Qualigen Therapeutics(QLGN) - 2024 Q3 - Quarterly Report

PART I. Financial Information Condensed Consolidated Financial Statements (Unaudited) The company presents its unaudited financial statements for the nine months ended September 30, 2024, reflecting a reduced net loss, significant financing, and the impact of discontinued operations Condensed Consolidated Balance Sheets Total assets increased to $2.31 million and total liabilities rose to $4.45 million, resulting in a stockholders' deficit of $2.14 million as of September 30, 2024 Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $388,152 | $401,803 | | Total current assets | $2,312,994 | $1,166,767 | | Total Assets | $2,312,994 | $2,033,248 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $4,453,845 | $4,136,805 | | Convertible debt | $1,090,002 | $0 | | Total Stockholders' Deficit | $(2,140,851) | $(2,103,557) | | Total Liabilities & Stockholders' Deficit | $2,312,994 | $2,033,248 | Condensed Consolidated Statements of Operations and Other Comprehensive Loss The company's net loss improved to $5.40 million for the nine months ended September 30, 2024, driven by significantly lower operating expenses Statement of Operations Summary (Nine Months Ended Sep 30) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total expenses | $4,428,676 | $9,030,895 | | Loss from operations | $(4,428,676) | $(9,030,895) | | Net loss from continuing operations | $(5,303,368) | $(10,007,448) | | Net loss | $(5,403,368) | $(11,310,001) | | Net loss per common share, basic and diluted | $(24.93) | $(109.19) | Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) The stockholders' deficit increased slightly to $2.14 million, as the net loss was largely offset by capital raised from financing activities - The company's equity position was impacted by a net loss of $5.4 million for the nine months ended September 30, 2024[10] - Financing activities that increased additional paid-in capital included a public offering ($3.05 million), monthly redemptions and voluntary conversions of convertible debt, and warrant exercises[10] Condensed Consolidated Statements of Cash Flows Net cash used in operations was $4.06 million, offset by $4.94 million generated from financing, resulting in a slight decrease in the cash balance Cash Flow Summary (Nine Months Ended Sep 30) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,057,980) | $(4,632,677) | | Net cash provided by (used in) investing activities | $(900,000) | $3,980,541 | | Net cash provided by (used in) financing activities | $4,944,329 | $(440,000) | | Net change in cash and cash equivalents | $(13,651) | $(1,092,136) | Notes to Condensed Consolidated Financial Statements Notes detail a reverse stock split, discontinued operations, going concern doubts, significant financing activities, and a new co-development agreement - A 1-for-50 Reverse Stock Split of the company's common stock became effective on November 5, 2024, with all share and per-share data retroactively adjusted[15][149] - The company has substantial doubt about its ability to continue as a going concern, as cash balances are only expected to fund operations through Q4 2024 without additional financing[48] - In July 2023, the company sold its subsidiary Qualigen, Inc and deconsolidated NanoSynex, both now classified as discontinued operations[20][21] - The company advanced $1.25 million to Marizyme, Inc via a demand promissory note bearing 18% interest as part of a co-development agreement[52][114] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its strategic focus, reduced operating expenses, and severe liquidity challenges that raise substantial doubt about its going concern status Overview The company is an early-clinical-stage firm focused on cancer therapeutics, with its lead assets being the QN-302 and Pan-RAS programs - The company's lead program, QN-302, is an investigational small molecule G4-selective transcription inhibitor currently in a Phase 1a clinical trial[158] - The Pan-RAS program is a preclinical portfolio of small molecules designed to inhibit mutated RAS oncogene protein-protein interactions[159] - A co-development agreement with Marizyme entitles Qualigen to a 33% royalty on net sales of DuraGraft, capped at double the funding provided by Qualigen[161] Results of Operations Operating expenses for the nine-month period decreased by 51% year-over-year, leading to an improved net loss from continuing operations of $5.3 million Operating Expense Comparison (Nine Months Ended Sep 30) | Expense Category | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | General and administrative | $3,186,575 | $5,132,834 | $(1,946,259) | -38% | | Research and development | $1,242,101 | $3,898,061 | $(2,655,960) | -68% | | Total expenses | $4,428,676 | $9,030,895 | $(4,602,219) | -51% | - The decrease in G&A expenses was primarily due to reductions in stock-based compensation ($0.8M), payroll ($0.7M), and professional fees ($0.5M)[181] - The decrease in R&D expenses was mainly due to reduced costs for the QN-302 program ($2.0M) and the RAS program ($0.8M)[182] Liquidity and Capital Resources The company's critical liquidity position raises substantial going concern doubts, despite recent financing efforts, and it faces a Nasdaq delisting risk - The company's cash balance of approximately $388,000 is only expected to fund operations into Q4 2024, raising substantial doubt about its ability to continue as a going concern[192][193] - In the first nine months of 2024, the company raised approximately $1.5 million from convertible debt and net proceeds of approximately $3.1 million from a public offering[49][195] - The company received a Nasdaq Panel decision granting an extension until November 19, 2024, to regain compliance with listing requirements, after which it may be delisted[200] Quantitative and Qualitative Disclosures About Market Risk The company is exempt from market risk disclosures as it qualifies as a smaller reporting company - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide this information[222] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective due to unremediated material weaknesses in internal controls - Management concluded that disclosure controls and procedures were not effective as of September 30, 2024[224] - The ineffectiveness is due to material weaknesses related to an insufficient number of accounting personnel to segregate duties and a lack of effective Information Technology General Controls (ITGC)[225] - No changes were made to internal controls during the third quarter of 2024, and the company foresees the weaknesses will not be remediated until additional funding is secured[225][226] PART II. Other Information Legal Proceedings The company is not currently involved in any material legal proceedings - As of the report date, the company is not currently involved in any legal matters that could be reasonably expected to have a material effect on its operations[101][228] Risk Factors No material changes have occurred to the risk factors disclosed in the 2023 Annual Report - There have been no material changes to the Company's risk factors since the 2023 Annual Report[229] Unregistered Sales of Equity Securities and Use of Proceeds The company issued 64,312 unregistered common shares related to the conversion of a 2022 convertible debenture - During the nine months ended September 30, 2024, the company issued 64,312 shares of unregistered common stock to Alpha Capital Anstalt for monthly redemptions and voluntary conversions of its 2022 Debenture[230] Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None reported[230] Mine Safety Disclosures This item is not applicable to the company's operations - Not Applicable[230] Other Information No other information was reported for the period - None[230] Exhibits This section lists all exhibits filed with the report, including financing agreements and required officer certifications - The report includes numerous exhibits detailing recent financing activities, such as the Form of Pre-Funded Warrant, Placement Agent Warrant, and Securities Purchase Agreements[233] - Certifications from the principal executive officer and principal financial officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed with the report[234][235]