expense, net

Gain on change in fair value of warrant liabilities

Interest expense, net

Loss on voluntary conversion of convertible debt

Loss on debt extinguishment

Loss on fixed asset disposal

Other income, net

4 unchanged sentences

(BENEFIT) PROVISION FOR INCOME TAXES

NET LOSS FROM CONTINUING OPERATIONS

(12,475,010 )

(13,894,462 )

Net loss attributable to noncontrolling interest

DISCONTINUED OPERATIONS

Loss from discontinued operations, net of tax

Loss on disposal of discontinued operations, net of tax

LOSS FROM DISCONTINUED OPERATIONS

(13,760,250 )

(21,034,643 )

Net loss attributable to non-controlling interest from discontinued operations

Net loss attributable to Qualigen Therapeutics, Inc.

1 unchanged sentence

$ (18,640,543 )

Net loss per common share, basic and diluted - continuing operations

Net loss per common share, basic and diluted - discontinued operations

Weighted—average number of shares outstanding, basic and diluted

Other comprehensive loss, net of tax

1 unchanged sentence

$ (21,034,643 )

Foreign currency translation adjustment

Foreign currency translation adjustment from discontinued operations

Other comprehensive loss

1 unchanged sentence

(20,983,922 )

Comprehensive loss attributable to noncontrolling interest

Comprehensive loss attributable to noncontrolling interest from discontinued operations

Comprehensive loss attributable to Qualigen Therapeutics, Inc.

1 unchanged sentence

$ (18,589,822 )

operating revenues are primarily generated from sales of our FastPack diagnostic tests.

Revenues for the year ended December 31,

2022 were approximately $5.0 million compared to approximately $5.7 million for the year ended December 31, 2021, a decrease of $0.7

This decrease was primarily due to the recognition of approximately $0.6 million in license revenue from Yi Xin under the

Technology Transfer Agreement for the year ended December 31, 2021, compared with no license revenue for the year ended December 31,

product sales

product sales are primarily generated from sales of our diagnostic tests.

Net product sales for the year ended December 31, 2022 were

$5.0 million, which remained largely consistent with $5.0 million for the year ended December 31, 2021.

revenue for the year ended December 31, 2021 was $0.6 million, due to the recognition of revenue from Yi Xin under the Technology Transfer

There was no license revenue for the year ended December 31, 2022.

of Product Sales

of product sales for the year ended December 31, 2022 were $4.3 million, which remained largely consistent with $4.3 million for the

year ended December 31, 2021.

and Administrative Expenses

and administrative expenses decreased from $11.7 million for the year ended December 31, 2021 to $10.8 million the year ended December

This decrease was due to a $0.3 million decrease in professional fees, a $0.3 million decrease in payroll-related expenses,

a $0.3 million decrease in insurance expenses, and a $0.3 million decrease in investor relations expenses, offset by increases of $0.2

million in legal expenses and $0.1 million in rent.

and administrative expenses decreased from $10.3 million for the year ended December 31, 2022 to $6.1 million for the year ended

December 31, 2023.

This decrease was due to a $3.8 million decrease in stock-based compensation expense, a $0.4 million decrease in

payroll related expenses, a $0.3 million decrease in insurance expenses, and a $0.2 million decrease in license fees, offset by an

increase of $0.5 million in professional fees.

(The foregoing comparison, and all other comparisons presented in this Item, exclude

Qualigen, Inc.

and NanoSynex, Ltd.

results for both years.)

and Development Costs

and development costs include therapeutics and diagnostics research and product development costs.

Research and development costs decreased

from $11.7 million for the year ended December 31, 2021 to $6.8 million for the year ended December 31, 2022.

Of the $6.8 million of

research and development costs for year ended December 31, 2022, $4.5 million (66%) was attributable to therapeutics and $2.3 million

(34%) was attributable to diagnostics.

Of the $11.7 million of research and development costs for the year ended December 31, 2021, $10.3

million (88%) was attributable to therapeutics and $1.4 million (12%) was attributable to diagnostics.

increase in diagnostic research and development costs was primarily due to $0.9 million in R&D expenses assumed in connection with

the acquisition of NanoSynex.

The decrease in therapeutics research and development costs was primarily due to a decrease of $6.4 million

in expenses related to the potential application of QN-165 for the treatment of COVID-19 ($4.6 million in drug compound manufacturing

costs, and $1.8 million in other pre-clinical research costs), as well as pre-clinical research and development cost decreases

of $0.2 million for QN-247, a decrease in legal expenses of $0.3 million, a decrease of $0.3 million in payroll-related expenses, offset

by an increase in QN-302 spending of $1.1 million and an increase in RAS expenses of $0.3 million.

the future, we expect our therapeutic research and development costs to continue to significantly outweigh our diagnostic research and

development costs, and to be relatively lower in periods when we are focusing on pre-clinical activities and meaningfully higher in periods

when we are provisioning for and conducting clinical trials, if any.

and Marketing Expenses

and marketing expenses for the year ended December 31, 2022 increased to $1.0 million as compared to $0.5 million for the year ended

December 31, 2021, primarily due to an increase in payroll-related expenses as a result of the termination of the Sekisui distribution

and Fixed Asset Impairment

a result of annual goodwill impairment testing, we recognized a $4.2 million non-cash goodwill and fixed asset impairment charge in the valuation of

our business acquisition of NanoSynex for the year ended December 31, 2022.

For more information, refer to Note 1 - Organization and

Summary of Significant Accounting Policies and Estimates and Note 7 - Goodwill, IPR&D and other Intangibles of the consolidated financial

and development expenses increased from $4.5 million for the year ended December 31, 2022 to approximately $5.2 million for year ended December

This increase in research and development expenses for the year ended December 31, 2023 compared to for the year ended December

31, 2022 was primarily due to a $2.1 million increase in pre-clinical and clinical research costs for QN-302, offset by a $1.0 million

decrease in pre-clinical research costs for QN-247 a $0.3 million decrease in preclinical research costs for Pan-RAS, and a $0.1 million decrease in preclinical research costs for QN-165.

Expense (Income)

in Fair Value of Warrant Liabilities

the year ended December 31, 2022 we experienced (primarily due to a decrease in our stock price during the period) a $0.9 million gain

in other income because of the change in fair value of the warrant liabilities arising from our liability classified warrants described

The estimated fair value of these warrants increased to $3.6 million as of December 31, 2022 from $1.7 million as of December

31, 2021 primarily due to the issuance of a new warrant as part of the convertible debt-related party financing transaction, offset by a reduction

in fair value of the other liability classified warrants.

For the year ended December 31, 2021, the gain on change in fair value of warrant

liabilities was $4.7 million due to an associated decrease in the market price of our common stock.

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.

the fair value of the warrant liabilities will be determined each quarter on a “mark-to-market” basis, this item is likely

to continue to result in significant variability in our future quarterly and annual Consolidated Statements of Operations based on unpredictable

changes in our public market common stock price and the number of warrants outstanding at the end of each quarter.

the year ended December 31, 2023 we experienced a $2.0 million gain in other income because of the change in fair value of the

warrant liabilities arising from our liability classified warrants described above.

The estimated fair value of these warrant

liabilities decreased to $0.1 million as of December 31, 2023 from $3.6 million as of December 31, 2022 due to a reduction in fair

value of the warrant liabilities resulting from an associated decrease in the market price of our common stock, and the

reclassification at fair value of a liability classified warrant to equity of $1.6 million.

For the year ended December 31, 2022,

the gain on change in fair value of warrant liabilities was $0.9 million due to an associated decrease in the market price of our

common stock.

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.

remaining liability classified warrants expire on June 26, 2024.

Because the fair value of the warrant liabilities will be determined

each quarter on a “mark-to-market” basis, this item is likely to, until then, continue to result in variability in our future

quarterly Consolidated Statements of Operations based on unpredictable changes in our public market common stock price and the number

of warrants outstanding at the end of each quarter.

(Income) Expense, Net

was $27,000 in net interest expense during the year ended December 31, 2022 compared to net interest income of $43,000 during the year

ended December 31, 2021.

During the year ended December 31, 2022, we issued convertible debt which resulted in an increase of $47,000

in interest expense offset by a reduction of $20,000 in interest income compared to the year ended December 31, 2021, primarily due to

lower interest bearing cash balances.

Other Income, Net

Other income was immaterial during the years ended December 31, 2022 and 2021.

was $1.5 million in net interest expense during the year ended December 31, 2023 compared to net interest income of $34,000 during the

year ended December 31, 2022.

The increase was due to the interest on the 2022 Debenture.

on Voluntary Conversion of Convertible Debt

the year ended December 31, 2023 we issued 841,726 shares of common stock upon Alpha’s partial voluntary conversion of the

2022 Debenture at $1.32 per share for a total of $1,111,078 principal converted.

Upon conversion, we recognized a loss on voluntary

conversion of convertible debt of approximately $1.1 million.

on Debt Extinguishment

the year ended December 31, 2023, we issued 309,665 shares of common stock in lieu of cash for the October and December 2023 monthly

redemptions, for a total of $220,000 principal redeemed, pursuant to the terms of the 2022 Debenture at a weighted average share

price of $0.71.

Upon redemption in shares, we recognized a loss on partial debt extinguishment of $34,315.

The modification of the 2022 Debenture during the year ended December 31, 2023 met the criteria to be accounted for

as a debt extinguishment in the amount of $591,338.

Accordingly, we recognized an additional loss on partial debt extinguishment of that

on Fixed Asset Disposal

the year ended December 31, 2023, we incurred a $21,747 loss on fixed asset disposal due to disposal of research and development equipment

previously used for QN-165.

and Going Concern

of December 31, 2022, we had approximately $7.0 million in cash.

financial position is weak.

As of December 31, 2023, we had approximately $0.4 million in cash and net accounts payable of over $2.2

We are in arrears on accounts payable to important partners.

We have incurred recurring losses from operations and have an accumulated

2 unchanged sentences

of December 31, 2023.

For the years ended December 31, 2022 and 2021, we used cash of $13.2 million and $14.7 million, respectively,

in operations.

We currently expect our cash balances to fund operations into the third quarter of 2023.

As a pre-clinical development-stage

therapeutics biotechnology company, we expect to continue to have net losses and negative cash flow from operations, which over time

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 these financial statements were issued.

There is no assurance that we

will ever achieve profitable operations, or, if achieved, could be sustained on a continuing basis.

In order to fully execute our business

plan, we will require significant additional financing for planned research and development activities, capital expenditures, clinical

and pre-clinical testing for QN-302 clinical trials, to continue preclinical development of RAS, and to continue funding the NanoSynex

operations (See Note 3-Acquisition), as well as commercialization activities.

Historically, our principal sources

of cash have, in addition to revenue from FastPack product sales and license revenues, included proceeds from the issuance of common and

preferred equity and proceeds from the issuance of debt.

In December 2021, we raised $8.8 million from the issuance of common stock to

several institutional investors, and in December 2022 we raised approximately $3.0 million from the sale of a convertible debenture to Alpha.

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, which could adversely affect our business prospects.

For the years ended December 31, 2023 and 2022, we used cash of $10.3 million and $13.2 million, respectively, in

We sold our Qualigen, Inc.

FastPack® diagnostics products business in 2023.

February 26, 2024, we entered into a Securities Purchase Agreement (“Agreement”) with Alpha.

The transactions contemplated

by the Agreement closed on February 27, 2024, at which time we delivered to Alpha a new Debenture and warrant, as described in this paragraph,

and Alpha paid the Company a cash purchase price of $500,000 (less expenses).

Pursuant to the Agreement, we issued to Alpha an 8% Convertible

Debenture (the “2024 Debenture”) in the principal amount of $550,000.

The 2024 Debenture has a maturity date of 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 $0.6111 per share, subject to adjustment as described in the 2024 Debenture.

The 2024 Debenture accrues interest on its outstanding

principal balance at the rate of 8% per annum, payable at maturity.

Pursuant to the terms of the Agreement, we also issued to Alpha a

5-year common stock purchase warrant to purchase (at $0.26 per share) 900,016 shares of common stock of the Company.

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 1,800,032 additional warrants), which would (if and when Alpha exercises such option) provide us up to an additional $1.0

million in cash proceeds (less expense reimbursement, and not including any possible cash proceeds from any future exercise of the additional warrants).

currently expect our cash balances to fund operations only into the second quarter of 2024.

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 Annual Report were issued.

is no assurance that we will ever achieve profitable operations, or, if achieved, could be sustained on a continuing basis.

to fully execute our business plan, we will require significant additional financing for planned research and development activities,

capital expenditures, QN-302 clinical trials, and preclinical development of Pan-RAS, as well as commercialization activities.

Historically,

our principal sources of cash have, in addition to revenue from FastPack product sales and license revenues (see Note 5 - Discontinued

Operations), included proceeds from the issuance of common and preferred equity and proceeds from the issuance of debt.

In December 2022

and February 2024 we raised approximately $3.0 million and $0.5 million, respectively from the sale of convertible debentures to Alpha.

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.

the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our

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our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

additional funds through government or other 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.

any future financing (depending on the terms and conditions) may be subject to the approval of Alpha under the terms of the Debenture

and/or trigger certain adjustments to the Debenture or warrants held by Alpha.

As a condition to the

NanoSynex closing, the Company agreed to provide NanoSynex with up to $10.4 million of future funding based on NanoSynex’s

achievement of certain future development milestones and subject to other terms and conditions described in the Master Agreement for

the Operational and Technological Funding of NanoSynex (the “Funding Agreement”) entered into with NanoSynex.

funding commitments are in the form of convertible promissory notes to be issued to the Company with a face value equal to the

amount paid by the Company to NanoSynex upon satisfaction of the applicable performance milestone, bearing interest at the rate of

9% per annum on the principal balance from time to time outstanding under the particular promissory note, convertible at the option

of the Company into additional shares of NanoSynex in order for the Company to maintain at least a 50.1% controlling ownership

interest in NanoSynex, should NanoSynex issue additional shares.

The principal of the convertible notes are due and payable upon the

sooner to occur of:

i) five years from the date of issuance of the particular promissory note;

ii) the acquisition by any person or

entity of all or substantially all of the share capital of NanoSynex, through share purchase, issuance or shares or merger of

NanoSynex, or the purchase of all or substantially all of the assets of NanoSynex;

or iii) the initial public offering of NanoSynex.

The Company provided funding to NanoSynex of $2.4 million during 2022 and an additional $0.5 million in February 2023 pursuant to

this agreement.

The Company may terminate the Funding Agreement upon 120 days’ notice, but would still be liable for any

payments due for milestones achieved prior to termination.

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.

In addition, any future

financing (depending on the terms and conditions) may be subject to the approval of Alpha under the terms of the Debentures and/or trigger

certain adjustments to the Debentures or warrants held by Alpha.

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

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from those reflected in the accompanying financial statements.

consolidated balance sheet at December 31, 2022 includes $3.6 million of current warrant liabilities.

We do not consider the warrant

liabilities to constrain our liquidity, as a practical matter.

Our current liabilities at December 31, 2022 also include $0.9

million of accounts payable, $0.5 million of accrued vacation pay, $1.5 million of accrued expenses and other current liabilities, a $0.8 million R&D grant

liability, $0.2 million in operating lease liabilities, $0.1 million of notes payable (convertible debt to a related party), and $1.0 million in short term debt to a related party.

current liabilities at December 31, 2023 include $2.2 million of accounts payable, $0.6 million of accrued expenses and other current

liabilities, $0.1 million in warrant liabilities, and $1.3 million of convertible debt to a related party.

Obligations and Commitments

1 unchanged sentence

to the financial statements.

Agreement with Bond Ranch LP

December 15, 2021, our wholly-owned subsidiary Qualigen, Inc.

entered into a Second Amendment to Lease with Bond Ranch LP.

This Amendment

extended the Company’s triple-net leasehold on its existing 22,624-square-foot headquarters/manufacturing facility at 2042 Corte

del Nogal, Carlsbad, California for the 61-month period of November 1, 2022 to November 30, 2027.

Over the 61 months, the base rent payable

will total $1,950,710;

however, the base rent for the first 12 months of the 61-month period will be only $335,966.

Additionally, Qualigen,

was entitled to a $339,360 tenant improvement allowance.

See Note 13-Commitments and Contingencies of the consolidated financial

statements for additional details.

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.

have multiple license and sponsored research agreements with UofL Research Foundation (“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.

We agreed to reimburse ULRF for sponsored research expenses of up to $2.7 million and

prior patent costs of up to $112,000 for RAS.

As of December 31, 2022 we had up to $748,000 remaining due under this sponsored research

agreement for RAS.

We also agreed to reimburse ULRF for sponsored research expenses of up to $830,000 and prior patent costs of up to

$200,000 for QN-247.

As of December 31, 2022, there were no remaining un-expensed amounts under this sponsored research agreement for

QN-247 and the agreement was terminated effective August 31, 2022.

We also agreed to reimburse ULRF for sponsored research expenses of

up to $430,000 and prior patent costs of up to $24,000 for QN-165.

As of December 31, 2022 we had no remaining un-expensed amounts under

this sponsored research agreement for QN-165, and the agreement was terminated effective November 30, 2021.

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, and we will be required to pay a percentage

of any sublicense income.

January 13, 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.) The program’s lead compound will be further developed at Qualigen under the name QN-302 as a candidate for treatment

of pancreatic ductal adenocarcinoma (PDAC), which represents the vast majority of pancreatic cancers.

The Agreement requires (if and

when applicable) tiered royalty payments in the low to mid-single digits, clinical/regulatory/sales milestone payments, and a percentage

of any non-royalty sublicensing consideration paid to Qualigen.

of Sekisui Distribution Agreement

the expiration of the Sekisui Distribution Agreement on March 31, 2022, the Company has a commitment to purchase leased FastPack rental

systems back from Sekisui at its net book value, in the amount of $154,000 which is included in equipment held for lease and accrued

expenses and other current liabilities on the consolidated balance sheet.

Transfer Agreement with Yi Xin

our wholly-owned diagnostics subsidiary Qualigen, Inc., we entered into a Technology Transfer Agreement dated as of October 7, 2020,

with Yi Xin, of Suzhou, China, which authorizes Yi Xin to develop, manufacture and sell new generations of diagnostic test systems based

on our core FastPack technology.

In addition, the Technology Transfer Agreement authorizes Yi Xin to manufacture and sell our current

generations of FastPack System diagnostic products (1.0, IP and PRO) in China.

We have provided technology transfer and patent/know-how

license rights to facilitate Yi Xin’s development and commercialization.

the terms of the Technology Transfer Agreement, we have provided Yi Xin the exclusive rights for China – which is a market we have

not otherwise entered – both for Yi Xin’s new generations of FastPack-based products and for Yi Xin-manufactured versions

of our existing FastPack product lines.

Yi Xin has the right to sell its new generations of FastPack-based diagnostic test systems throughout

the world (but not to or toward current customers of our existing generations of FastPack products);

provided that any non-China sales

would, until March 31, 2022, need to be through Sekisui.

As of April 1, 2022, Yi Xin has right to sell Yi Xin-manufactured versions of

existing FastPack 1.0, IP and PRO product lines worldwide (other than in the United States and other than to or toward current non-US

customers of those products).

Yi Xin also has the right, as of April 1, 2022, to buy Qualigen-manufactured FastPack 1.0, IP and PRO products

from us at distributor prices for resale in and for the United States (but not to or toward current U.S.

customers of those products).

We did not license Yi Xin to sell in the United States market any Yi Xin-manufactured versions of those legacy FastPack product lines,

even after March 31, 2022.

We agreed in the Technology Transfer Agreement that we would not, after March 31, 2022, seek new FastPack

customers outside the United States.

the Technology Transfer Agreement, we have received total net cash payments of approximately $670,000, of which approximately $632,000

was classified as license revenue, and approximately $38,000 is classified as product sales on the statement of operations for the fiscal

year ended December 31, 2021.

There were no revenues under this agreement for the fiscal year ended December 31, 2022.

We will receive

low- to mid-single-digit royalties on any future new-generations and current-generations product sales by Yi Xin.

Xin is a newly-formed company and is subject to many risks.

There can be no assurance that Yi Xin will successfully commercialize any

products or that we will receive any royalties from Yi Xin.

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.

have multiple license and sponsored research 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

We agreed to reimburse ULRF for sponsored research expenses of up to $2.7 million and prior patent costs of up to $112,000

As of December 31, 2023, there were no remaining un-expensed amounts under this sponsored research agreement for Pan-RAS.

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.

previously had sponsored research agreements with ULRF for QN-247 and QN-165.

As of December 31, 2023, there were no remaining un-expensed

amounts under these sponsored research agreements and the agreements were terminated effective August 31, 2022, and November 30, 2021

respectively.

January 13, 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.

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

In November 2023, we became obligated to pay $100,000 to UCL Business Limited upon the first patient dosing of QN-302,

which is included in accounts payable in our consolidated balance sheet.

Convertible Debt

December 22, 2022, we issued an 8% Senior Convertible Debenture in the aggregate principal amount of $3,300,000 to Alpha for a purchase

price of $3,000,000 pursuant to the terms of a Securities Purchase Agreement, dated December 21, 2022 (the “Alpha Purchase Agreement”).

The Debenture is convertible, at any time, and from time to time, at Alpha’s option, into shares of our common stock (the “Conversion

Shares”), at a price equal to $1.32 per share, subject to adjustment as described in the Debenture (the “Conversion Price”)

and other terms and conditions described in the Debenture, including the Company’s receipt of the requisite stockholder approvals.

December 22, 2022, pursuant to the terms of a Securities Purchase Agreement, dated December 21, 2022 (the “Alpha Purchase Agreement”),

we issued to Alpha, in exchange for $3,000,000 in cash (less $50,000 for expense reimbursement), the 2022 Debenture with an original

face amount of $3,300,000 due on December 22, 2025, plus 2,500,000 common stock warrants exercisable (from June 22, 2023 through June

22, 2028) at $1.65 per share.

June 1, 2023 and continuing on the first day of each month thereafter until the earlier of (i) December 22, 2025 and (ii) the full redemption

of the Debenture, we must redeem $110,000 plus accrued but unpaid interest, liquidated damages and any amounts then owing under the Debenture.

of the 2022 Debenture, we must redeem $110,000 plus accrued but unpaid interest, liquidated damages and any amounts then owing under

the 2022 Debenture.

The Monthly Redemption Amount must be paid in cash;

provided that after the first two monthly redemptions, we may elect to pay all or

a portion of a Monthly Redemption Amount in shares of our common stock, based on a conversion price equal to the lesser of (i) the then

applicable conversion price of the Debenture and (ii) 85% of the average of the VWAPs (as defined in the Debenture) for the five consecutive

provided that after the first two monthly redemptions, we may

(if the Equity Conditions, as defined in the 2022 Debenture, are then satisfied or have been waived) elect to pay all or a portion of

a Monthly Redemption Amount in shares of our common stock, based on a conversion price equal to the lesser of (i) the then applicable

conversion price of the 2022 Debenture and (ii) 85% of the average of the VWAPs (as defined in the 2022 Debenture) for the five consecutive

trading days ending on the trading day that is immediately prior to the applicable Monthly Redemption Date.

We may also redeem some or

all of the then outstanding principal amount of the Debenture at any time for cash in an amount equal to 105% of the then outstanding

principal amount of the Debenture being redeemed plus accrued but unpaid interest, liquidated damages and any amounts then owing under

the Debenture.

These monthly redemption and optional redemptions are subject to the satisfaction of the Equity Conditions (as defined

in the Debenture), which includes a condition that we have obtained stockholder approval for such share issuances.

Debenture accrues interest at the rate of 8% per annum, which does not begin accruing until December 1, 2023, and will be payable on

a quarterly basis.

Interest may be paid in cash or shares of common stock of the Company or a combination thereof at the option of the

provided that interest may only be paid in shares if the Equity Conditions have been satisfied, including the stockholder approval

condition as described above.

2022 Debenture accrues interest at the rate of 8% per annum, which began accruing on December 1, 2023, and will be payable on a quarterly

Interest may be paid in cash or shares of common stock or a combination thereof at our option;

provided that the Equity Conditions

have been satisfied.

has waived the Equity Conditions for certain Monthly Redemption Amounts, but Alpha is not required to continue such waivers beyond May

For the foreseeable future, we do not expect to be able to satisfy the Equity Conditions;

as a result, where there is no waiver

of the Equity Conditions we would not have the opportunity to make 2022 Debenture payments in the form of stock rather than in the form

of cash, even for types of payments for which payment in the form of stock would have been allowed.

2022 Debenture is convertible into our common stock at any time at the holder’s option;

the conversion price was originally $1.32

but pursuant to a Securities Purchase Agreement amendment it was reduced to $0.73 on December 5, 2023 and then on February 27, 2024 it

was adjusted downward to $0.26 per share by virtue of the operation of a “ratchet” antidilution provision.

(The exercise

price of the warrants issued with the 2022 Debenture was originally $1.65 but pursuant to the Securities Purchase Agreement amendment

it was reduced to $0.73 on December 5, 2023 and then on February 27, 2024 it was adjusted downward to $0.26 per share by virtue of the

operation of a “ratchet” antidilution provision.)

the 2022 Debenture and the accompanying warrants provide for “ratchet” antidilution adjustments to their conversion price

and exercise price.

the 2022 Debenture and the accompanying warrants include a beneficial ownership blocker of 9.99%, which may only be waived by Alpha upon

61 days’ notice to the Company.

granted Alpha resale registration rights for the common shares underlying the 2022 Debenture and the accompanying warrants.

December 5, 2023, we entered into an Amendment No.

1 with regard to Securities Purchase Agreement, with Alpha, which, among other things,

revised certain provisions of the 2,500,000 warrants to clarify the intention that such 2,500,000 warrants would not be liability-classified

for GAAP purposes.

the year ended December 31, 2023, we recognized an extinguishment loss on voluntary conversion of convertible debt of approximately

$1.1 million, an extinguishment loss of $0.6 million upon October and December 2023 share redemptions and the modification of the

2022 Debenture in December 2023, and recorded accrued interest of approximately $1.5 million, in other expenses in the consolidated

statements of operations.

During the year ended December 31, 2023 we paid Monthly Redemption Amounts of $550,000 in cash and

$220,000 in common stock, and as of December 31, 2023 the remaining 2022 Debenture principal balance was approximately $1.4 million,

the remaining discount was approximately $0.1 million, and the fair value of the suite of bifurcated embedded derivative features

is also made to the 2024 Debenture, which was issued to Alpha after the end of the 2023 fiscal year and is described above.

Funding Agreement

a condition to the NanoSynex acquisition, we entered into a Master Agreement for the Operational and Technological Funding of NanoSynex

(the “Funding Agreement”), on May 26, 2022, pursuant to which we have agreed to fund NanoSynex up to an aggregate of approximately

$10.4 million over the next three years, subject to NanoSynex’s achievement of certain performance milestones specified in the

Funding Agreement and the satisfaction of other terms and conditions described in the Funding Agreement.

will receive in exchange for any payment made to NanoSynex under the Funding Agreement one or more promissory notes (which may contain

convertible features) with a face value equal to the amount paid by the Company to NanoSynex upon satisfaction of the applicable performance

Any promissory notes issued to us by NanoSynex under the Funding Agreement will bear interest at a rate of 9.00% per annum

on the principal balance from time to time outstanding under the promissory note.

The principal and interest under any promissory note

issued to us under the Funding Agreement will be due and payable upon the sooner to occur of:

(i) five years from the date of the particular

promissory note;

(ii) the acquisition by any person or entity of all or substantially all of the share capital of NanoSynex, through

share purchase, issuance of shares or merger of NanoSynex or the purchase of all or substantially all of the assets of NanoSynex;

(iii) the initial public offering of NanoSynex.

If at any time, our ownership of the share capital of NanoSynex on an issued and outstanding

basis falls or is reasonably expected to fall below 50.1%, solely as a result of the exercise of existing or future options (or an equivalent

instrument) or as a result of issuance of restricted, shares, restricted stock units (or an equivalent instruments), we, in our sole

discretion, may elect to convert all or any portion of the outstanding principal amount of any promissory note into shares of NanoSynex’s

most senior class of preferred shares existing immediately prior to such conversion, subject to the terms and conditions described in

the promissory notes so that, following such conversion, we will regain 50.1% ownership of NanoSynex’s issued and outstanding share

During the year ended December 31, 2022 a total of approximately $2.4 million was funded and in February 2023 and additional $0.5 million was funded to NanoSynex under the Funding Agreement.

a condition to our acquisition of a majority voting equity interest in NanoSynex from Alpha and NanoSynex, we entered into a Master Agreement

for the Operational and Technological Funding of NanoSynex (the “Funding Agreement”), on May 26, 2022, pursuant to which

we agreed to fund NanoSynex up to an aggregate of approximately $10.4 million, subject to NanoSynex’s achievement of certain performance

milestones specified in the Funding Agreement and the satisfaction of other terms and conditions described in the Funding Agreement.

the year ended December 31, 2022, we funded a total of approximately $2.4 million and in February 2023 we funded an additional $0.5 million

to NanoSynex under the Funding Agreement.

July 20, 2023, we entered into the NanoSynex Amendment, which amended the Funding Agreement, pursuant to which the Company agreed to,

among other things, forfeit 281,000 Series B Preferred Shares of NanoSynex held by the Company, resulting in our ownership in NanoSynex

being reduced from approximately 52.8% to approximately 49.97% of the voting equity of NanoSynex.

In addition, we agreed to cancel approximately

$3.0 million of promissory notes which NanoSynex had issued to us under the NanoSynex Funding Agreement, relieving NanoSynex of any repayment

obligations to us with respect to such notes.

The surrender of shares reducing our interest in NanoSynex from approximately 52.8% to

approximately 49.97% occurred on July 20, 2023.

Accordingly, NanoSynex was deconsolidated from our financial statements as of July 20,

2023, and is reported as Discontinued Operations in this Annual Report.

NanoSynex Amendment superseded any payment obligations contemplated by the original Funding Agreement and amended our obligations to

provide funding to NanoSynex, except we agreed to provide future funding as follows:

(i) $560,000 on or before November 30, 2023,

and (ii) $670,000 on or before March 31, 2024, in each case issued in the form of a promissory note to the Company with a face value

in the amount of such funding.

However, on November 22, 2023, in full settlement of any additional funding obligations to NanoSynex,

we forfeited certain of our shares of Series A-1 Preferred Stock of NanoSynex in an amount that reduced our ownership in NanoSynex

from approximately 49.97% to 39.90%.

Our investment in NanoSynex will be accounted as an equity method investment

prospectively from the July 20, 2023 deconsolidation date.

Service Agreements

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following table sets forth the significant sources and uses of cash for the periods set forth below:

For the Years Ended

Net cash (used in) provided by:

Operating activities

the Twelve Months Ended

cash (used in) provided by:

$ (10,304,263 )

$ (13,247,541 )

Investing activities

Financing activities

Effect of exchange rate on cash

Net decrease in cash and restricted cash

of exchange rate on cash

decrease in cash and restricted cash

$ (6,638,320 )

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Cash Used in Operating Activities

the year ended December 31, 2022, operating activities used $13.2 million of cash, primarily resulting from a net loss of $21.0 million.

Cash flows from operating activities (as opposed to net loss) for the year ended December 31, 2022 were positively impacted by adjustments

for $5.4 million in non cash stock-based compensation expense, a $4.2 million non cash goodwill impairment charge related to the acquisition

of Nanosynex, $0.1 million in depreciation and amortization, as well as $0.4 million decrease in accounts receivable.

Cash flows from

operating activities (as opposed to net loss) for the year ended December 31, 2022 were negatively impacted by a $1.0 million gain on

change in fair value of warrant liabilities (as described above), a $0.6 million increase in inventory and equipment held for lease,

a $0.5 million decrease in R&D grant liability which was offset against NanoSynex R&D expenses, a $0.3 million decrease in deferred

tax liability, a $0.1 million increase in prepaid expenses and other assets, and a $0.1 million decrease in accounts payable and accrued

the year ended December 31, 2021, operating activities used $14.7 million of cash, primarily resulting from a net loss of $17.9 million.

Cash flows from operating activities (as opposed to net loss) for the twelve months ended December 31, 2021 were positively impacted

by adjustments for $5.6 million in non cash stock-based compensation expenses, a $1.3 million decrease in prepaid expenses and other

assets, a $1.0 million increase in accrued expenses and other current liabilities and a $0.4 million increase in accounts payable, due

to higher costs related to therapeutics research and development.

The decrease in prepaid expenses reflected in the statements of cash

flows from operating activities was primarily due to the expensing during the period of $1.2 million of previous prepayments to STA Pharmaceutical

Co., Ltd., a subsidiary of WuXi AppTec, which was our manufacturer of QN-165 drug compounds.

Cash flows from operating activities (as

opposed to net loss) for the twelve months ended December 31, 2021 were negatively impacted by a $4.7 million gain on change in fair

value of warrant liabilities (as described above), and a $0.4 million decrease in deferred revenue primarily resulting from recognition

of Yi Xin license revenue.

Cash Used in Investing Activities

the year ended December 31, 2022, net cash used in investing activities was approximately $0.2 million, due to capital expenditures offset

by cash acquired in the NanoSynex acquisition.

the year ended December 31, 2021, net cash used in investing activities was approximately $0.1 million, primarily related to the purchase

of property and equipment.

the year ended December 31, 2023, operating activities used $10.3 million of cash, primarily resulting from a loss from continuing

operations of $12.5 million.

Cash flows from operating activities for the year ended December 31, 2023 were positively impacted by

adjustments for a $1.1 million non cash loss on voluntary conversion of convertible debt, a $0.6 million non cash loss on

convertible debt extinguishment, accretion of discount of $1.5 million on convertible debt, a $1.6 million increase in accounts

payable, and $1.1 million in non cash stock-based compensation expense.

Cash flows from operating activities for the year ended December 31, 2023 were negatively impacted by adjustments for a

$2.0 million decrease in fair value of warrant liabilities, a $0.3 million increase in prepaid expenses and other assets, a $0.2

million decrease in accrued expenses and other current liabilities, and cash used in discontinued operations of $1.2 million.

the year ended December 31, 2022, operating activities used $13.2 million of cash, primarily resulting from a loss from continuing

operations of $13.9 million.

Cash flows from operating activities for the year ended December 31, 2022 were positively impacted by

an adjustment for $4.8 million in non cash stock-based compensation expense.

flows from operating activities for the year ended December 31, 2022 were negatively impacted by cash used in discontinued

operations of $2.6 million, a $0.9 million decrease in fair value of warrant liabilities, a $0.5 million decrease in accrued

expenses and other current liabilities, and a $0.1 million increase in prepaid expenses.

Cash Provided By Investing Activities

the year ended December 31, 2023, net cash provided by investing activities was approximately $4.2 million resulting from discontinued

operations due to $4.9 million in proceeds received from the sale of Qualigen, Inc., offset by $0.5 million advanced to NanoSynex, and

$0.2 million in purchases of property and equipment prior to deconsolidation.

During the year ended December 31, 2022, net cash used in investing activities

was approximately $0.2 million, due to capital expenditures offset by cash acquired in the NanoSynex acquisition.

Cash Provided by Financing Activities

cash provided by financing activities for the year ended December 31, 2022, was approximately $2.9 million, due to the issuance of convertible

debt to Alpha.

cash provided by financing activities for the year ended December 31, 2021 was approximately $8.4 million, due to $8.8 million of proceeds

from sales of equity securities in a registered-direct offering to several institutional investors, and $0.5 million of net proceeds

from warrant exercises, offset by $0.7 million in payments for offering costs related to the registered-direct offering and $0.1 million

of principal payments on notes payable.

cash provided by financing activities for the year ended December 31, 2023, was approximately $0.6 million, due to monthly redemption

payments which we made in the form of stock (rather than in the form of cash) on the 2022 Debenture.

Net cash provided by financing activities for the year ended December 31,

2022, was approximately $2.9 million, due to the issuance of convertible debt to Alpha.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis