What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-04-08 compared with 2023-05-02 · 1013 added, 1226 removed, 626 unchanged (78% of the section changed)

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.

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.

Consolidated Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID:

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Notes to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 23 )

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of Qualigen Therapeutics, Inc.

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31, 2023 and December 31, 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity

and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as

the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all

material respects, the financial position of the Company as of December 31, 2022 and December 31, 2021, and the results of its

operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting

principles generally accepted in the United States of America.

(deficit) and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively

referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2023 and December 31, 2022, and the

results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with

accounting principles generally accepted in the United States of America.

Concern Uncertainty

The accompanying

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

As discussed in Note

2 to the consolidated financial statements, the Company’s current liquidity position and projected cash needs raise substantial

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

in Note 2 to the consolidated financial statements, the Company’s current liquidity position and projected cash needs raise substantial

doubt about its ability to continue as a going concern.

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consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an

opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the

Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to

error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for

the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis,

evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated

or required to be communicated to the audit committee and that:

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does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Intangible Assets – Business Combination

matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

for Financial Instruments – Modification of Convertible Debt with Warrants

Audit Matter Description

described in Note 3 of the consolidated financial statements, the Company completed its majority interest acquisition of NanoSynex,

(“NanoSynex”) on May 26, 2022, in a business combination.

In connection with this acquisition, the Company recorded

an in-process research and development (“IPR&D”) intangible asset in the amount of $5.7 million based

on the fair value of the IPR&D at the acquisition date.

The fair value of this acquired intangible asset was estimated using the excess

earnings method which is a form of an income-based approach.

The excess earnings valuation model requires certain significant assumptions in estimating fair value of the IPR&D.

identified the assessment of the fair value of the IPR&D intangible asset as a critical audit matter.

This required a high

degree of auditor judgment and an increased audit effort in determining the reasonableness of the fair value of the IPR&D due to

the measurement uncertainty related to the selection of the valuation methodology and the significant assumptions used in the estimation.

We Addressed the Matter in Our Audit

primary procedures we performed to address this critical audit matter included:

● Obtaining an understanding of the Company’s process and control over the valuation of

IPR&D intangible asset including the significant assumptions used in the valuation.

● Testing the clerical accuracy of the valuation model prepared by the Company’s specialist.

● Evaluating the reasonableness of the key assumptions by considering past performance and third-party market data where appropriate,

and whether such assumptions were consistent with our understanding and evidence obtained in other areas of the audit.

● Involving internal valuation professionals as an auditor’s specialist to assist in evaluating the valuation methodology used

by management by comparing with methodologies commonly used to value IPR&D intangible assets and to review and opine on significant

assumptions utilized in the valuation model.

Goodwill and IPR&D Impairment Assessment

Critical Audit Matter Description

As described in Notes 1 and 7 to the consolidated

financial statements, the Company recorded goodwill and indefinite-lived intangible assets in connection with its acquisition of majority

ownership of NanoSynex.

Goodwill represents the excess of the purchase price over the fair market value of assets acquired and liabilities

assumed, and the intangible asset represents the estimated acquisition date fair value of acquired IPR&D.

Goodwill and indefinite-lived

intangible assets are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that

these assets may be impaired.

Goodwill is tested for impairment at the reporting unit level and indefinite-lived intangible assets are

tested at the individual asset level.

The Company determined that its goodwill was impaired and recorded an impairment loss of approximately

$4.2 million.

Management’s estimates of the fair value

of the reporting unit and of the IPR&D were determined using the discounted cash flow method and excess earnings method, respectively.

The determination of fair value using these income approach techniques involves significant assumptions which are highly subjective.

We identified goodwill and IPR&D impairment

assessments as a critical audit matter due to the significant judgment and subjectivity exercised by management when developing the fair

value measurements, and a high degree of auditor judgment and an increased audit effort required in evaluating management’s significant

How We Addressed the Matter in Our Audit

The primary procedures we performed to address this critical

audit matter included:

● Obtaining an understanding and evaluating the design of internal controls related to the impairment of goodwill and IPR&D.

● Evaluating the appropriateness of methods used in developing the fair value measurements by management.

● Testing the completeness and accuracy of underlying data used in management’s fair value estimates, including mathematical accuracy.

● Evaluating the reasonableness of the key assumptions by considering past performance and third-party market data where appropriate,

and whether such assumptions were consistent with our understanding and evidence obtained in other areas of the audit.

● Involving internal valuation professionals as an auditor’s specialist to assist in evaluating the valuation methodologies used

by management for the goodwill impairment assessment by comparing the methodologies to those utilized by other companies holding similar

assets, and to review and opine on significant assumptions utilized in the valuation model.

Accounting for Financial Instruments – Convertible Debt with Warrants

Critical Audit Matter Description

As described in Notes 11 to the consolidated

financial statements, the Company issued a convertible debenture and common stock purchase warrants in the principal amount of $3.3M during

the year ended December 31, 2022.

We identified the accounting for this complex

financial instrument as a critical audit matter.

This includes both the evaluation of the various features as potential embedded derivatives

and the determination of the respective fair value of the instruments and the embedded features, as well as the determination of the appropriate

classification of warrants between equity and liabilities.

The application of the accounting guidance applicable to issuing a complex

financial instrument requires significant judgment.

Determination of appropriate classification

of warrants requires management’s judgments relating to the interpretations of relevant accounting guidance based on specific provisions

of the warrant agreement.

And accounting for the convertible notes and embedded conversion features requires management’s judgments

related to initial and subsequent recognition of the debt and related features, use of a valuation model, and key inputs used in the selected

As described in Note 8 to the consolidated financial

statements, during the year ended December 31, 2023, the Company modified the conversion price and strike price of its convertible debenture

and common stock purchase warrants, respectively.

Further, the Company modified certain terms of its stock warrant agreements that were

originally classified as liabilities enabling them to be classified as equity.

We identified the accounting for the modification

of this complex financial instrument as a critical audit matter.

This includes both the evaluation of the various features as potential

embedded derivatives and the determination of the respective fair value of the instruments and the embedded features, as well as the determination

of the appropriate classification of warrants between equity and liabilities.

The application of the accounting guidance applicable to

issuing and modifying a complex financial instrument requires significant judgment.

Determination of appropriate classification of warrants

requires management’s judgments relating to the interpretations of relevant accounting guidance based on specific provisions of

the warrant agreement.

Accounting for the convertible notes and embedded conversion features requires management’s judgments related

to initial and subsequent recognition of the debt and related features, use of a valuation model, and key inputs used in the selected

valuation model.

How We Addressed the Matter in Our Audit

The primary procedures we performed to address this critical

audit matter included:

● Obtaining an understanding of the Company’s process and controls over the execution of complex financial instruments.

primary procedures we performed to address this critical audit matter included:

Inspecting the agreements associated with the transactions and evaluating management’s technical accounting analysis, including

the identification of potential embedded derivatives, and the application of the relevant accounting literature.

Utilizing an auditor’s specialist to assist in

assessing management’s analysis of the transaction, including (i) evaluating the contracts to identify relevant terms that affect

the recognition of the financial instruments, (ii) assessing the appropriateness of conclusions reached by management, and (iii)

reviewing the valuation model for derivatives, performing independent calculations, and examining the significant assumptions

utilized in the valuation model.

the application of the relevant accounting literature.

Utilizing an auditor’s specialist to assist in assessing management’s analysis of the transaction, including (i) evaluating

the contracts to identify relevant terms that affect the recognition of the financial instruments, (ii) assessing the appropriateness

of conclusions reached by management, and (iii) reviewing the valuation model for derivatives, performing independent calculations, and

examining the significant assumptions utilized in the valuation model.

Baker Tilly US, LLP

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Current assets

Accounts receivable, net

Inventory, net

Prepaid expenses and other current assets

Current assets of discontinued operations

Total current assets

Restricted cash

Right-of-use assets

Property and equipment, net

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

Non-current assets of discontinued operations

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities

Accounts payable

Accrued vacation

Accrued expenses and other current liabilities

R&D grant liability

Deferred revenue, current portion

Operating lease liability, current portion

Short term debt - related party

Warrant liabilities

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Convertible debt - related party

Current liabilities of discontinued operations

Total current liabilities

Operating lease liability, net of current portion

Deferred revenue, net of current portion

Deferred tax liability

Non-current liabilities of discontinued operations

Total liabilities

Commitments and Contingencies (Note 10)

Stockholders’ equity

Stockholders’ equity (deficit)

Qualigen Therapeutics, Inc.

stockholders’ equity:

stockholders’ equity (deficit):

Common stock, $ 0.001 par value;

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Total Qualigen Therapeutics, Inc.

stockholders’ equity

stockholders’ equity (deficit)

( 2,103,557 )

Noncontrolling interest

Total Stockholders’ Equity

Total Liabilities & Stockholders’ Equity

Total Stockholders’ Equity (deficit)

( 2,103,557 )

Total Liabilities & Stockholders’ Equity (Deficit)

accompanying notes are an integral part of these consolidated financial statements.

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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

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( 2,035,469 )

Interest (income) expense, net

Interest expense, net

Loss on voluntary conversion of convertible debt

Loss on debt extinguishment

Loss on fixed asset disposal

Other income, net

Total other expense (income), net

( 4,771,326 )

LOSS BEFORE (BENEFIT) PROVISION FOR INCOME TAXES

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(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

( 7,140,181 )

Loss on disposal of discontinued operations, net of tax

LOSS FROM DISCONTINUED OPERATIONS

( 1,285,240 )

( 7,140,181 )

( 13,760,250 )

( 21,034,643 )

Net loss attributable to non-controlling interest from discontinued operations

( 2,394,100 )

Net loss attributable to Qualigen Therapeutics, Inc.

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$ ( 18,640,543 )

Net loss per common share, basic and diluted

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

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$ ( 21,034,643 )

Foreign currency translation adjustment

Foreign currency translation adjustment from discontinued operations

Other comprehensive loss

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( 20,983,922 )

Comprehensive loss attributable to noncontrolling interest

Comprehensive loss attributable to noncontrolling interest from discontinued operations

( 2,394,100 )

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STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Comprehensive

Noncontrolling

Other Comprehensive

Total Qualigen Therapeutics, Inc.

Therapeutics,

Stockholders’

Income (Deficit)

Noncontrolling

Total Stockholders’

Balance at December 31, 2022

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$ ( 103,385,172 )

Stock issued upon exercise of warrants

Voluntary conversion of convertible

debt into common stock

Redemptions of convertible

debt into common stock

Fair value of warrant modification

for professional services

Fair value of warrant reclassified

from liabilities to equity

Stock-based compensation

Common stock and prefunded warrants issued for business acquisition

Noncontrolling interest adjustments relating to Stock-based compensation

Foreign currency translation adjustment

Fair value of warrant modification for professional services

Fair value of warrant modification for business acquisition

Issuance of rounded shares as a result of the reverse stock split

Foreign currency translation

Deconsolidation of discontinued

( 1,235,443 )

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( 13,417,212 )

( 13,760,250 )

Balance at December 31,

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$ ( 116,802,384 )

Alpha Convertible

$ ( 2,103,557 )

Therapeutics,

Comprehensive

Stockholders’

Noncontrolling

Stockholders’

Balance at December 31, 2021

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$ ( 84,744,629 )

Stock issued upon cash-exercise of warrants

Stock issued upon net-exercise of warrants

Issuance of common stock for conversion of preferred stock

Fair value of warrants issued for professional services

Shares issued pursuant to Securities Purchase Agreements

Commission and offering costs of Securities Purchase Agreements

$ 101,274,073

$ ( 84,744,629 )

Fair value of warrant modifications pursuant to Securities Purchase Agreements

Stock issued for professional services

Stock issued upon exercise

Stock-based compensation

Common stock and prefunded

warrants issued for business acquisition

Noncontrolling interest

adjustments relating to Stock-based compensation and other

Foreign currency translation

Fair value of warrant modification

for professional services

Fair value of warrant modification

for business acquisition

Issuance of rounded shares

as a result of the reverse stock split

( 18,640,543 )

( 2,394,100 )

( 21,034,643 )

Balance at December 31,

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$ ( 103,385,172 )

Balance, value

$ 110,528,050

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$ ( 21,034,643 )

Adjustments to reconcile net loss to net cash used in operating activities:

Loss from discontinued operations, net of tax

( 1,285,240 )

( 7,140,181 )

Loss from continuing operations

( 12,475,010 )

( 13,894,462 )

Adjustments to reconcile loss from continuing operations to net cash used in operating activities:

Depreciation and amortization

Amortization of right-of-use assets

Accounts receivable reserves and allowances

Inventory reserves

Common stock issued for professional services

Fair value of warrants issued for professional services

Stock-based compensation

Fair value of warrant modification for professional services

Goodwill and fixed asset impairment

Change in fair value of warrant liabilities

( 2,035,469 )

Loss on voluntary conversion of convertible debt

Accretion of discount on convertible debt

Loss on debt extinguishment

Loss on disposal of fixed assets

Fair value of warrant modification for professional services

Changes in operating assets and liabilities:

Accounts receivable

Inventory and equipment held for lease

Prepaid expenses and other assets

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Accrued expenses and other current liabilities

R&D grant liability

Operating lease liability

Deferred revenue

Deferred tax liability

Net cash used in operating activities - continuing operations

( 9,093,599 )

( 10,598,862 )

Net cash provided by (used in) operating activities - discontinued operations

( 1,210,664 )

( 2,648,679 )

Net cash used in operating activities

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CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

Purchases of equipment held for lease

Payments for patents and licenses

Net cash acquired in business combination

Net cash used in investing activities

Net cash provided by (used in) investing activities -

discontinued operations

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from warrant exercises

Proceeds from issuance of shares and warrants pursuant to Securities Purchase Agreements

Proceeds from issuance of convertible debt - related party

Offering costs of Securities Purchase Agreements

Principal payments on notes payable

Proceeds from issuance of convertible debt

Payments on convertible notes payable

Fractional share payments related to the reverse stock split

Net cash provided by financing activities

Net cash (used in)/provided by financing activities - continuing operations

Net cash used in financing activities - discontinued operations

Net cash (used in) provided by financing activities

Net change in cash and restricted cash

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Effect of exchange rate changes on cash and restricted cash

Cash and restricted cash - beginning of period

Cash and restricted cash - end of period

Cash and restricted cash from continuing operations -

beginning of period

Cash and restricted cash from discontinued operations - beginning of period

cash and restricted cash from discontinued operations - end of period

Cash from continuing operations - end of period

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

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NONCASH FINANCING AND INVESTING ACTIVITIES:

Issuance of common stock for conversion of preferred stock after closing of reverse recapitalization

Right-of-use assets obtained in exchange for operating lease liabilities

Fair value of shares issued for cashless warrant exercises

Net transfers to inventory from equipment held for lease

Fair value of warrant modifications pursuant to Securities Purchase Agreements

Net transfers to equipment held for lease from inventory

Fair value of warrant liabilities on date of exercise

Redemption of convertible debt into common stock

Voluntary conversion of convertible debt into common stock

Fair value of warrant modifications pursuant to Securities Purchase

Fair value of warrant modifications for business acquisition

Fair value of assets acquired

$ ( 5,896,278 )

Fair value of liabilities assumed, net of goodwill

Fair value of Alpha Capital/Qualigen warrants repriced due to acquisition

Fair value of Qualigen prefunded warrant issued in exchange for NanoSynex stock

Fair value of Qualigen common stock issued in exchange for NanoSynex stock

Net cash acquired in business combination (Note 3)

accompanying notes are an integral part of these consolidated financial statements.

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1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

Inc., now a subsidiary of Qualigen Therapeutics, Inc., was incorporated in Minnesota in 1996 to design, develop, manufacture and sell

Physician Office Laboratory (“POL”) market quantitative immunoassay diagnostic products for use in physician offices and

other point-of-care settings worldwide, and was reincorporated in Delaware in 1999.

In May 2020, Qualigen, Inc.

completed a reverse recapitalization

transaction with Ritter Pharmaceuticals, Inc.

(“Ritter”) and Ritter was renamed Qualigen Therapeutics, Inc.

All shares of

Qualigen, Inc.’s capital stock were exchanged for Qualigen Therapeutics, Inc.’s capital stock in the merger.

Ritter/Qualigen

Therapeutics common stock, which was previously traded on the Nasdaq Capital Market under the ticker symbol “RTTR,” commenced

trading on the Nasdaq Capital Market, on a post-reverse-stock-split adjusted basis, under the trading symbol “QLGN” on May

Qualigen Therapeutics, Inc.

(the “Company”) operates in one business segment.

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,

On May 22, 2020, upon completing a “reverse recapitalization” transaction with Qualigen, Inc., Ritter Pharmaceuticals,

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.

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

May 26, 2022, the Company acquired 2,232,861 shares of Series A-1 Preferred Stock of NanoSynex, Ltd.

(“NanoSynex”) from Alpha

Capital Anstalt (“Alpha Capital”), a related party, in exchange for 350,000 reverse split adjusted shares of the Company’s common stock and a prefunded warrant

to purchase 331,464 reverse split adjusted shares of the Company’s common stock at an exercise price of $ 0.001 per share.

Capital Anstalt (“Alpha”), a related party, in exchange for 350,000 reverse split adjusted shares of the Company’s

common stock and a prefunded warrant to purchase 331,464 reverse split adjusted shares of the Company’s common stock at an exercise

price of $ 0.001 per share.

These warrants were subsequently exercised on September 13, 2022.

Concurrently with this transaction,

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

The transactions

resulted in the Company acquiring a 52.8 % interest in NanoSynex.

The Company envisions future synergies from the integration of its own

proprietary results-proven FastPack diagnostics platform with the innovative NanoSynex technology.

NanoSynex is a micro-biologics diagnostics

Concurrently with this transaction, the

Company also entered into a Master Funding Agreement for the Operational and Technology Funding of NanoSynex Ltd., dated May 26, 2022,

with NanoSynex (the “NanoSynex Funding Agreement”), to, among other things, provide for the further funding of NanoSynex,

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

The transactions resulted

in the Company acquiring a 52.8 % interest in NanoSynex (the “NanoSynex Acquisition”).

NanoSynex is a nanotechnology diagnostics

company domiciled in Israel.

On July 20, 2023, the Company entered into an Amendment and Settlement Agreement with NanoSynex (the “NanoSynex

Amendment”), which amended the NanoSynex Funding Agreement, to, among other things, eliminate most of the Company obligation for

the further funding of NanoSynex.

Pursuant to the terms of the NanoSynex Amendment, the Company lost its controlling interest in NanoSynex

(see Note 5 -Discontinued Operations).

of Presentation

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of Consolidation

accompanying consolidated financial statements include the accounts of the Company and its 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

accompanying 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 U.S.

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, however for NanoSynex, the functional currency is the local currency, New Israeli

In general, the functional

currency of the Company and its subsidiaries is the U.S.

For NanoSynex, the functional currency was the local currency, New Israeli

Shekels (NIS).

As such, assets and liabilities for NanoSynex are translated into U.S.

dollars and the effects of foreign currency translation

adjustments are reflected as a component of accumulated other comprehensive income within the Company’s consolidated statements

of changes in stockholders’ equity.

As such, assets and liabilities for NanoSynex were 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 consolidated statements of

changes in stockholders’ equity (deficit).

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.

See Note 5 – Discontinued Operations for further information.

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.

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 281,000 Series B Preferred

Shares of NanoSynex held by the Company, resulting in the deconsolidation of NanoSynex.

The disposition represents a strategic shift

that will have a material effect on the Company’s operations and financial results.

Accordingly, the business of NanoSynex is classified

as discontinued operations for all periods presented herein.

Note 5 - Discontinued Operations for further information.

Method Investments

deconsolidation of NanoSynex on July 20, 2023, the Company accounts for its retained investment under the equity method of accounting

as it retained the ability to exercise significant influence over the operating and financial policies of the investee.

Under the equity

method, the Company recognizes its proportionate share earnings or losses each reporting period with an adjustment to the carrying value

of the investment.

As of December 31, 2023, the carrying value of the retained investment was zero, and therefore the Company has suspended

application of the equity method as the Company is not liable for the obligations of the investee nor otherwise committed to provide

financial support.

Future equity method earnings, if any, will not be recognized until the amount exceeds the unrecognized net losses

in prior periods.

See Note 5 – Discontinued Operations for further information.

uses estimates and assumptions in preparing its consolidated financial statements in accordance with U.S.

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The most significant estimates relate to the estimated fair value of in-process research and development, goodwill, warrant

liabilities, stock-based compensation, amortization and depreciation, inventory reserves, allowances for doubtful accounts and returns,

and warranty costs.

liabilities, and stock-based compensation.

Actual results could vary from the estimates that were used.

November 23, 2022, the Company effected a 1-for-10, as determined by the Company’s board of directors, reverse stock split of its

outstanding shares of common stock (the “Reverse Stock Split”).

The Reverse Stock Split reduced the Company’s 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 the accompanying financial statements and the 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.

November 23, 2022, the Company effected a 1-for-10 reverse stock split of its outstanding shares of common stock (the “Reverse

Stock Split”).

The Reverse Stock Split reduced the Company’s shares of outstanding common stock, stock options, and warrants

to purchase shares of 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 fractional shares was paid to stockholders.

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 the Reverse Stock Split.

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

Company considers all highly liquid investments purchased with an initial maturity of 90 days or less and money market funds to be cash

Restricted cash includes cash that is restricted due to Israeli banking regulations.

Company maintains the majority of its cash in accounts at banking institutions in the U.S.

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 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.

The FDIC recently took control of two such banking institutions,

Silicon Valley Bank on March 10, 2023 and Signature Bank on March 12, 2023.

While the Company did not have an account at either of these two banks, in

the event of failure of any of the financial institutions where the Company maintains its cash and cash equivalents, there can be no

assurance that the Company would be able to access uninsured funds in a timely manner or at all.

Any inability to access or delay in

accessing these funds could adversely affect our business and financial position.

is recorded at the lower of cost or net realizable value.

Cost is determined using the first-in, first-out method.

The Company reviews

the components of its inventory on a periodic basis for excess or obsolete inventory, and records reserves for inventory components identified

as excess or obsolete.

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.

In March 2023, Silicon Valley Bank and Signature Bank, and more recently in May 2023, First Republic Bank, were closed due to liquidity

concerns and taken over by the FDIC.

While the Company did not have an account at any of these banks, in the event of failure of any

of the financial institutions where the Company maintains its cash and cash equivalents, there can be no assurance that the Company would

be able to access uninsured funds in a timely manner or at all.

Any inability to access or delay in accessing these funds could adversely

affect the Company’s business and financial position.

of Long-Lived Assets

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the net book value of the assets and their estimated fair values.

During the fiscal year ending December 31, 2022 the Company recorded

an impairment loss of $ 4,239,000 related to the NanoSynex acquisition.

During the years ended December 31, 2023 and 2022, no such impairment

losses have been recorded.

segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation

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To date, the Company

has viewed its operations and managed its business as one segment operating primarily within the United States and Israel.

Receivable, Net

Company grants credit to domestic physicians, clinics, and distributors.

The Company performs ongoing credit evaluations of its customers

and generally requires no collateral.

Customers can purchase certain products through a financing agreement that the Company has with

an outside leasing company.

Under the agreement, the leasing company evaluates the credit worthiness of the customer.

Upon acceptance

of the product by the customer, the leasing company remits payment to the Company at a discount.

This financing arrangement is without

recourse to the Company.

Company records an allowance for doubtful accounts and returns equal to the estimated uncollectible amounts or expected returns.

Company’s estimates are based on historical collections and returns and a review of the current status of trade accounts receivable.

receivable is comprised of the following at:

OF ACCOUNTS RECEIVABLE

Accounts Receivable

Less Reserves and Allowances

Accounts receivable,

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).

and Development

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therapeutics license costs.

has received R&D grants from Israel Innovation Authority (IIA) and from the European Commission.

These grants may provide cash funding

to NanoSynex from time to time in advance of the applicable costs being incurred.

When such cash funding is received from these grants

in advance, the proceeds are recorded as a current or non-current R&D grant liability based on the time from the consolidated balance

sheets date to the expected future date of recognition as a reduction to research and development expenses.

Company expenses all costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting

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statement of operations.

and Handling Costs

Company includes shipping and handling fees billed to customers in net sales.

Shipping and handling costs associated with inbound and

outbound freight are generally recorded in cost of sales;

such shipping and handling costs totaled approximately $ 267,000 and $ 113,000 ,

respectively, for the years December 31, 2022 and 2021.

Other shipping and handling costs included in general and administrative, research

and development, and sales and marketing expenses totaled approximately $ 14,000 and $ 12,000 for the years ended December 31, 2022 and

2021, respectively.

from Contracts with Customers

Company applies the following five-step model in accordance with ASC 606, Revenue from Contracts with Customers, in order to determine

(i) identification of the promised goods or services in the contract;

(ii) determination of whether the promised goods or services

are performance obligations, including whether they are distinct in the context of the contract;

(iii) measurement of the transaction

price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations;

(v) recognition of revenue when (or as) the Company satisfies each performance obligation.

Company generates revenue from selling FastPack System analyzers, accessories and disposable products used with the FastPack System.

Disposable products include reagent packs, which are diagnostic tests for prostate-specific antigen, testosterone, thyroid disorders,

pregnancy, and Vitamin D.

Company provides disposable products and equipment in exchange for consideration, which occurs when a customer submits a purchase order

and the Company provides disposable products and equipment at the agreed upon prices in the invoice.

Generally, customers purchase disposable

products using separate purchase orders after the equipment (“analyzer”) has been provided to the customer.

The initial delivery

of the equipment and reagent packs represents a single performance obligation and is completed upon receipt by the customer.

of each subsequent individual reagent pack represents a separate performance obligation because the reagent packs are standardized, are

not interrelated in any way, and the customer can benefit from each reagent pack without any other product.

There are no significant

discounts, rebates, returns or other forms of variable consideration.

Customers are generally required to pay within 30 days.

performance obligation arising from the delivery of the equipment is satisfied upon the delivery of the equipment to the customer.

disposable products are shipped Free on Board (“FOB”) shipping point.

For disposable products that are shipped FOB shipping

point, the customer has the significant risks and rewards of ownership and legal title to the assets when the disposable products leave

the Company’s shipping facilities, thus the customer obtains control and revenue is recognized at that point in time.

Company has elected the practical expedient and accounting policy election to account for the shipping and handling as activities to

fulfill the promise to transfer the disposable products and not as a separate performance obligation.

Company’s contracts with customers generally have an expected duration of one year or less, and therefore the Company has elected

the practical expedient in ASC 606 to not disclose information about its remaining performance obligations.

Any incremental costs to

obtain contracts are recorded as selling, general and administrative expense as incurred due to the short duration of the Company’s

Company entered into an out-license agreement with Yi Xin to develop and/or commercialize its products in exchange for nonrefundable

upfront license fees and/or sales-based royalties.

the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified

in the arrangement, the Company recognizes revenue from nonrefundable upfront fees allocated to the license when the license is transferred

to the customer and the customer can benefit from the license.

For licenses that are bundled with other performance obligations, management

uses judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is

satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing

revenue from nonrefundable upfront fees.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts

the measure of progress and related revenue recognition.

During years ended December 31, 2022 and 2021, the Company recognized license

revenue of approximately $ 0 and $ 632,000 , respectively.

Asset and Liability Balances

timing of the Company’s revenue recognition may differ from the timing of payment by the Company’s customers.

records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment.

Alternatively, when

payment precedes the performance of the related services, the Company records deferred revenue until the performance obligations are

performance obligations include contracts that combine both the Company’s analyzer and a customer’s future reagent purchases

under a single contract.

In some sales contracts, the Company provides analyzers at no charge to customers.

Title to the analyzer is

maintained by the Company and the analyzer is returned by the customer to the Company at the end of the purchase agreement.

the years December 31, 2022 and 2021, product sales are stated net of an allowance for estimated returns of approximately $ 96,000 and

$ 150,000 , respectively.

received in advance from customers pursuant to certain collaborative research license agreements, deposits against future product sales,

multiple element arrangements and extended warranties are recorded as a current or non-current deferred revenue liability based on the

time from the Consolidated Balance Sheet date to the future date of revenue recognition.

April 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No.

2018-11, Leases (Topic 842) Targeted Improvements

(“Topic 842”).

In accordance with the guidance in Topic 842, the Company recognizes lease liabilities and corresponding

right-of-use-assets for all leases with terms of greater than 12 months.

Leases with a term of 12 months or less will be accounted for

in a manner similar to the guidance for operating leases prior to the adoption of Topic 842.

(See Note 13-Commitments and Contingencies).

and Equipment, Net

and equipment are stated at cost and are presented net of accumulated depreciation.

Depreciation is provided for on a straight-line basis

over the estimated useful lives of the related assets as follows:

OF USEFUL LIVES OF PROPERTY AND EQUIPMENT

and equipment

improvements are amortized on a straight-line basis over the shorter of the lease term or their estimated useful lives.

The Company occasionally

designs and builds its own machinery.

The costs of these projects, which includes the cost of construction and other direct costs attributable

to the construction, are capitalized as construction in progress.

No provision for depreciation is made on construction in progress until

the relevant assets are completed and placed in service.

Company’s policy is to evaluate the remaining lives and recoverability of long-term assets on at least an annual basis or when

conditions are present that indicate impairment.

Company accounts for business combinations using the acquisition method pursuant to FASB ASC Topic 805.

This method requires, among other

things, that results of operations of acquired companies are included in Qualigen’s financial results beginning on the respective

acquisition dates, and that assets acquired and liabilities assumed and noncontrolling interests are recognized at fair value as of the

acquisition date.

Intangible assets acquired in a business combination are recorded at fair value using a discounted cash flow model.

We have third-party valuations completed for intangible assets in a business combination using a discounted cash flow analysis, incorporating

various assumptions.

The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, the cost

of capital and terminal values from the perspective of a market participant.

Each of these factors can significantly affect the value

of the intangible asset.

Company accounts for business combinations using the acquisition method pursuant to Financial Accounting Standards Board’s (“FASB”)

ASC Topic 805.

This method requires, among other things, that results of operations of acquired companies are included in the Company’s

financial results beginning on the respective acquisition date, and that assets acquired and liabilities assumed are recognized at fair

value as of the acquisition date.

Intangible assets acquired in a business combination are recorded at fair value using a discounted

cash flow model.

The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, the cost of

capital and terminal values from the perspective of a market participant.

Each of these factors can significantly affect the value of

the intangible asset.

Any excess of the fair value of consideration transferred (the “purchase price”) over the fair values

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Legal costs, due diligence costs, business valuation costs and all other acquisition-related costs are expensed when incurred.

represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets

acquired, when accounted for using the purchase method of accounting.

Goodwill has an indefinite useful life and is not amortized

but is reviewed for impairment annually and whenever events or changes in circumstances indicate that the carrying value of the

goodwill may not be recoverable.

represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets acquired,

when accounted for using the purchase method of accounting.

Goodwill has an indefinite useful life and is not amortized but is reviewed

for impairment annually and whenever events or changes in circumstances indicate that the carrying value of the goodwill may not be recoverable.

In testing for impairment, the fair value of the reporting unit is compared to the carrying value.

If the net assets assigned to the reporting unit exceed the fair value of the reporting unit, an impairment loss equal to the

difference is recorded.

As a result of the annual goodwill impairment analysis, the Company recognized a $ 4,239,000

non-cash goodwill and fixed asset impairment charge in the valuation of its business acquisition of NanoSynex for the year ended

December 30, 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.

in process R&D (IPR&D) represents the fair value assigned to the research and development assets that have not reached technological

The value assigned to IPR&D is determined by estimating the costs to develop the acquired technology into commercially

viable products, estimating the resulting revenue from the projects, and discounting the net cash flow to present value.

and cost projections used to value acquired IPR&D are, as applicable, reduced based on the probability of success of developing the

Additionally, projections consider relevant market sizes and growth factors, expected trends in technology and the nature

and expected timing of new product introductions.

The rates utilized to discount the net cash flow to its present value are commensurate

with the stage of development of the project and uncertainties in the economic estimates used in the projections.

Upon the acquisition

of acquired IPR&D, an assessment is completed as to whether the acquisition constitutes an acquisition of a single asset or a group

Multiple factors are considered in this assessment, including the nature of the technology acquired, the presence or absence

of separate cash flows, the development process and stage of completion, quantitative significance, and the Company’s rationale

for entering into the transaction.

a business is acquired, as defined under the applicable accounting standards, then the acquired IPR&D is capitalized as an intangible

If an asset or group of assets is acquired that do not meet the definition under the applicable accounting standards, then the

acquired IPR&D is expensed on its acquisition date.

Future costs to develop these assets are recorded to research and development

expense in the Company’s consolidated statements of operations and comprehensive loss as they are incurred.

is evaluated for impairment annually using the same methodology as described above for calculating fair value.

If the carrying value

of the acquired IPR&D exceeds the fair value, then the intangible asset is written down to its fair value, with the resulting adjustment

recorded as a charge to operations.

Changes in estimates and assumptions used in determining the fair value of acquired IPR&D could

result in an impairment.

Intangible Assets, Net

intangible assets consist of patent-related costs and costs for license agreements.

Management reviews the carrying value of other intangible

assets that are being amortized on an annual basis or sooner when there is evidence that events or changes in circumstances may indicate

that impairment exists.

The Company considers relevant cash flow and profitability information, including estimated future operating

results, trends and other available information, in assessing whether the carrying value of intangible assets being amortized can be

the Company determines that the carrying value of other intangible assets will not be recovered from the undiscounted future cash flows

expected to result from the use and eventual disposition of the underlying assets, the Company considers the carrying value of such intangible

assets as impaired and reduces them by a charge to operations in the amount of the impairment.

related to acquiring patents and licenses are capitalized and amortized over their estimated useful lives, which is generally 5 to 17

years, using the straight-line method.

Amortization of patents and licenses commences once final approval of the patent or license has

been obtained.

Patent and license costs are charged to operations if it is determined that the patent or license will not be obtained.

If the net assets assigned to the

reporting unit exceed the fair value of the reporting unit, an impairment loss equal to the difference is recorded.

As a result of the

annual goodwill impairment analysis, the Company recognized a $ 4,239,000 non-cash goodwill and fixed asset impairment charge in the valuation

of its business acquisition of NanoSynex for the year ended December 30, 2022.

Financial Instruments and Warrant Liabilities

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The guidance establishes three levels of the fair value hierarchy as follows:

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;

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;

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;

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;

3 - Inputs that are unobservable.

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fair value due to the short-term nature of these instruments.

expense consists primarily of print and digital media promotional materials for a distributor.

Advertising costs are expensed as incurred.

Advertising expense for the years ended December 31, 2022 and 2021 amounted to $ 50,000 and $ 0 , respectively.

Comprehensive

loss consists of net income and foreign currency translation adjustments.

Comprehensive gains (losses) have been reflected in the statements

of operations and comprehensive loss and as a separate component in the statements of stockholders’ equity for all periods presented.

loss consists of net income and foreign currency translation adjustments related to the discontinued operations of NanoSynex.

Comprehensive

gains (losses) have been reflected in the statements of operations and comprehensive loss and as a separate component in the statements

of stockholders’ equity (deficit) for all periods presented.

compensation cost for equity awards granted to employees and non-employees is measured at the grant date based on the calculated fair

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For more information, refer to Note 14 - Income Taxes.

and Excise Taxes

and other taxes collected from customers and subsequently remitted to government authorities are recorded as accounts receivable with

corresponding tax payable.

These balances are removed from the consolidated balance sheet as cash is collected from customers and remitted

to the tax authority.

Company’s warranty policy generally provides for one year of coverage against defects and nonperformance within published specifications

for sold analyzers and for the term of the contract for equipment held for lease.

The Company accrues for estimated warranty costs in

the period in which the revenue is recognized based on historical data and the Company’s best estimates of analyzer failure rates

and costs to repair.

warranty liabilities were approximately $ 138,000 and $ 60,000 , respectively, at December 31, 2022 and December 31, 2021 and are included

in accrued expenses and other current liabilities on the Consolidated Balance Sheets.

Warranty costs were approximately $ 69,000 and $ 57,000

for the years ended December 31, 2022 and 2021, respectively, and are included in cost of product sales in the Consolidated Statements

of Operations.

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.

Currency Translation

functional currency for the Company is the U.S.

The functional currency for NanoSynex, the Company’s newly acquired majority

owned subsidiary, is the New Israeli Shekel (NIS).

The financial statements of NanoSynex are translated into U.S.

dollars using exchange

rates in effect at each period end for assets and liabilities;

The functional currency for the discontinued operations of NanoSynex was the

New Israeli Shekel (NIS).

The financial statements of NanoSynex were translated into U.S.

dollars using exchange rates in effect at each

period end for assets and liabilities;

using exchange rates in effect during the period for results of operations;

and using historical exchange rates for certain equity accounts.

The adjustment resulting from translating the financial statements of

NanoSynex is reflected as a separate component of other comprehensive income (loss).

comprehensive loss related to the effects of foreign currency translation adjustments attributable to NanoSynex was $ 50,721 and $ 0 at

December 31, 2022 and 2021, respectively.

and using historical

exchange rates for certain equity accounts.

The adjustment resulting from translating the financial statements of NanoSynex was reflected

as a separate component of other comprehensive income (loss) (see Note 5 - Discontinued Operations).

Accounting Pronouncements

June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2016-13, Measurement of Credit Losses on Financial

Instruments , which supersedes current guidance by requiring recognition of credit losses when it is probable that a loss has been

The new standard requires the establishment of an allowance for estimated credit losses on financial assets including trade

and other receivables at each reporting date.

The new standard will result in earlier recognition of allowances for losses on trade and

other receivables and other contractual rights to receive cash.

In November 2019, the FASB issued ASU No.

2019-10, Financial Instruments

– Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842) , which extended the effective

date of Topic 326 for certain companies until fiscal years beginning after December 15, 2022.

The new standard will be effective for

the Company in the first quarter of fiscal year beginning January 1, 2023, and early adoption is permitted.

The Company adopted ASU 2016-13

on January 1, 2023.

Adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected

to have a significant impact to the financial statements.

Economic Conditions

Wars in Ukraine and Israel

February 2022, Russia invaded Ukraine.

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conflict and its impact on regional and global economic conditions.

Cost Environment

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).

and Global Economic Conditions

the year ended 2022 and continuing into the current fiscal year, global commodity and labor markets experienced significant inflationary

pressures attributable to ongoing economic recovery and supply chain issues.

The Company is subject to inflationary pressures with respect

to raw materials, labor and transportation.

Accordingly, the Company continues to take actions with its customers and suppliers to mitigate

the impact of these inflationary pressures in the future.

Actions to mitigate inflationary pressures with suppliers include aggregation

of purchase requirements to achieve optimal volume benefits, negotiation of cost-reductions and identification of more cost competitive

While these actions are designed to offset the impact of inflationary pressures, the Company cannot provide assurance that

it will be successful in fully offsetting increased costs resulting from inflationary pressure.

COVID-19 Pandemic

pressures attributable to government stimulus and recovery programs, government deficit spending and supply chain issues.

cannot provide assurance that it will be successful in fully offsetting increased costs resulting from inflationary pressure.

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.

of COVID-19 Pandemic

COVID-19 pandemic has had a dramatic impact on businesses globally and on the Company’s business as well.

Sales of diagnostic products

fell significantly during 2020 and the Company’s net loss increased significantly, as deferral of patients’ non-emergency

visits to physician offices, clinics and small hospitals sharply reduced demand for FastPack tests.

Since then we have experienced some recovery in demand.

During the height of

the pandemic, sales of diagnostic products decreased significantly and the Company’s net loss increased significantly, as clinics

and small hospitals’ demand for Qualigen, Inc.’s FastPack™ diagnostic test kits was reduced sharply, largely due to

deferral of patients’ non-emergency visits to physician offices.

In July 2023 the Company sold Qualigen, Inc., its wholly-owned

subsidiary, to Chembio (see Note 5 - Discontinued Operations).

accounting standard updates are either not applicable to the Company or are not expected to have a material impact on the Company’s

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2 — LIQUIDITY AND GOING CONCERN

of December 31, 2022, the Company had approximately $ 7.0 million in cash and an accumulated deficit of $ 103.4 million.

For the years

ended December 31, 2022 and 2021, the Company used cash of $ 13.2 million and $ 14.7 million, respectively, in operations.

The Company’s

cash balances are expected to fund operations into the third quarter of 2023.

As a pre-clinical development-stage therapeutics biotechnology

company, the Company expects to continue to have net losses and negative cash flow from operations, which over time will challenge its

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.

of December 31, 2023, the Company had approximately $ 0.4

million in cash and an accumulated deficit of $ 116.8

For the years ended December 31,

2023 and 2022, the Company used cash of $ 10.3

million and $ 13.2

million, respectively, in operations.

Company’s cash balances as of the date that these financial statements were issued along with the proceeds from the above sale

to Chembio, without additional financing, are expected to fund operations only into the second quarter of 2024.

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.

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

to fully execute its business plan, the Company will require significant additional financing for planned research and development activities,

capital expenditures, clinical and pre-clinical testing for its QN-302 clinical trials, preclinical development of RAS and QN-247, and

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

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

Historically,

the Company’s principal sources of cash have included proceeds from the issuance of common and preferred equity and proceeds

from the issuance of debt.

the Company’s principal sources of cash have included proceeds from the issuance of common and preferred equity and proceeds from

the issuance of debt.

In December 2022 the Company raised $ 3.0

million from the issuance of common stock to several institutional investors, and in December 2022 the Company raised $ 3.0

million from the sale of a convertible debt - related party (see Note 11-Convertible Debt - Related Party).

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.

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.

These 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 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.

the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the ownership interests

of its 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 the Company raises 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, it may have to relinquish valuable

rights to its technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be

favorable to the Company.

Additional funding may not be available to the Company on acceptable terms, or at all.

In addition, any future

financing (depending on the terms and conditions) may be subject to the approval of Alpha Capital, the holder of the Company’s

8% Senior Convertible Debenture (the “Debenture”), or trigger certain adjustments to the Debenture or warrants held by Alpha

million from the sale of an 8% Senior Convertible

Debenture (the “Debenture”) to Alpha (see Note 8 - Convertible Debt - Related Party).

There can be no assurance that further

financing can be obtained on favorable terms, or at all.

If the Company is unable to obtain funding, the Company could be required to

delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which

could adversely affect the Company’s business prospects.

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

3 — ACQUISITION

The Company acquired a 52.8 %

voting equity interest in NanoSynex on May 26, 2022 (the “NanoSynex Acquisition Date”) through:

(1) the purchase of 2,232,861

shares Preferred A-1 Stock of NanoSynex from Alpha Capital (a related party) for 350,000

reverse split adjusted shares of the Company’s common stock and a prefunded warrant to purchase 331,464

reverse split adjusted shares of the Company’s common stock at a purchase price of $ 0.001

per share ( these warrants were subsequently exercised on September 13, 2022) , and (2) the purchase of 381,786

shares of Series B preferred stock of NanoSynex from NanoSynex in exchange for $ 600,000

(collectively, the “NanoSynex Acquisition”).

acquisition of the majority interest of NanoSynex was accounted for as a business combination using the acquisition method, in accordance

with FASB ASC Topic 805.

Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized

and measured as of the acquisition date at fair value.

Determining the fair value of assets acquired, liabilities assumed and noncontrolling

interest requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions

with respect to future cash flows, discount rates and asset lives among other items.

The Company uses third-party valuations for intangible

assets in a business combination using a discounted cash flow analysis, incorporating various assumptions.

summary of the consideration transferred and fair value of assets acquired and liabilities assumed in the NanoSynex Acquisition is as

follows (all shares shown post 1 for 10 reverse split on November 23, 2022):

OF CONSIDERATION TRANSFERRED

Consideration transferred, net of cash acquired

Cash paid for NanoSynex preferred stock:

FMV of 350,000 shares of Qualigen stock issued to Alpha Capital Anstalt

FMV of 331,464

shares of Qualigen stock related to prefunded warrant issued to Alpha Capital Anstalt (See Note 15)

Total consideration paid for NanoSynex preferred stock

FMV of consideration related to related to repricing of 7,048 shares of Alpha Capital/Qualigen warrants *

NanoSynex cash acquired

Total consideration transferred, net of cash acquired

* See disclosure

under Noncompensatory Equity Classified Warrants regarding May 26, 2022 transaction-Note 15-Stockholders’ Equity

OF ASSETS ACQUIRED AND LIABILITIES

Purchase Price Allocation

Accounts receivable

Property and equipment

In process R&D

Accounts payable

Accrued expenses and other payables

R&D grant liability

( 1,362,264 )

Short term debt

Deferred tax liability

Noncontrolling interest assumed

( 3,882,225 )

Identifiable net assets acquired

( 1,215,169 )

Total consideration transferred, net of cash acquired

the year ended December 31, 2022, the Company made measurement period adjustments to the preliminary purchase price allocation which

(i) a decrease to noncontrolling interest of $ 117,775 , (ii) a decrease to goodwill of $ 106,621 .

The measurement period adjustments

were made to reflect facts and circumstances that existed as of the acquisition date and is reflected in the table above.

transaction costs, which were immaterial, have been expensed as incurred and charged to the Company’s consolidated statements of

operations and comprehensive loss.

There was no provision for reimbursement of transaction costs from the Company to NanoSynex.

represents the excess of the purchase price over the fair value of the net assets acquired as of the acquisition date.

Goodwill represents

the value of the future technology to be developed in excess of the identifiable assets as well as the operational synergies of the combined

companies to be recognized.

Goodwill has an indefinite useful life and is not amortized.

None of the Goodwill is expected to be deductible

for tax purposes.

a condition to the 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 Funding Agreement entered

into with NanoSynex.

(See Note 2-Liquidity for further details regarding the terms and conditions of the Funding Agreement).

Company’s consolidated statements of operations and comprehensive loss for the years ended December 31, 2022 and 2021 include

approximately $ 5.1 million and $ 0 , respectively, of net loss associated with the results of operations of NanoSynex from the NanoSynex

Acquisition Date.

following proforma information has been prepared as if the NanoSynex Acquisition occurred on January 1, 2021.

The following unaudited

supplemental proforma consolidated results do not purport to reflect what the combined Company’s results of operations would have

been, nor do they project the future results of operations of the combined Company.

The unaudited supplemental proforma consolidated

results reflect the historical financial information of the Company and NanoSynex, adjusted to give effect to the NanoSynex Acquisition

as if it had occurred on January 1, 2021, as well as to record NanoSynex stock compensation expense and to record the net loss related

to the non-controlling interest, in accordance with generally accepted accounting principles:

OF PRO FORMA INFORMATION

Consolidated Pro Forma Financial

Results for the Years Ending

Net loss attributable to Qualigen Therapeutics, Inc.

$ ( 19,538,959 )

$ ( 17,897,137 )

4 — INVENTORY, NET

net consisted of the following at December 31, 2022 and December 31, 2021:

SCHEDULE OF INVENTORY

Raw materials

Work in process

Finished goods

Total inventory

3 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

2 unchanged sentences

Prepaid insurance

Prepaid manufacturing expenses

Other prepaid expenses

Other current assets

Receivable from sale of Qualigen, Inc.

Prepaid research and development expenses

Prepaid expenses and

other current assets

expenses attributable to Qualigen, Inc.

and NanoSynex were deemed disposed of as discontinued operations (see Note 5 - Discontinued Operations).

4 — OTHER NON-CURRENT ASSETS

non-current assets consisted of the following at December 31, 2023:

OF OTHER NON CURRENT ASSETS

Funds held in escrow

Long-term research and development deposits

Other non-current assets

5 — DISCONTINUED OPERATIONS

summary of assets and liabilities classified in discontinued operations as of December 31, 2022 are as follows:

OF BALANCE SHEETS AND INCOME STATEMENT CLASSIFIED IN DISCONTINUED OPERATIONS

Qualigen, Inc.

Current assets of discontinued operations

Non-current assets of discontinued operations

Total assets of discontinued operations

Current liabilities of discontinued operations

Non-current liabilities of discontinued operations

Total liabilities of discontinued operations

summary of gain (loss) from discontinued operations, net of tax, as of December 31, 2023 and 2022 are as follows:

Year ended December 31, 2023

Year ended December 31, 2022

Qualigen, Inc.

(Loss) from discontinued operations

$ ( 171,701 )

$ ( 511,307 )

$ ( 683,008 )

$ ( 2,142,763 )

$ ( 4,997,418 )

$ ( 7,140,181 )

Gain (loss) on disposal of discontinued operations

( 4,479,010 )

Total gain (loss) from discontinued operations

$ ( 4,990,317 )

$ ( 1,285,240 )

$ ( 2,142,763 )

$ ( 4,997,418 )

$ ( 7,140,181 )

of Qualigen, Inc.

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 $ 5.4 million, of which $ 4.9 million was received during the year ended December 31, 2023, and $ 450,000

is being held in escrow until January 20, 2025 to satisfy certain Company indemnification obligations.

assets and liabilities classified in discontinued operations for Qualigen, Inc.

as of December 31, 2022 are as follows:

AND LIABILITIES CLASSIFIED IN DISCONTINUED OPERATIONS

Accounts receivable, net

Inventory, net

Prepaid expenses and other current assets

Total current assets of discontinued operations

Right-of-use assets

Property and equipment, net

and equipment, net consisted of the following at December 31, 2022 and December 31, 2021:

SCHEDULE OF PROPERTY AND EQUIPMENT

Machinery and equipment

Computer equipment

Leasehold improvements

Molds and tooling

Furniture and fixtures

Equipment held for lease

Property and equipment, gross

Accumulated depreciation

Intangible assets, net

Total non-current assets of discontinued operations

Total assets of discontinued operations of Qualigen, Inc.

Accounts payable

Accrued vacation

Accrued expenses and other current liabilities

Deferred revenue, current portion

Operating lease liability, current portion

Total current liabilities of discontinued operations

Operating lease liability, net of current portion

Deferred revenue, net of current portion

Total non-current liabilities of discontinued operations

Total liabilities of discontinued operations of Qualigen, Inc.

Company reclassified the following statement of operations items to discontinued operations for the years ended December 31, 2023 and

2022, respectively:

For the Years Ended

Net product sales

Total revenues

Cost of product sales

General and administrative

Research and development

Sales and marketing

Goodwill and fixed asset impairment

Total expenses

OTHER EXPENSE (INCOME), NET

Loss on disposal of equipment held for lease

Interest (income) expense, net

Other expense (income), net

Loss on fixed asset disposal

Total other expense (income), net

INCOME (LOSS) FROM DISCONTINUED OPERATIONS BEFORE DISPOSAL

( 2,142,763 )

Gain on sale of Qualigen, Inc., net of tax

INCOME (LOSS) FROM DISCONTINUED OPERATIONS OF QUALIGEN, INC.

$ ( 2,142,763 )

Fixed asset impairment

Property and equipment,

expense relating to property and equipment was approximately $ 92,000 and $ 73,000 for the years ended December 31, 2022 and 2021, respectively.

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

systems back from Sekisui at Sekisui’s net book value, which was determined to be approximately $ 154,000 .

This amount is included

in equipment held for lease in the table above and in accrued expenses at December 31, 2022.

An assignment agreement is to be executed

by both parties to legally transfer title to this equipment from Sekisui to Qualigen.

7 — GOODWILL, IPR&D AND OTHER INTANGIBLES

OF GOODWILL AND OTHER INTANGIBLE

Estimated Useful Lives

Gross carrying amounts

Finite-lived intangible assets:

Developed-product-technology rights

Licensing rights

Accumulated amortization

Total finite-lived intangible assets, net

Indefinite-lived intangible assets:

In-process research and development

Total other intangible assets, net

Company periodically reviews goodwill for impairment in accordance with relevant accounting standards.

Goodwill is attributable to

the NanoSynex Acquisition.

Goodwill and intangible assets are recognized at fair value during the period in which an acquisition is

completed, from updated estimates during the measurement period, or when they are considered to be impaired.

These non-recurring

fair value measurements, primarily for goodwill and intangible assets acquired, were based on Level 3 inputs.

The Company estimates

the fair value of long-lived assets on a non-recurring basis based on a market valuation approach, engaging independent valuation

experts to assist in the determination of fair value.

In the fourth quarter of fiscal 2022, in conjunction with the annual

impairment assessment, the Company determined that the fair value of the reporting unit was less than the carrying value.

addition to continued losses in the reporting unit, the Company considered macroeconomic conditions including a deterioration in the

equity markets evidenced by sustained declines in the Company’s stock price, peer companies, and major market indices since

the acquisition date.

The Company engaged independent valuation experts to assist in determining the fair value of the reporting

As a result of this analysis, the Company recorded a $ 4,239,000 goodwill and fixed asset impairment charge associated with the reporting unit.

There were no impairments

to intangible assets and goodwill during the year ended December 31, 2021.

carrying value of the patents of approximately $ 140,000 and $ 159,000 at December 31, 2022 and December 31, 2021, respectively, are stated

net of accumulated amortization of approximately $ 339,000 and $ 320,000 , respectively.

Amortization of patents charged to operations for

the year ended December 31, 2022 and December 31, 2021 were approximately $ 18,000 and $ 17,000 , respectively.

Total future estimated amortization

of patent costs for the five succeeding years is approximately $ 18,000 for the year ending December 31, 2023, approximately $ 15,000 for

the year ending December 31, 2024, approximately $ 14,000 for years 2025, 2026 and 2027, and approximately $ 65,000 thereafter.

carrying value of the licenses of approximately $ 5,000 and $ 12,000 at December 31, 2022 and December 31, 2021 are stated net of accumulated

amortization of approximately $ 414,000 and $ 407,000 , respectively.

Amortization of licenses charged to operations for the year ended

December 31, 2022 and December 31, 2021 was approximately $ 7,000 and $ 7,000 , respectively.

Total future estimated amortization of license

costs for the five succeeding years is approximately $ 5,000 for the year ending December 31, 2023.

connection with this transaction, the Company recorded a gain on the sale of Qualigen, Inc.

in its consolidated financial statements

for the years ended December 31, 2023:

Gain on sale of

Qualigen, Inc.

Fair value of consideration received

Working capital adjustment

Total Assets of discontinued operations

( 4,225,562 )

Total Liabilities of discontinued operations

Transaction expenses

Gain on sale of Qualigen, Inc.

the fourth quarter of 2023, the gain was adjusted upward by $ 17,000 upon final payment of transaction costs.

and Settlement Agreement with NanoSynex Ltd.

July 20, 2023, the Company entered into and effectuated the NanoSynex Amendment, pursuant to which the Company agreed to, in exchange

for eliminating all future NanoSynex Funding Agreement obligations for the Company to invest further cash in NanoSynex (except for obligations

to lend NanoSynex $ 560,000 on or before November 30, 2023, and $ 670,000 on or before March 31, 2024), surrender 281,000 Series B Preferred

Shares of NanoSynex held by the Company, resulting in the Company’s ownership in NanoSynex being reduced from approximately 52.8 %

to approximately 49.97 % of the voting equity of NanoSynex;

in addition, the Company agreed to surrender approximately $ 3.0 million of

promissory notes which NanoSynex had issued to the Company under the NanoSynex Funding Agreement.

On November 22, 2023, the Company further

agreed to eliminate the Company’s obligations to lend NanoSynex $ 560,000 on or before November 30, 2023, and $ 670,000 on or before

March 31, 2024, by instead surrendering shares of Series A-1 Preferred Stock of NanoSynex in an amount that reduced the Company’s

ownership in NanoSynex voting equity from approximately 49.97 % to 39.90 %.

surrender of Series B Preferred Shares of NanoSynex was accounted for as a loss of control of a subsidiary that constitutes a business

under ASC 810.

As a result, on July 20, 2023, the Company deconsolidated NanoSynex’s related assets, liabilities, accumulated other

comprehensive income, and the noncontrolling interest.

Subsequently, the retained investment in NanoSynex is accounted for as an equity

method investment.

On the date of deconsolidation, the Company recognized its retained investment at fair value, which during the preparation

of these financial statements was determined to be de minimis based on various economic, industry, and other factors.

As a result, the

Company has discontinued recognition of its proportionate share of equity method losses following the date of initial recognition.

equity method earnings, if any, will not be recognized until the amount exceeds the unrecognized net losses in prior periods.

upon the magnitude of the disposition and because the Company is exiting certain research and development operations, the disposition

represents a strategic shift that will have a material effect on the Company’s operations and financial results.

Accordingly, the

business of NanoSynex is classified as discontinued operations for all periods presented herein.

assets and liabilities classified in discontinued operations for NanoSynex as of December 31, 2022 are as follows:

AND LIABILITIES CLASSIFIED IN DISCONTINUED OPERATIONS

Accounts receivable, net

Prepaid expenses and other current assets

Total current assets of discontinued operations

Restricted cash

Property and equipment, net

Intangible assets, net

Total non-current assets of discontinued operations

Total assets of discontinued operations of NanoSynex

Accounts payable

Accrued vacation

Accrued expenses and other current liabilities

R&D grant liability

Short term debt-related party

Total current liabilities of discontinued operations

Deferred tax liability

Total non-current liabilities of discontinued operations

Total liabilities of discontinued operations of NanoSynex

Company reclassified the following statement of operations items to discontinued operations for the years ended December 31, 2023 and

2022, respectively:

For the Years Ended

Research and development

Goodwill and fixed asset impairment

Total expenses

Loss on disposal of discontinued operations

(BENEFIT) PROVISION FOR INCOME TAXES

LOSS FROM DISCONTINUED OPERATIONS

( 4,990,317 )

( 4,997,418 )

Loss attributable to noncontrolling interest

( 2,394,100 )

NET LOSS ATTRIBUTABLE TO STOCKHOLDERS

$ ( 4,647,279 )

$ ( 2,603,318 )

connection with this transaction, the Company recorded a loss on deconsolidation of NanoSynex in its consolidated financial statements

for the years ended December 31, 2023:

Loss on deconsolidation of NanoSynex

Fair value of NanoSynex interest retained

Net assets deconsolidated

( 2,768,403 )

Non-controlling interest share

Accumulated other comprehensive income attributable to NanoSynex

Forgiveness of debt

( 3,077,941 )

Loss from deconsolidation of NanoSynex

$ ( 4,479,010 )

6 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

expenses and other current liabilities consisted of the following at December 31, 2023 and December 31, 2022:

1 unchanged sentence

Board compensation

Equipment held for lease

Franchise, sales and use taxes

Interest (Convertible debt - related party)

Interest (Convertible debt)

Professional fees

Research and development

Warranty liability

Accrued liabilities

9 – SHORT TERM DEBT - RELATED PARTY

has four separate Notes Payable (the “Notes”) outstanding to Alpha Capital, dated between March 26, 2020 and September 2,

2021, aggregating to a total principal outstanding balance of $ 905,000 , and aggregate accrued interest of $ 45,722 for a total outstanding

balance of $ 950,722 as of December 31, 2022.

The Notes all accrue interest at 2.62 % per annum, accrued daily, and provide that the full

amount of principal and interest under each Note shall be due immediately prior to a Liquidation Event (the Maturity Date) unless due

earlier in accordance with the terms of the Notes.

“Liquidation Event” means either i) the merger or consolidation of NanoSynex

into any other entity, other than one in control or under control of NanoSynex or NanoSynex’s majority shareholder;

ii) a transaction

or series of transactions resulting in the transfer of all or substantially all of NanoSynex’s assets or issued and outstanding

share capital (other than to a company under the control of NanoSynex or NanoSynex’s majority shareholders;

or iii) an underwritten

public offering by NanoSynex of its ordinary shares.

Notwithstanding the above, if NanoSynex receives subsequent debt, convertible debt,

or equity funding with gross proceeds of USD $ 3,000,000 or more, then these Notes shall be due and payable upon the actual receipt of

such funding.

Accrued expenses and

other current liabilities

accrued liabilities attributable to Qualigen Inc, and NanoSynex were deemed disposed of as discontinued operations (see Note 5 – Discontinued

7 – WARRANT LIABILITIES

1 unchanged sentence

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, pursuant to the Series C Warrant

terms as adjusted.

exchange for the Series C Warrants, upon closing of the merger with Ritter, the holders received warrants to purchase shares of the Company’s

common stock at $ 7.195

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, at $ 7.195

per share, subject to adjustment.

As of December

31, 2022, the warrants have remaining terms ranging from 0.90

The warrants were determined to be liability-classified

pursuant to the guidance in ASC 480 and ASC 815-40, resulting from inclusion of a leveraged ratchet provision for subsequent dilutive

On April 25, 2022 the warrants were repriced from $ 7.195

with an additional 49,318

ratchet shares issued, and on May 26 2022 the

warrants were repriced from $ 6.00

with an additional 49,952

ratchet shares issued.

On December 22, 2022 the

warrants were repriced again from $ 5.136

with an additional 1,002,717

ratchet shares issued.

As of December 31, 2023, the Series C Warrants had a remaining term of 0.49

The Series C Warrants were determined to be liability-classified pursuant to the guidance in ASC 480 and ASC 815-40, based on

the inclusion of a leveraged ratchet provision for subsequent dilutive issuances.

On April 25, 2022, the Series C warrants were

repriced from $ 7.195

per share exercise price to $ 6.00

per share exercise price with 49,318

additional ratchet Warrants issued.

On May 26, 2022, the Series C warrants were repriced from $ 6.00

per share exercise price to $ 5.136

per share exercise price with 49,952

additional ratchet Warrants issued.

As a result of these repricings, 247,625

warrants were forfeited and 346,896

warrants were reissued.

On December 22, 2022, the Series C Warrants were repriced again from $ 5.136

per share exercise price to $ 1.32

per share exercise price with 1,002,717

additional ratchet Warrants issued.

Additionally,

on December 22, 2022, in conjunction with the issuance of Convertible Debt - Related Party (Note 11), the Company issued to

Alpha Capital a warrant to purchase 2,500,000

shares of the Company’s common stock.

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 may be exercised by Alpha, in whole or in part, at any

time on or after June 22, 2023 and before June 22, 2028, subject to certain terms conditions described in the warrant, including the

Company’s receipt of the necessary stockholder approvals.

on December 22, 2022, in conjunction with the issuance of the Debenture to Alpha (see Note 8 – Convertible Debt – Related

Party), the Company issued to Alpha a warrant to purchase 2,500,000 shares of the Company’s common stock (the “Alpha Warrant”).

The exercise price of the Alpha Warrant was $ 1.65 (equal to 125 % of the conversion price of the Debenture on the closing date).

Warrant may be exercised by Alpha, in whole or in part, at any time before June 22, 2028, subject to certain terms and conditions described

in the Alpha Warrant.

The fair value of this warrant was included in Warrant liabilities-related party on the Company’s consolidated

balance sheet as of December 31, 2022.

On December 5, 2023, the Company entered into an Amendment No.

1 with regard to Securities Purchase

Agreement, with Alpha.

This Amendment amended two instruments which the Company issued under the Securities Purchase Agreement dated

December 21, 2022:

(a) the 8% Senior Convertible Debenture dated December 22, 2022 in favor of Alpha, and (b) the Common Stock Purchase

Warrant dated December 22, 2022 in favor of Alpha.

The Amendment reduced the conversion price of the Debenture from $ 1.32 per share to

$ 0.73 per share (subject to possible future adjustment pursuant to the terms of the Debenture) and reduced the exercise price of the

Warrant from $ 1.65 per share to $ 0.73 per share (subject to possible future adjustment pursuant to the terms of the Warrant).

The Amendment

also eliminated certain adjustment provisions of the Warrant.

The Company determined the event resulted in equity classification for

the Warrant and, accordingly, the Company remeasured the warrant liabilities to fair value, and reclassified.

a result of the Alpha Warrant repricing, on December 5, 2023 the Series C Warrants were repriced again from $ 1.32 per share exercise

price to $ 0.73 per share exercise price with 203,652 additional ratchet Series C Warrants issued, resulting in 455,623 of these Series

C Warrants outstanding and exercisable as of December 31, 2023.

following table summarizes the activity in liability classified warrants for the year ended December 31, 2023:

1 unchanged sentence

Common Stock Warrants

Range of Exercise

Weighted– Average

Weighted–Average

Total outstanding – December 31, 2022

$ 1.32 - $ 1.65

( 2,751,976 )

( 1,097,595 )

Total outstanding – December 31, 2023

3 unchanged sentences

Weighted–Average

Range of Exercise

Total outstanding –December 31, 2021

Total outstanding – December 31, 2022

$ 1.32 - 1.65

following table presents the Company’s fair value hierarchy for its Common Stock Warrant liabilities measured at fair value on

3 unchanged sentences

Balance as of December 31, 2022

Issuance of Alpha warrants

Gain on change in fair value of warrant liabilities

Balance as of December 31, 2022

following table presents the Company’s fair value hierarchy for its Common Stock Warrant liabilities (all of which arose under

the warrants received in exchange for the Series C Warrants) measured at fair value on a recurring basis as of December 31, 2021:

Common Stock Warrant liabilities

Balance as of December 31, 2020

Fair value of warrant reclassified from liabilities to equity

( 1,626,694 )

Loss on debt extinguishment

Gain on change in fair value of warrant liabilities

14 unchanged sentences

or lower fair value measurements.

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 December 31, 2022 and December 31, 2021:

following are the assumptions used in, and 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 December 31, 2023 and December

OF ASSUMPTIONS OF WARRANT LIABILITIES

1 unchanged sentence

December 31, 2022

Weighted Average

Risk-free interest rate

3.906 % — 4.628 %

Expected volatility (peer group)

1 unchanged sentence

Expected dividend yield

value of the warrant liabilities is based on a valuation received from an independent valuation firm determined using a Monte-Carlo simulation.

8 — CONVERTIBLE DEBT- RELATED PARTY

December 22, 2022, the Company issued to Alpha Capital, 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 “Alpha

Purchase Agreement”).

The Debenture is convertible, at any time, and from time to time, at Alpha’s option, into shares of

common stock of the Company (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.

Additionally, on December 22, 2022, the Company issued to Alpha Capital a liability classified warrant to purchase

December 22, 2022, the Company 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

(less expenses) pursuant to the terms of a Securities Purchase Agreement, dated December 21, 2022.

The Debenture has a maturity date

22, 2025 and was initially convertible, at any time, and from time to time, until the Debenture is no longer outstanding, at

Alpha’s option, into shares of common stock of the Company (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 necessary stockholder approvals, which the Company obtained at its 2023 annual meeting of

stockholders on July 13, 2023.

As a part of the same transaction, on December 22, 2022, the Company issued to Alpha a

liability classified warrant (the “Alpha Warrant”) to purchase 2,500,000

shares of the Company’s common stock (see Note 7 - Warrant Liabilities).

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 may be exercised by Alpha Capital, in whole or in part, at any time on or after

June 22, 2023 and before June 22, 2028, subject to certain terms conditions described in the warrant, including the Company’s receipt

of the necessary stockholder approvals.

proceeds from the transaction will be dedicated to the Company’s efforts of advancing its QN-302 Investigative New Drug candidate

towards clinical trials and other working capital purposes.

The exercise price of the Alpha Warrant was initially

(equal to 125 %

of the Conversion Price of the Debenture on the closing date) subject to adjustment as described in the Alpha Warrant.

Warrant may be exercised by Alpha, in whole or in part, at any time before June 22, 2028, subject to certain terms and

conditions described in the Alpha Warrant, including the necessary stockholder approvals, which the Company obtained at its 2023

annual meeting of stockholders on July 13, 2023.

proceeds from the transaction were used to advance the Company’s QN-302 Investigative New Drug candidate towards clinical trials

and other working capital purposes.

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 (each such date, a “Monthly Redemption Date”), the Company will redeem $ 110,000 plus accrued but unpaid

of the Debenture (each such date, a “Monthly Redemption Date”), the Company must redeem $ 110,000 plus accrued but unpaid

interest, liquidated damages and any amounts then owing under the Debenture (the “Monthly Redemption Amount”).

Redemption Amount will be paid in cash;

Redemption Amount must be paid in cash;

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

6 unchanged sentences

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.

The Company’s election to pay monthly redemptions in Conversion Shares or to effect an optional redemption is subject

to the satisfaction (or waiver) of the Equity Conditions (as defined in the Debenture), including the necessary stockholder approvals,

which the Company obtained at its 2023 annual meeting of stockholders on July 13, 2023.

Debenture accrues interest at the rate of 8 % per annum, which did not begin accruing until December 1, 2023.

Interest may be paid in

cash or shares of common stock of the Company or a combination thereof at the option of the Company;

provided that interest may only

be paid in shares if the Equity Conditions have been satisfied (or waived).

the Debenture and the Alpha Warrant provide for adjustments to the Conversion Price and exercise price, respectively, in connection with

stock dividends and splits, subsequent equity sales and rights offerings, pro rata distributions, and certain fundamental transactions.

Both the Debenture and the Alpha Warrant include a beneficial ownership blocker of 9.99%, which may only be waived by Alpha Capital upon

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

61 days’ notice to the Company.

Company filed a registration statement on Form S-3 (No.

333-269088) with the Securities and Exchange Commission on December 30, 2022

registering the resale by Alpha Capital of an aggregate of 5,157,087 shares of our common stock, which may be issuable to the selling

stockholder pursuant to the terms of the Debenture and Alpha Warrant.

Company evaluated the Debenture and Alpha Warrants (“Warrants”) and determined that the Warrants are freestanding financial

The Warrants are not considered indexed to an entity’s own stock, because the settlement amount would not equal the

difference between the fair value of a fixed number of the entity’s equity shares and a fixed strike price and all of the adjustment

features in Section 3(b) of the warrant agreement are not down round provisions, as defined in ASU 2017-11.

Accordingly, the warrants

are classified as a liability and recognized at fair value, with subsequent changes in fair value recognized in earnings.

proceeds were allocated to the initial fair value of the Warrants, with the residual balance allocated to the initial carrying value

of the Debenture.

to resale registration rights granted by the Company to Alpha in such Securities Purchase Agreement, the Company filed a

resale registration statement on Form S-3 (File Number 333-269088) on December 30, 2022 registering the resale by Alpha of

up to 5,157,087

shares of common stock of the Company which could be issued to Alpha pursuant to the Debenture and the Alpha Warrant, which

registration statement was declared effective by the SEC on January 5, 2023 (the “Original Registration Statement”).

Company later became ineligible to update the Original Registration Statement via incorporation by reference of its future SEC

periodic and current reports as a result of its failure to timely file its annual report on Form 10-K for the fiscal year ended

December 31, 2022.

Therefore, the Company filed a Post-Effective Amendment No.

1 to Form S-3 on Form S-1 (No.

333-269088)(the

“Post-Effective Amendment No.

1”) on September 1, 2023 in order to maintain the registration of the resale by Alpha of up to 3,958,537

shares of common stock of the Company issuable under the Debenture and the Alpha Warrant., which Post-Effective Amendment No.

declared effective by the SEC on September 7, 2023.

Company evaluated the Debenture and the Alpha Warrant and determined that the Alpha Warrant is a freestanding financial instrument.

the Alpha 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 Alpha Warrant was classified

as a liability and recognized at fair value, with subsequent changes in fair value recognized in earnings.

proceeds from the Debenture were allocated to the initial fair value of the Alpha Warrant, with the residual balance allocated to the

initial carrying value of the Debenture.

The Company has not elected the fair value option for the Debenture.

The Debenture was recognized at proceeds received

after allocating the proceeds to the Warrants, and then allocating remaining proceeds to a suite of bifurcated embedded derivative features

(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.

The suite of derivative features was measured and determined to have no fair

original issue discount ($ 0.3 million), the initial fair value of the Warrant ($ 2.8 million), the initial fair value of the suite of

bifurcated embedded derivative features ($ 0 ), and the fees and costs paid to Alpha Capital and other third parties ($ 0.1 million) comprise

the debt discount.

debt discount shall be amortized to interest expense over the expected term of the Debenture using the effective interest method, in

accordance with ASC 835-30.

The debt host instrument of the Debenture will subsequently be measured at amortized cost using the effective

interest method to accrete interest over its term to bring the Debenture’s initial carrying value to the principal balance at maturity.

senior secured convertible debt comprises the following:

The Debenture was recognized

as proceeds received after allocating the proceeds to the Alpha Warrant, and then allocating remaining proceeds to a suite of bifurcated

embedded derivative features (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.

The suite of derivative features was measured

and determined to have no fair value.

original issue discount of $ 0.3 million, the initial fair value of the Alpha Warrant of $ 2.8 million, the initial fair value of the suite

of bifurcated embedded derivative features of $ 0 , and the fees and costs paid to Alpha and other third parties of $ 0.1 million

comprised the debt discount upon issuance.

The debt discount is amortized to interest expense over the expected term of the Debenture

using the effective interest method, in accordance with ASC 835-30.

The debt host instrument of the Debenture will subsequently be measured

at amortized cost using the effective interest method to accrete interest over its term to bring the Debenture’s initial carrying

value to the principal balance at maturity.

January 9 and 12, 2023, the Company issued 841,726

shares of common stock upon Alpha’s partial conversion of the Debenture at $ 1.32

per share for a total of $ 1,111,078

Upon conversion, the Company recognized a loss on conversion of convertible debt of approximately $ 1.1

million, recorded to other expenses in the consolidated statements of operations.

In October and December 2023, the Company issued 309,665

shares of common stock to Alpha in lieu of cash for monthly redemption payments on the Debenture at a weighted average price

Upon redemption for shares, the Company recognized a loss on partial debt extinguishment of $ 34,315 .

September 22, 2023, the Company entered into a consent and waiver (the “Waiver”) with Alpha.

Pursuant to the Waiver,

Alpha consented to the Company’s election to pay all of the Monthly Redemption Amount for October 2023 in Conversion Shares

(the “October Payment”) and waived the requirement of satisfaction of the Equity Conditions in relation to the October and

December Payment.

On October 3, 2023 the Company issued 128,595 shares of common stock to Alpha in satisfaction of the October

On December 8, 2023 the Company issued 181,070 shares of common stock to Alpha in satisfaction of the December Payment.

December 5, 2023, the Company and Alpha executed Amendment No.

1 with regard to Securities Purchase Agreement (the “SPA

Amendment”), pursuant to which the Company and Alpha agreed to, among other things, reduce the Conversion Price of the

Debenture from $ 1.32

per share to $ 0.73

per share and reduce the exercise price of the Alpha Warrant from $ 1.65

per share to $ 0.73

per share, in each case subject to certain adjustments.

In addition, the SPA Amendment revised certain provisions of the Alpha

Warrant to (i) limit the circumstances which would trigger a potential adjustment to the exercise price of the Alpha Warrant and

(ii) clarify the treatment of the Alpha Warrant upon a Fundamental Transaction.

The purpose of these revisions was to remove the

terms that caused the Alpha Warrant to be liability-classified under U.S.

The Company performed an assessment and concluded

that all remaining adjustment features in the revised language meet the FASB’s definition of a down-round feature.

addition, the Alpha Warrant was determined to meet all of the additional requirements for equity classification.

Accordingly, as of

December 5, 2023, the Company remeasured the Alpha Warrant to its fair value immediately prior to the modification and recognized

the change in fair value in earnings.

The incremental fair value impact from the Alpha Warrant modification of $ 0.09

million was included in the Company’s evaluation of the Debenture modification under ASC 470, discussed further below.

Company then reclassified the Alpha Warrant liability to equity at its post-modification fair value of $ 1.6

accordance with ASC 470-50, the Company determined that the modified terms of the 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 $ 1.4

million, and recorded a $ 0.6

million loss on debt extinguishment.

The difference between the remaining Debenture principal and its fair value on December 5, 2023

was recorded as a debt discount and will be amortized to interest expense over the expected term of the Debenture using the

effective interest method, in accordance with ASC 835-30.

the year ended December 31, 2023, the Company recognized a loss on voluntary conversion of convertible debt of

approximately $ 1.1

million, recognized an extinguishment loss of $ 0.6

million upon October and December 2023 share redemptions and December 2023 modification of the Debenture, 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 the Company paid

Monthly Redemption Amounts of $ 550,000

in cash and $ 220,000

in common stock, and as of December 31, 2023 the remaining 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 was $ 0 .

senior convertible debt comprises the following:

SCHEDULE OF SENIOR SECURED CONVERTIBLE DEBT

December 31, 2022

December 31, 2021

Senior secured convertible debenture

Senior convertible debenture

Discount on convertible debenture

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Total convertible debt-related party

of December 31, 2022, there were no events of default or violation of any covenants under our financing obligations.

of December 31, 2023, there were no unwaived events of default or violation of any covenants under the Company’s financing obligations.

9 — EARNINGS (LOSS) PER SHARE

earnings (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted-average number of common

shares outstanding.

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 stock

options and warrants as shown below.

following table reconciles net loss and the weighted-average shares used in computing basic and diluted EPS in the respective periods:

SCHEDULE OF EARNINGS PER SHARE BASIC AND DILUTED

loss per share (“EPS”) is computed by dividing net loss by the weighted-average number of common shares outstanding.

EPS is computed based on the sum of the weighted-average number of common shares and potentially dilutive common shares outstanding during

Potentially dilutive common shares consist of shares issuable from convertible debt, stock options and warrants.

following potentially dilutive securities have been excluded from diluted net loss per share as of December 31, 2023 and 2022 because

their effect would be anti-dilutive:

OF DILUTIVE SECURITIES EXCLUDED FROM DILUTED NET LOSS PER SHARE

For the Years Ended

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Basic weighted-average common shares outstanding

Dilutive potential shares issuable from stock options and warrants

Dilutive potential shares issuable from convertible debt, stock options and warrants

Diluted weighted-average common shares outstanding

OF DILUTIVE SECURITIES EXCLUDED FROM DILUTED NET LOSS PER SHARE

As of December 31,

Shares of common stock subject to outstanding options

Shares of common stock subject to outstanding warrants

Total common stock equivalents

dilutive common shares excluded from the calculation above represent stock options and warrants because their effect would be anti-dilutive.

10 — COMMITMENTS AND CONTINGENCIES

Company leases its facilities under a long-term operating lease agreement.

On December 15, 2021, our wholly-owned subsidiary Qualigen,

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

This Amendment extended the Company’s triple-net leasehold on

the Company’s existing 22,624 -square-feet 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 by Qualigen, Inc.

$ 1,950,710 ;

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

Additionally, under the Second Amendment

to Lease Qualigen, Inc.

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

tables below show the operating lease right-of-use assets and operating lease liabilities and the balances as of December 31, 2022 and 2021,

including the changes during the periods:

SCHEDULE OF OPERATING LEASE RIGHT OF USE ASSETS AND OPERATING LEASE LIABILITIES

Operating lease

right-of-use assets

Net right-of-use assets at December 31, 2021

Less amortization of operating lease right-of-use assets

Operating lease right-of-use assets at December 31, 2022

Operating lease

Lease liabilities at December 31, 2021

Less principal payments on operating lease liabilities

Lease liabilities at December 31, 2022

Less non-current portion

( 1,301,919 )

Current portion at December 31, 2022

of December 31, 2022, the Company’s operating leases have a weighted-average remaining lease term of 4.9 years and a weighted-average

discount rate of 8.9 % .

of December 31, 2022, the maturities of operating lease liabilities are as follows:

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

Year Ending December 31,

Less present value discount

Operating lease liabilities

lease expense was approximately $ 462,000 and $ 342,000 , respectively, for the years ended December 31, 2022 and December 31, 2021.

expense was recorded in cost of product sales, general and administrative expenses, research and development and sales and marketing

of Sekisui Distribution Agreement

Distribution Arrangement expired on March 31, 2022.

Following the expiration of the Sekisui Distribution Agreement on March 31, 2022,

the Company had a commitment to purchase leased FastPack rental systems back from Sekisui at Sekisui’s net book value, in the amount

of $ 154,000 which is included in equipment held for lease and accrued expenses on the consolidated balance sheet.

Funding Commitment

a condition to the NanoSynex Acquisition, the Company agreed to provide NanoSynex with up to $ 10.4 million of future funding in the form

of promissory notes to the Company based on NanoSynex’s achievement of certain future development milestones and subject to other

terms and conditions described in the Funding Agreement entered into with NanoSynex.

Of this amount approximately $ 2.4 million was funded

during the year ended December 31, 2022, and an additional $ 0.5 million was funded in February 2023 (See Note 2-Liquidity for further details regarding the terms and conditions of the Funding Agreement).

and Other Legal Proceedings

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11 — RESEARCH AND LICENSE AGREEMENTS

University of Louisville Research Foundation

March 2019, the Company entered into a sponsored research agreement and an option for a license agreement with ULRF for development of

several small-molecule RAS interaction inhibitor drug candidates.

Under the terms of this agreement, the Company was to reimburse ULRF

for sponsored research expenses of up to $ 693,000

for this program.

In February 2021, March 2022,

and October 2022, the Company extended the term of this agreement until September 2023 and increased the amount that the Company will

reimburse ULRF for sponsored research expenses to approximately $ 2.7

July 2020, the Company entered into an exclusive license agreement with ULRF for RAS interaction inhibitor drug candidates.

agreement, the Company will take over development, regulatory approval and commercialization of the candidates from ULRF and is responsible

for maintenance of the related intellectual property portfolio.

In return, ULRF received approximately $112,000 for an upfront license

fee and reimbursement of prior patent costs.

In addition, the Company has agreed to pay ULRF (i) royalties, on patent-covered net sales

associated with the commercialization, of 4% (on net sales up to a cumulative $250,000,000) or 5% (on net sales above a cumulative $250,000,000),

until expiration of the licensed patent, and 2.5% (on net sales for any sales not covered by Licensed Patents), (ii) 30% to 50% of any

non-royalty sublicensee income received (50% for sublicenses granted in the first two years of the ULRF license agreement, 40% for sublicenses

granted in the third or fourth years of the ULRF license agreement, and 30% for sublicenses granted in the fifth year of the ULRF license

agreement or thereafter), (iii) reimbursements for ongoing costs associated with the preparation, filing, prosecution and maintenance

of licensed patents, incurred prior to July 2020, and (iv) payments ranging from $ 50,000

the achievement of certain regulatory and commercial milestones.

payments for the first therapeutic indication would be $ 50,000

for first dosing in a Phase 1 clinical trial,

for first dosing in a Phase 2 clinical trial,

for first dosing in a Phase 3 clinical trial,

for regulatory marketing approval and $ 5,000,000

upon achieving a cumulative $ 500,000,000

of Licensed Product sales.

The Company also must

pay ULRF shortfall payments if the total amounts actually paid with respect to royalties and non-royalty sublicensee income for any year

is less than the applicable annual minimum (ranging from $ 20,000

to $ 100,000 )

for such year.

research expenses related to these agreements for the years ended December 31, 2022 and December 31, 2021 were approximately $ 758,000

Business Limited

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 $ 150,000 upfront payment, reimbursement of past patent prosecution expenses (approximately $ 160,000 ), and (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 the Company.

the years ended December 31, 2023 and 2022 there were license costs of approximately $ 128,000 and $ 338,000 , respectively, related to

this agreement which are included in research and development expenses in the consolidated statements of operations and other comprehensive

Phase 1 Study

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 intends to enter into statements of work with TD2 for the performance

of specific services under this Master Clinical Research Services Agreement.

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 intends to enter into work orders with MLM

for the performance of specific services under this Master Laboratory Services Agreement.

June 2023, the Company entered into a Master Services Agreement with Clinigen Clinical Supplies Management, Inc.

whereby Clinigen agreed to provide certain pharmaceutical products and/or services.

From time to time, the Company intends to enter into

statements of work with Clinigen for the performance of specific services under this Master Services Agreement.

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.

The project timeline started in July 2023 and is expected to continue until approximately

The total amount to be paid under these work orders and statements of work is currently expected to be approximately $ 7.6

million over the term of the QN-302 Phase 1 study, subject to available funding.

of Louisville Research Foundation

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.

the terms of this agreement, the Company agreed to reimburse ULRF for sponsored research expenses of initially up to $ 693,000 for this

This agreement was amended in February 2021, March 2022 and August 2023, with the current term of this agreement set to expire

in December 2023 and the aggregate amount that the Company would reimburse ULRF for sponsored research expenses increased to approximately

$ 2.9 million.

In July 2020, the Company entered into an exclusive license agreement with ULRF for RAS interaction inhibitor drug candidates.

Under the agreement, the Company took over development, regulatory approval and commercialization of the candidates from ULRF and is

responsible for maintenance of the related intellectual property portfolio.

In return, ULRF received approximately $112,000 for an upfront

license fee and reimbursement of prior patent costs.

In addition, the Company has agreed to pay ULRF (i) royalties, on patent-covered

net sales associated with the commercialization, of 4% (on net sales up to a cumulative $250,000,000) or 5% (on net sales above a cumulative

$250,000,000), until expiration of the licensed patent, and 2.5% (on net sales for any sales not covered by Licensed Patents), (ii) 30%

to 50% of any non-royalty sublicensee income received (50% for sublicenses granted in the first two years of the ULRF license agreement,

40% for sublicenses granted in the third or fourth years of the ULRF license agreement, and 30% for sublicenses granted in the fifth

year of the ULRF license agreement or thereafter), (iii) reimbursements for ongoing costs associated with the preparation, filing, prosecution

and maintenance of licensed patents, incurred prior to July 2020, and (iv) payments ranging from $ 50,000 to $ 5,000,000 upon the achievement

of certain regulatory and commercial milestones.

Milestone payments for the first therapeutic indication would be $ 50,000 for first dosing

in a Phase 1 clinical trial, $ 100,000 for first dosing in a Phase 2 clinical trial, $ 150,000 for first dosing in a Phase 3 clinical trial,

$ 300,000 for regulatory marketing approval and $ 5,000,000 upon achieving a cumulative $ 500,000,000 of Licensed Product sales.

also must pay ULRF shortfall payments if the total amounts actually paid with respect to royalties and non-royalty sublicensee income

for any year is less than the applicable annual minimum (ranging from $ 20,000 to $ 100,000 ) for such year.

research expenses related to these RAS agreements for the years ended December 31, 2023 and December 31, 2022 were approximately $ 743,000

and $ 758,000 , respectively, and are recorded in research and development expenses in the Consolidated Statements of Operations.

1 unchanged sentence

respectively, and are included in research and development expenses in the Consolidated Statements of Operations.

June 2018 and September 2020, the Company entered into license and sponsored research agreements with the University of Louisville

Research Foundation (“ULRF”) for QN-247, a novel aptamer-based compound that has shown promise as an anticancer drug.

Under the agreements, the Company took over development, regulatory approval and commercialization of the compound from ULRF and is

responsible for maintenance of the related intellectual property portfolio.

In return, ULRF received a $ 50,000

convertible promissory note in payment of an upfront license fee, which was subsequently converted into the Company’s common

stock, and the Company agreed to reimburse ULRF for sponsored research expenses of up to $ 830,000

and prior patent costs of up to $ 200,000 .

The sponsored research agreement ended on August 31, 2022.

addition, the Company agreed to pay ULRF (i) royalties, on patent-covered net sales associated with the commercialization of

anti-nucleolin agent-conjugated nanoparticles, of 4% (on net sales up to a cumulative $250,000,000) or 5% (on net sales above a

cumulative $250,000,000), until expiration of the last to expire of the licensed patents, (ii) 30% to 50% of any non-royalty

sublicensee income received (50% for sublicenses granted in the first two years of the ULRF license agreement, 40% for sublicenses

granted in the third or fourth years of the ULRF license agreement, and 30% for sublicenses granted in the fifth year of the ULRF

license agreement or thereafter), (iii) reimbursements for ongoing costs associated with the preparation, filing, prosecution and

maintenance of licensed patents, incurred prior to June 2018, and (iv) payments ranging from $ 100,000

to $ 5,000,000

upon the achievement of certain regulatory and commercial milestones.

Milestone payments for the first therapeutic indication

would be $ 100,000

for first dosing in a Phase 1 clinical trial, $ 200,000

for first dosing in a Phase 2 clinical trial, $ 350,000

for first dosing in a Phase 3 clinical trial, $ 500,000

for regulatory marketing approval and $ 5,000,000

upon achieving a cumulative $ 500,000,000

of Licensed Product sales;

the Company would also pay another $ 500,000

milestone payment for any additional regulatory marketing approval for each additional therapeutic (or diagnostic) indication.

Company also must pay ULRF shortfall payments if the total amounts actually paid with respect to royalties and non-royalty

sublicensee income for any year is less than the applicable annual minimum (ranging from $ 10,000

to $ 50,000 )

for such year.

research expenses related to these agreements for the years ended December 31, 2022 and December 31, 2021 were approximately $ 164,000

and $ 325,000 , respectively, and these amounts are recorded in research and development expenses in the Consolidated Statements of Operations.

Minimum annual royalties of $ 0 and $ 0 related to these agreements are included in research and development expenses in the Consolidated

Statements of Operations for the years ended December 31, 2022 and December 31, 2021, respectively.

License costs related to these agreements

were approximately $ 94,000 and $ 118,000 for the years ended December 31, 2022 and December 31, 2021, respectively, and are included in

research and development expenses in the Consolidated Statements of Operations.

June 2020, the Company entered into an exclusive license agreement with ULRF for its intellectual property in the use of QN-165 as a

treatment for COVID-19.

Under the agreement, the Company took over development, regulatory approval and commercialization of the

compound (for such use) from ULRF and was responsible for maintenance of the related intellectual property portfolio.

ULRF received approximately $ 24,000 for

an upfront license fee and reimbursement of prior patent costs.

In addition, the Company executed a sponsored research agreement

with ULRF (for QN-165 as a treatment for COVID-19) supporting up to $ 430,000 .

This sponsored research agreement expired in November 2021 and effective October 31, 2022 the license agreement for

QN-165 was terminated.

research expenses related to these agreements for the years ended December 31, 2022 and December 31, 2021 were approximately $ 14,000 and $ 243,000 ,

respectively, and are recorded in research and development expenses in the Consolidated Statements of Operations.

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.

Under the agreements, the Company took over development, regulatory approval and

commercialization of the compound from ULRF and is responsible for maintenance of the related intellectual property portfolio.

ULRF received a $ 50,000 convertible promissory note in payment of an upfront license fee, which was subsequently converted into the Company’s

common stock, and the Company agreed to reimburse ULRF for sponsored research expenses of up to approximately $ 805,000 and prior patent

costs of up to $ 200,000 .

In addition, the Company agreed to pay ULRF (i) royalties, on patent-covered net sales associated with the commercialization

of anti-nucleolin agent-conjugated nanoparticles, of 4% (on net sales up to a cumulative $250,000,000) or 5% (on net sales above a cumulative

$250,000,000), until expiration of the last to expire of the licensed patents, (ii) 30% to 50% of any non-royalty sublicensee income

received (50% for sublicenses granted in the first two years of the ULRF license agreement, 40% for sublicenses granted in the third

or fourth years of the ULRF license agreement, and 30% for sublicenses granted in the fifth year of the ULRF license agreement or thereafter),

(iii) reimbursements for ongoing costs associated with the preparation, filing, prosecution and maintenance of licensed patents, incurred

prior to June 2018, and (iv) payments ranging from $ 100,000 to $ 5,000,000 upon the achievement of certain regulatory and commercial milestones.

Milestone payments for the first therapeutic indication would be $ 100,000 for first dosing in a Phase 1 clinical trial, $ 200,000 for

first dosing in a Phase 2 clinical trial, $ 350,000 for first dosing in a Phase 3 clinical trial, $ 500,000 for regulatory marketing approval

and $ 5,000,000 upon achieving a cumulative $ 500,000,000 of Licensed Product sales.

The Company also agreed to pay another $ 500,000 milestone

payment for any additional regulatory marketing approval for each additional therapeutic (or diagnostic) indication.

The Company must

also pay ULRF shortfall payments if the total amounts actually paid with respect to royalties and non-royalty sublicensee income for

any year is less than the applicable annual minimum (ranging from $ 10,000 to $ 50,000 ) for such year.

sponsored research agreement for QN-247 expired in August 2022.

The sponsored research expenses related to these QN-247 agreements for

the years ended December 31, 2023 and December 31, 2022 were $ 0 and approximately $ 164,000 , respectively, and these amounts are recorded

in research and development expenses in the consolidated statements of operations and other comprehensive loss.

License costs related

to these agreements for the years ended December 31, 2022 and December 31, 2021 were approximately $ 2,000 and $ 28,000 , respectively,

and are included in research and development expenses in the Consolidated Statements of Operations.

Cancer Therapeutics

December 2018, the Company entered into a license agreement with Advanced Cancer Therapeutics, LLC (“ACT”), granting the

Company exclusive rights to develop and commercialize QN-165, an aptamer-based drug candidate .

In return, ACT received a $ 25,000 convertible

promissory note in payment of an upfront license fee, which was subsequently converted into the Company’s common stock.

the Company agreed to pay ACT (i) royalties, on net sales associated with the commercialization of QN-165, of 2% (only if patent-covered

and only on net sales above a cumulative $ 3,000,000 ) or 1% (if not patent-covered, but only on net sales above a cumulative $ 3,000,000 ),

until the 15th anniversary of the ACT license agreement and (ii) milestone payments of $ 100,000 for the Company raising a cumulative

total of $ 2,000,000 in new equity financing after the date of the ACT license agreement, $ 100,000 upon any first QN-165-based licensed

product receiving the CE Mark or similar FDA status, and $ 500,000 upon cumulative worldwide QN-165-based licensed product net sales reaching

$ 3,000,000 .

For the years ended December 31, 2022 and December 31, 2021, there were approximately $ 0 and $ 2,000 , respectively in costs

related to this agreement which are included in research and development expenses in the Consolidated Statements of Operations.

In October 2020, through our wholly-owned diagnostics subsidiary Qualigen, Inc.

we entered into a Technology Transfer

Agreement with Yi Xin Zhen Duan Jishu (Suzhou) Ltd.

(“Yi Xin”), of Suzhou, China, for Yi Xin to develop, manufacture and sell

new generations of diagnostic test systems based on the Company’s core FastPack technology.

In addition, the Technology Transfer Agreement

authorized Yi Xin to manufacture and sell the Company’s current generations of FastPack System diagnostic products (1.0, IP and PRO) in

The Company will receive low- to mid-single-digit royalties on any future new-generations and current-generations

product sales by Yi Xin.

We received total net cash payments of approximately $ 670,000 , of which approximately $ 632,000

is classified as license revenue, and approximately $ 38,000 is classified as product sales on the Consolidated Statements of Operations for the fiscal year ended December 31,

The Company provided technology transfer and patent/know-how license rights to facilitate Yi Xin’s development and commercialization.

The Company gave 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 also 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).

After March 31,

2022, Yi Xin has the 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), as well as the right 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

customers of those products).

The Company did not license Yi Xin to sell in the U.S.

market any Yi Xin-manufactured versions of those

legacy FastPack 1.0, IP and PRO product lines.

In the Technology Transfer Agreement the Company also confirmed that after March 31, 2022

it would not seek new FastPack customers outside the U.S.

Pharmaceutical

November 2020, the Company entered into a contract with STA Pharmaceutical Co., Ltd., a subsidiary of WuXi AppTec, for GMP production

of QN-165, which was the Company’s lead drug candidate for the treatment of COVID-19 and other viral diseases.

In connection with

this agreement, the Company paid an upfront deposit of approximately $ 1.1 million which was classified as a prepaid expense on the December

31, 2020 Consolidated Balance Sheet date, and all of which was included in research and development expenses in the statement of operations

for the year ended December 31, 2021.

and development expenses related to this agreement for the years ended December 31, 2022 and December 31, 2021 were approximately $ 9,000

and $ 3.2 million, respectively, and are recorded in research and development expenses in the Consolidated Statements of Operations.

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 Qualigen under the name QN-302 as a candidate for treatment for pancreatic ductal adenocarcinoma (PDAC), which

represents the vast majority of pancreatic cancers.

The License Agreement required a $ 150,000 upfront payment, reimbursement of past patent

prosecution expenses (approximately $ 160,000 ), and (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.

For the years ended December 31, 2022 and 2021 there were license costs of approximately $ 338,000 and $ 0 , respectively,

related to this agreement which are included in research and development expenses in the Consolidated Statements of Operations.

to these agreements were approximately $ 23,000 and $ 94,000 for the years ended December 31, 2023 and December 31, 2022, respectively,

and are included in research and development expenses in the consolidated statements of operations and other comprehensive loss.

In June 2020, the Company entered into an exclusive license agreement with ULRF for its intellectual property in the use of QN-165 as

a treatment for COVID-19.

Under the agreement, the Company took over development, regulatory approval and commercialization of the compound

(for such use) from ULRF and is responsible for maintenance of the related intellectual property portfolio.

In return, ULRF received

approximately $ 24,000 for an upfront license fee and reimbursement of prior patent costs.

In addition, the Company was required to enter

into a separate sponsored research agreement with ULRF (for QN-165 as a treatment for COVID-19) for at least $ 250,000 .

In November 2020,

the Company executed a sponsored research agreement with ULRF (for QN-165 as a treatment for COVID-19) supporting up to approximately

$ 430,000 in research which satisfied this requirement.

This sponsored research agreement expired in November 2021 and the exclusive license

agreement was terminated on October 31, 2022.

There were no sponsored research expenses or license costs related to these QN-165 agreements

for the years ended December 31, 2023 and 2022.

12 — STOCKHOLDERS’ EQUITY

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subscription or conversion rights and there are no redemption or sinking fund provisions.

December 1, 2021, the Company closed a Securities Purchase Agreement (dated November 29, 2021) with several institutional investors

for the purchase and sale of 588,000

reverse split adjusted shares of Company common stock at a reverse split adjusted exercise price of $ 15.00

per share, for aggregate gross proceeds of $ 8.82

December 22, 2022, the Company issued to Alpha Capital, 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 Debenture is convertible, at any time, and

from time to time, at Alpha’s option, into shares of common stock of the Company, at a price equal to $ 1.32

per share, and other terms and conditions described in the Debenture (see Note 11 -Convertible Debt - Related Party).

this transaction, the Company issued to Alpha Capital a warrant to purchase 2,500,000

shares of the Company’s common stock (see Note 10-Warrant Liabilities).

December 31, 2022, the Company has reserved 5,183,629 shares of authorized but unissued common stock for possible future issuance.

December 31, 2022, 5,183,629 shares were reserved as follows:

December 31, 2023, the Company has reserved 5,781,161 shares of authorized but unissued common stock for possible future issuance as

OF RESERVED SHARES

Exercise of issued and future grants of stock options

Conversion of convertible debt

Exercise of stock warrants

December 31, 2022 and 2021, there were no shares of preferred stock outstanding.

All shares of Series A, B, C, D, D-1 convertible preferred

stock were converted into common stock at the time of the May 2020 reverse recapitalization transaction.

the year ended December 31, 2021, the holder of Series Alpha convertible preferred stock converted 180 of its shares of Series Alpha

convertible preferred stock into an aggregate of 243,416 shares of the Company’s common stock.

December 31, 2023 and December 31, 2022, there were no shares of preferred stock outstanding.

Options and Equity Classified Warrants

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At December 31, 2023 and December 31, 2022

there were 608,012 and 484,186 outstanding stock options, respectively, under the 2020 Plan and there were 147,690 and 280,916 of Plan

shares available, respectively, for future grant.

there were 398,924 and 608,012 outstanding stock options, respectively, under the 2020 Plan and there were 356,778 and 147,690 Plan shares

available, respectively, for future grant.

following represents a summary of the options granted to employees and non-employee service providers that were outstanding at December

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OF STOCK OPTION ACTIVITY

Weighted–Average

Total outstanding – December 31, 2022

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Total outstanding – December 31, 2023

$ 5.14 — $ 51.30

Exercisable (vested)

$ 5.14 — $ 51.30

Non-Exercisable (non-vested)

$ 5.14 - $ 32.90

following represents a summary of the options granted (under the 2020 Plan and otherwise) to employees and non-employee service providers

that were outstanding at December 31, 2022, and changes during the twelve months then ended:

Weighted–Average

Total outstanding – December 31, 2021

$ 12.40 — $ 14,657.50

57.50 - 14,657.50

Total outstanding – December 31, 2022

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Non-Exercisable (non-vested)

$ 5.14 — $ 10.50

was approximately $ 1.1 million and $ 5.4 million of compensation costs related to outstanding options for the year ended December 31, 2023

and December 31, 2022, respectively.

As of December 31, 2022, there was approximately $ 3.3 million of total unrecognized compensation

cost related to unvested stock-based compensation arrangements.

This cost is expected to be recognized over a weighted average period

of 0.93 years.

stock options were exercised during the year ended December 31, 2022 or 2021.

This cost is expected to be recognized over a weighted average period of 1.09 years.

stock options were granted or exercised during the year ended December 31, 2023 or 2022.

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

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The options awarded under the 2020 Plan will vest as determined by the Board of Directors but will not exceed a 10-year

The weighted average grant date fair value per share of the shares underlying options granted during the year ended December

31, 2022 was $ 3.96 and during the year ended December 31, 2021 was $ 11.00 .

were no options granted during the year ended December 31, 2023.

The weighted average grant date fair value per share of the shares underlying

options granted during the year ended December 31, 2022 was $ 3.96 .

Value of Equity Awards

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OF ASSUMPTION USED IN BLACK-SCHOLES OPTION-PRICING METHOD

For the Years Ended

the Years Ended December 31,

Expected dividend yield

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Risk-free interest rate

1.58 % — 3.77 %

Expected average term of options (in years)

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OF SHARE-BASED COMPENSATION EXPENSE

For the Years Ended

For the Years Ended December 31,

General and administrative

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Classified Compensatory Warrants

connection with the $ 4.0 million

equity capital raise as part of the May 2020 reverse recapitalization transaction, the Company issued common stock warrants to an

advisor and its designees for the purchase of 81,143

reverse split adjusted shares of the

Company’s common stock at a reverse split adjusted exercise price of $ 11.1 0 per

The issuance cost of these warrants was charged to additional paid-in capital, and did not result in expense in the

Company’s consolidated statements of operations and comprehensive

connection with the $ 4.0 million equity capital raise as part of the May 2020 reverse recapitalization transaction, the Company issued

common stock warrants to an advisor and its designees for the purchase of 81,143 reverse split adjusted shares of the Company’s

common stock at a reverse split adjusted exercise price of $ 11.10 per share.

The issuance cost of these warrants was charged to additional

paid-in capital, and did not result in expense in the Company’s consolidated statements of operations and comprehensive loss.

addition, various service providers hold equity classified compensatory warrants issued in 2017 and earlier (originally exercisable to

purchase Series C convertible preferred stock, and now instead exercisable to purchase common stock) for the purchase of 66,802 reverse split adjusted s hares

of Company common stock at a weighted average exercise price of $ 23.40 per share.

These are to be differentiated from the Series C Warrants

described in Note 10- Warrant Liabilities.

the year ended December 31, 2021, the Company issued equity classified compensatory warrants to a service provider for the purchase of

reverse split adjusted shares of Company common stock at a

reverse split adjusted exercise price of $ 13.20

The fair value issuance cost of approximately $ 0.3

using the Black-Scholes options pricing model for these warrants was charged to general and administrative expenses in the Company’s

consolidated statements of operations and comprehensive loss.

On April 25, 2022, 60,000

were repriced from $ 13.20

reverse split adjusted exercise price of $6.00 and

extended from June

purchase Series C convertible preferred stock, and now instead exercisable to purchase common stock) for the purchase of 66,802 reverse

split adjusted shares of Company common stock at a weighted average exercise price of $ 23.40 per share.

These are to be differentiated

from the Series C Warrants described in Note 7- Warrant Liabilities.

April 25, 2022, 60,000

warrants were repriced from $ 13.20

per share exercise price to a reverse split adjusted exercise price of $ 6.00

per share exercise price and extended from June

3, 2023 to September 14, 2023 .

The increase in fair value of $ 67,370

a Monte Carlo pricing model for the modification of these warrants was charged to general and administrative expenses in the Company’s

consolidated statements of operations and comprehensive loss.

On April 25, 2022 and May 26, 2022 an additional 67,619 reverse split adjusted

were repriced from reverse split adjusted $11 .10

for the modification of these warrants was charged to general and administrative expenses in the Company’s consolidated

statements of operations and comprehensive loss.

These warrants expired on September 14, 2023 .

On April 25, 2022 and May 26, 2022 an

additional 67,620

reverse split adjusted warrants were repriced from reverse split adjusted $ 11.10

per share exercise price to $ 5.136

per share exercise price.

The increase in fair value of $ 31,010

a Monte Carlo pricing model for the modification of these warrants was charged to additional paid-in capital and did not result in expense

on the Company’s consolidated statements of operations and comprehensive loss.

for the modification of these warrants was charged to additional paid-in capital and did not result in expense on the

Company’s consolidated statements of operations and comprehensive loss.

On December 22, 2022 67,620

were repriced from $ 5.136

warrants were repriced from $ 5.136

per share exercise price to $ 1.32

per share exercise price.

The increase in fair value of $ 8,548

a Monte Carlo pricing model for the modification of these warrants was charged to additional paid-in capital and did not result in expense

on the Company’s consolidated statements of operations and comprehensive loss.

new compensatory warrants were issued during the year ended December 31, 2022.

for the modification of these warrants was charged to additional paid-in capital and did not result in expense on the

Company’s consolidated statements of operations and comprehensive loss.

On December 5, 2023, 67,620

warrants were repriced from $ 1.32

per share exercise price to $ 0.73

per share exercise price.

The increase in fair value of $ 7,945

for the modification of these warrants was charged to general and administrative expenses in the Company’s consolidated

statements of operations and comprehensive loss.

new compensatory warrants were issued during the year ended December 31, 2023 or 2022.

following table summarizes the equity classified compensatory warrant activity for the year ended December 31, 2023:

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Exercise Price

Weighted–Average

Total outstanding – December 31, 2022

$ 1.32 — $ 25.40

Granted to advisor and its designees

Total outstanding – December 31, 2023

$ 0.73 — $ 25.40

Non-Exercisable

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Exercise Price

Weighted–Average Remaining

Total outstanding – December 31, 2021

$ 11.10 — $ 25.40

Granted to advisor and its designees

Total outstanding – December 31, 2022

$ 1.32 — $ 25.40

$ 1.32 - $ 25.40

Non-Exercisable

were $ 67,370 in compensation costs related to outstanding warrants for the year ended December 31, 2022 and $ 0.3 million for the year

was $ 7,945 in compensation costs related to outstanding warrants for the year ended December 31, 2023 and $ 67,370 for the year

ended December 31, 2022.

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Equity Classified Warrants

May 2020, as a commitment fee, the Company issued noncompensatory equity classified warrants to Alpha Capital (a related party) for the purchase of 27,048

reverse split adjusted shares of Company common stock at a reverse split adjusted exercise price of $ 11.10 per

share (of which warrants for 20,000 shares

were subsequently exercised in December 2020).

In July 2020 the Company issued noncompensatory equity classified warrants to Alpha Capital for the purchase of 78,019

reverse split adjusted shares

of Company common stock at a reverse split adjusted exercise price of $ 0.01 per

share (which were subsequently exercised in July 2020), and 192,068 reverse split adjusted shares of Company common stock at a

reverse split adjusted exercise price of $ 52.50 per

In August 2020, the Company issued noncompensatory equity classified warrants to Alpha Capital for the purchase of 128,783

reverse split adjusted shares of Company common stock at a reverse split adjusted exercise price of $ 60.00 per

In December 2020, the Company issued noncompensatory equity classified warrants to Alpha Capital for the purchase of 100,000 reverse

split adjusted shares of Company common stock at a reverse split adjusted exercise price of $ 0.10 per

share (which were exercised in February 2021) and 219,101

reverse split adjusted shares

of Company common stock at a reverse split adjusted exercise price of $ 40.70 per

In May 2022, the Company issued noncompensatory equity classified warrants to Alpha Capital for the purchase of 331,464

reverse split adjusted shares

of Company common stock at a reverse split adjusted exercise price of $ 0.01 per

share (See Note 3 -Acquisition).

November 29, 2021, with the exception of the warrants to purchase 27,048

reverse split adjusted shares of the Company’s common stock at a reverse split adjusted exercise price of $ 11.10

per share, the exercise prices of all outstanding warrants to purchase a total of 539,951

reverse split adjusted shares of the Company’s common stock were modified to a reverse split adjusted exercise price of

per share and each of their remaining terms extended by six months.

May 2020, as a commitment fee, the Company issued noncompensatory equity classified warrants to Alpha (a related party) for the

purchase of 27,048 reverse split adjusted shares of Company common stock at a reverse split adjusted exercise price of $ 11.10 per share

(of which warrants for 20,000 shares were subsequently exercised in December 2020).

In July 2020 the Company issued noncompensatory equity

classified warrants to Alpha for the purchase of 78,019 reverse split adjusted shares of Company common stock at a reverse split

adjusted exercise price of $ 0.01 per share (which were subsequently exercised in July 2020), and 192,068 reverse split adjusted shares

of Company common stock at a reverse split adjusted exercise price of $ 52.50 per share.

In August 2020, the Company issued noncompensatory

equity classified warrants to Alpha for the purchase of 128,783 reverse split adjusted shares of Company common stock at a reverse

split adjusted exercise price of $ 60.00 per share.

In December 2020, the Company issued noncompensatory equity classified warrants to

Alpha for the purchase of 100,000 reverse split adjusted shares of Company common stock at a reverse split adjusted exercise

price of $ 0.10 per share (which were exercised in February 2021) and 219,101 reverse split adjusted shares of Company common stock at

a reverse split adjusted exercise price of $ 40.70 per share.

In May 2022, the Company issued noncompensatory equity classified warrants

to Alpha for the purchase of 331,464 reverse split adjusted shares of Company common stock at a reverse split adjusted exercise

price of $ 0.01 per share.

November 29, 2021, with the exception of the warrants to purchase 27,048 reverse split adjusted shares of the Company’s common

stock at a reverse split adjusted exercise price of $ 11.10 per share, the exercise prices of all outstanding warrants to purchase a total

of 539,951 reverse split adjusted shares of the Company’s common stock were modified to a reverse split adjusted exercise price

of $ 20.00 per share and each of their remaining terms extended by six months.

The fair value of the modification cost of these warrant

modifications of approximately $ 2.3

million was charged to additional paid-in capital and did not result in expense on the Company’s consolidated statements of

operations and comprehensive loss.

In May 2022, pre-funded warrants to purchase 331,464

reverse split adjusted shares of the Company’s common stock at a reverse split adjusted exercise price of $ 0.01

per share with no expiration date were issued.

These warrants were subsequently exercised during the period ended September 30,

conjunction with the NanoSynex Acquisition (See Note 3-Acquisition), on April 25, 2022 the exercise price of 7,048

modifications of approximately $ 2.3 million was charged to additional paid-in capital and did not result in expense on the Company’s

consolidated statements of operations and comprehensive loss.

In May 2022, pre-funded warrants to purchase 331,464 reverse split adjusted

shares of the Company’s common stock at a reverse split adjusted exercise price of $ 0.01 per share with no expiration date were

issued to Alpha.

These warrants were subsequently exercised in 2022.

conjunction with the NanoSynex Acquisition, on April 25, 2022 the exercise price of 7,048

reverse split adjusted outstanding warrants at $ 11.10

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result in expense on the Company’s consolidated statements of operations and comprehensive loss.

On May 26, 2022, the

reverse split adjusted exercise price of these warrants was modified again to $ 5.136 ,

On May 26, 2022, the reverse

split adjusted exercise price of these warrants was modified again to $ 5.136 ,

and the increase in fair value of $ 696 ,

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result in expense on the Company’s consolidated statements of operations and comprehensive loss.

December 5, 2023, the Company entered into an Amendment No.

1 with regard to Securities Purchase Agreement, with Alpha.

Amendment amended two instruments which the Company issued under the Securities Purchase Agreement dated December 21, 2022:

Senior Convertible Debenture dated December 22, 2022 in favor of Alpha, and (b) the Common Stock Purchase Warrant dated December

22, 2022 in favor of Alpha.

The Amendment reduced the Conversion Price of the Debenture from $ 1.32 per share to $ 0.73

per share (subject to possible future adjustment pursuant to the terms of the Debenture) and reduced the Exercise Price of the Alpha

Warrant from $ 1.65 per share to $ 0.73 per share (subject to possible future adjustment pursuant to the terms of the Alpha Warrant).

Amendment revised certain provisions of the Warrant which resulted in reclassification of the Warrant from liabilities to equity.

more details see Note 7 - Warrant Liabilities.

following table summarizes the noncompensatory equity classified warrant activity for the year ended December 31, 2023:

OF WARRANT ACTIVITY

Weighted–Average

Exercise Price

Weighted– Average Remaining

Total outstanding – December 31, 2022

$ 1.32 - $ 20.00

Legacy Ritter warrants

Reclassification of Alpha Warrant from warrant liabilities to equity

Total outstanding – December 31, 2023

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following table summarizes the noncompensatory equity classified warrant activity for the year ended December 31, 2022:

Exercise Price

Weighted– Average Exercise

Weighted– Average Remaining

Total outstanding – December 31, 2021

11.10 — 37.78

Legacy Ritter warrants

Total outstanding – December 31, 2022

Non-Exercisable

NOTE 16 — RELATED PARTY TRANSACTIONS

Convertible Debt

On December 22, 2022, the Company issued to Alpha

Capital, 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 “Alpha Purchase Agreement”).

The Debenture is

convertible, at any time, and from time to time, at Alpha’s option, into shares of common stock of the Company (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

(See Note 11 -Convertible Debt - Related Party).

Short-Term Debt

NanoSynex has four separate notes payable (the “Notes”) outstanding to Alpha Capital, dated between March

26, 2020 and September 2, 2021, aggregating to a total principal outstanding balance of $ 905,000 , and aggregate accrued interest of $ 45,722

for a total outstanding balance of $ 950,722 as of December 31, 2022.

The Notes all accrue interest at 2.62 % per annum, accrued daily,

and provide that the full amount of principal and interest under each Note shall be due immediately prior to a Liquidation Event (the

Maturity Date) unless due earlier in accordance with the terms of the Notes.

“Liquidation Event” means either i) the merger

or consolidation of NanoSynex into any other entity, other than one in control or under control of NanoSynex or NanoSynex’s majority shareholder;

ii) a transaction or series of transactions resulting in the transfer of all or substantially all of NanoSynex’s assets or issued and

outstanding share capital (other than to a company under the control of NanoSynex or NanoSynex’s majority shareholders;

or iii) an underwritten

public offering by NanoSynex of its ordinary shares.

Notwithstanding the above, if NanoSynex receives subsequent debt, convertible debt,

or equity funding with gross proceeds of USD $ 3,000,000 or more, then these Notes shall be due and payable upon the actual receipt of

such funding (See Note 9 -Short-term Debt - Related Party).

Nanosynex Acquisition

The Company acquired a 52.8 % voting equity interest

in NanoSynex on May 26, 2022 (the “NanoSynex Acquisition Date”) through:

(1) the purchase of 2,232,861 shares Preferred A-1

Stock of NanoSynex from Alpha Capital (a related party) for 350,000 reverse split adjusted shares of the Company’s common stock and a

prefunded warrant to purchase 331,464 reverse split adjusted shares of the Company’s common stock at a purchase price of $ 0.001 per share

( these warrants were subsequently exercised on September 13, 2022) , and (2) the purchase of 381,786 shares of Series B preferred stock

of NanoSynex from NanoSynex in exchange for $ 600,000 (See Note 3 - Acquisition).

13 — RELATED PARTY TRANSACTIONS

Note 8 – Convertible Debt – Related Party for additional information concerning convertible debt – related party

transactions.

On December 22, 2022, the Company 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.

As of December 31, 2023 the Debenture had a

remaining principal balance of $ 1,418,922 ,

and was convertible, at any time, and from time to time, at Alpha’s option, into shares of common stock of the Company, at a

price equal to $ 0.73

per share, subject to adjustment as described in the Debenture and other terms and conditions described in the Debenture.

Additionally,

on December 22, 2022, in conjunction with the issuance of the Debenture to Alpha, the Company issued to Alpha the Alpha

Warrant to purchase 2,500,000 shares of the Company’s common stock (the “Alpha Warrant”).

As of December 31, 2023,

the exercise price of the Alpha Warrant was $ 0.73 .

The Alpha Warrant may be exercised by Alpha, in whole or in part, at any time

before June 22, 2028, subject to certain terms and conditions described in the Alpha Warrant.

The Alpha Warrant is included in equity

on the Company’s consolidated balance sheets (see Note 12 – Stockholders’ Equity).

to a Share Purchase Agreement dated April 29, 2022, the Company acquired 2,232,861 shares of NanoSynex Series A-1 Preferred Stock from

Alpha in exchange for 350,000 reverse split adjusted shares of the Company’s common stock and a prefunded warrant to purchase

331,464 reverse split adjusted shares of the Company’s common stock at an exercise price of $ 0.001 per share.

14 — INCOME TAXES

following table presents domestic and foreign components of consolidated loss before income taxes for the periods presented:

following table presents domestic and foreign components of consolidated loss before income taxes from continuing operations for the

periods presented:

OF DOMESTIC AND FOREIGN COMPONENTS

December 31, 2022

December 31, 2021

$ ( 12,479,803 )

$ ( 13,887,914 )

( 5,344,967 )

Loss before provision for income taxes

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Foreign rate differential

Change in FV of warrant liability

Change in fair value of warrant liability

Tax impact of convertible debenture

Tax impact of divestiture

Change in valuation allowance

8 unchanged sentences

Total current provision

( 1,268,000 )

( 2,252,000 )

Deferred Benefit

( 2,252,000 )

1 unchanged sentence

( 2,488,000 )

( 4,909,000 )

Change in valuation allowance

Total provision (benefit) for income taxes

( 27,825,000 )

Total provision (benefit) for income taxes

components of deferred tax assets and liabilities are as follows:

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Intangible assets

( 1,324,000 )

Right-of-use asset

Total deferred income tax liabilities

( 1,706,000 )

Net deferred income tax assets

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Deferred tax asset, net of allowance

$ ( 358,000 )

on the available objective evidence, including the Company’s history of cumulative losses, management believes it is likely that

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tax liability.

This results in $ 272,000 of foreign deferred tax benefit recorded to the income statement in 2022.

Tax Cuts and Jobs Act resulted in significant changes to the treatment of research or experimental (“R&E”) expenditures

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both using a midyear convention.

The Company has incorporated the impact of this new tax legislation into its 2022 consolidated

financial statements, noting that the impact on the Company’s consolidated financial statements was immaterial.

The Company has incorporated the impact of this new tax legislation into its 2023 and

2022 consolidated financial statements, noting that the impact on the Company’s consolidated financial statements was immaterial.

December 31, 2023, the Company has U.S.

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of certain tax benefits related to net operating loss carryforwards and federal research and development credits, and an annual utilization

At December 31, 2022, the Company has foreign net operating loss carryforwards of approximately $ 953,000 , which are available

to offset future taxable income.

Foreign net operating loss carryovers are indefinite lived and do not expire.

Company also has research and development credit carryforwards for federal and state tax purposes of approximately $ 3,560,000 and $ 1,410,000 ,

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15 — SUBSEQUENT EVENTS

January 9 and 12, 2023 Alpha Capital voluntarily converted $ 1,111,078

of its outstanding Senior Convertible Debenture principal into 841,726

shares of common stock at a conversion price of $ 1.32

January 13, 2023, the Company’s board of directors, as part of certain cost-cutting measures, approved a temporary 20 % reduction

to the base salaries of all executive officers of the Company and a 20 % reduction to the non-employee directors’ annual cash compensation.

The Company also terminated the employment of certain employees, including its Senior Vice President/Chief Operating Officer and Vice President/Chief Scientific

Company filed a Notification of Late Filing on Form 12b-25 on March 31, 2023, indicating that the filing of this Annual Report would

be delayed on account of the Company and its registered public accounting firm requiring additional time to complete the

accounting and disclosures related to the Company’s acquisition of a majority interest in NanoSynex, Ltd., which accounting and disclosures have been included in this

Annual Report.

On April 20, 2023, the Company received a notification

letter from the Listing Qualifications Department of Nasdaq indicating that, as a result of the Company’s delay in filing this

Annual Report, the Company was not in compliance with the timely filing requirements for continued listing under Nasdaq Listing Rule

The notification letter has no immediate effect on the listing or trading of the Company’s common stock on the

Nasdaq Capital Market.

The notification letter stated that, under Nasdaq rules, the Company has 60 calendar days, or until June 20,

2023, to submit a plan to regain compliance with Nasdaq’s continued listing requirements.

The Company may also regain

compliance with Nasdaq’s continued listing requirements at any time before June 20, 2023, by filing this Annual Report with

the SEC, as well as any subsequent periodic financial reports that may become due, and continuing to comply with Nasdaq’s

other continued listing requirements.

The filing of this Annual Report was the Company’s action to regain

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

The transactions

contemplated by the Agreement closed on February 27, 2024, at which time the Company delivered to Alpha the 2024 Debenture and the

2024 Warrant, as described below, and Alpha paid the Company a cash purchase price of $ 500,000

(less $ 25,000

for expense reimbursement).

Pursuant to the Agreement, the Company issued to Alpha an 8% Convertible Debenture (the “2024

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

The 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 “Conversion Price”).

The Debenture accrues

interest on its outstanding principal balance at the rate of 8 %

The 2024 Debenture does not call for scheduled payments of principal or interest before the scheduled maturity date of

December 31, 2024.

Pursuant to the terms of the Agreement, the Company also issued to Alpha a 5-year common stock purchase warrant

(the “2024 Warrant”) to purchase (at $ 0.26

per share) 900,016

shares of common stock of the Company.

Under the Agreement, Alpha also has an option, exercisable until July 1, 2024, to

purchase from the Company up to an additional $ 1,100,000

in principal amount of 2024 Debentures of like tenor, together with up to an additional 1,800,032

2024 Warrants of like tenor, 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 2024 Warrants).

We granted Alpha “piggyback” registration rights for the common shares underlying the

2024 Debenture and the 2024 Warrant.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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 7A. Quantitative and Qualitative Disclosures About Market Risk