# FF EAI Robotics Ecosystem Inc.: Form 10-Q for the period ended Jun 30, 2024

- Company: [FF EAI Robotics Ecosystem Inc.](/companies/ffr.md) (CIK 1460702)
- Form: 10-Q
- Filed: 2024-08-14
- Accepted by EDGAR: Aug 14, 2024, 16:06 ET
- Period: 2024-06-30
- Accession: 0001493152-24-032161
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1460702/000149315224032161/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1460702/000149315224032161/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2024-04-01 to 2024-06-30 | $754.3k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2024-01-01 to 2024-06-30 | $1.1m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | −$1.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | −$3.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-04-01 to 2024-06-30 | $263.6k | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2024-01-01 to 2024-06-30 | $400.1k | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | −$1.2k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | −$3.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | −$1.6m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | −$3.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | −$0.21 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | −$0.54 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | −$0.21 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | −$0.54 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 7,603,252 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 6,773,533 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | −$2.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2024-06-30 | $118.7k | us-gaap:Cash |
| Current assets | at 2024-06-30 | $534.4k | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $534.4k | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $4.8m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2024-06-30 | −$4.3m | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest |

## Management's discussion and analysis

As filed, 52,707 characters.

*The following discussion and analysis should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and the audited financial statements and notes thereto as of and for the twelve months ended December 31, 2023, which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 5, 2024. As used in this Quarterly Report, unless the context suggests otherwise, “we,” “us,” “our,” or “Qualigen” refer to Qualigen Therapeutics, Inc. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.*

### Cautionary Note Regarding Forward Looking Statements

This Quarterly Report contains forward-looking statements by the Company that involve risks and uncertainties and reflect the Company’s judgment as of the date of this Report. These statements generally relate to future events or the Company’s future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” or “continue” or the negative of these words or other similar terms or expressions that concern the Company’s expectations, strategy, plans or intentions. Such forward-looking statements may relate to, among other things, potential future development, testing and launch of products and product candidates. Actual events or results may differ from our expectations due to a number of factors.

Some of the factors that we believe could cause actual results to differ from those anticipated or predicted include:

- our ability to procure sufficient working capital to continue and complete the development, testing and launch of our prospective drug products;
- our ability to successfully develop any drugs;
- our ability to progress our drug candidates through preclinical and clinical development;
- our ability to obtain the requisite regulatory approvals for our clinical trials and to begin and complete such trials according to any projected timeline;
- our ability to complete enrollment in our clinical trials as contemplated by any projected timeline;
- the likelihood that future clinical trial data will be favorable or that such trials will confirm any improvements over other products or lack negative impacts;
- our ability to successfully commercialize any drugs;
- the likelihood that patents will issue on our in-licensed patent applications;
- our ability to protect our intellectual property; and
- our ability to compete.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics, and healthcare, regulatory and scientific developments and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent in some future periods with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in other future periods. Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of this Quarterly Report, and we disclaim any intent or obligation to update these forward-looking statements beyond the date of this Quarterly Report, except as required by law. This caution is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Future filings with the Securities and Exchange Commission (the “SEC”), future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may also contain forward-looking statements. Because such statements include risks and uncertainties, many of which are beyond our control, actual results may differ materially from those expressed or implied by such forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.

### Overview

We are an early-clinical-stage therapeutics company focused on developing treatments for adult and pediatric cancer. Our business now consists of one early-clinical-stage therapeutic program (QN-302) and one preclinical therapeutic program (Pan-RAS).

Our lead program, QN-302, is an investigational small molecule G-quadruplexes (G4)-selective transcription inhibitor with strong binding affinity to G4s prevalent in cancer cells (such as pancreatic cancer). Such binding could, by stabilizing the G4s against DNA “unwinding,” help inhibit cancer cell proliferation. QN-302 is undergoing a Phase 1a clinical trial at START Midwest in Grand Rapids, Michigan, and HonorHealth in Scottsdale, Arizona.

Our Pan-RAS program, which is currently at the preclinical stage, consists of a family of RAS oncogene protein-protein interaction inhibitor small molecules believed to inhibit or block mutated RAS genes’ proteins from binding to their effector proteins thereby leaving the proteins from the mutated RAS unable to cause further harm. In theory, such mechanism of action may be effective in the treatment of about one quarter of all cancers, including certain forms of pancreatic, colorectal, and lung cancers. The investigational compounds within our Pan-RAS portfolio are designed to suppress the interaction of endogenous RAS with c-RAF, upstream of the KRAS, HRAS and NRAS effector pathways.

We do not expect to be profitable before products from our therapeutics pipeline are commercialized. To experience losses while therapeutic products are still under development is, of course, typical for biotechnology companies.

In addition, under a Co-Development Agreement dated April 11, 2024 with Marizyme, Inc. (“Marizyme”), we are entitled to receive quarterly a 33% payment in the nature of royalties (capped at double the amount of Funding Payment cash we provide to Marizyme) on any Net Sales (as defined with a meaning tantamount to gross profit on net sales) of Marizyme’s DuraGraft™ vascular conduit solution, which is indicated for adult patients undergoing coronary artery bypass grafting surgeries and is intended for the flushing and storage of the saphenous vein grafts used in coronary artery bypass grafting surgery. No such payments-in-the-nature-of-royalties would accrue until after DuraGraft has been launched in the United States and a cumulative total of $500,000 of DuraGraft Net Sales have been made in the United States. To date we have provided $1,750,000 of Funding Payments to Marizyme (inclusive of a $1,250,000 demand promissory note dated July 15, 2024 which bears interest at 18% per annum).

### Recent Developments

### Phase 1 Clinical Trial of QN-302

On August 1, 2023, we announced that the FDA has cleared our IND application for QN-302. Based on this clearance, we chose Translational Drug Development, LLC (“TD2”) to serve as our contract research organization to conduct a Phase 1 clinical trial in patients with advanced or metastatic solid tumors. The Phase 1 trial (NCT06086522) is designed as a multicenter, open-label, dose escalation, safety, pharmacokinetic, and pharmacodynamic study with dose expansion to evaluate safety, tolerability, and antitumor activity of QN-302 in patients with advanced solid tumors that have not responded to or that have recurred following treatment with available therapies. On November 7, 2023, we announced that the first patient had been enrolled and dosed in the dose escalation (Phase 1a) portion of the study. The exact number of patients to be enrolled in the trial will depend on the observed safety profile, which will determine the number of patients per dose level, as well as the number of dose escalations required to meet the Maximum Tolerated Dose (“MTD”). Once the MTD has been established in dose escalation, dose expansion will begin.

### Sale of Diagnostics Business

On July 20, 2023, we sold all of the issued and outstanding shares of common stock of Qualigen, Inc., a wholly-owned subsidiary and the legal entity operating our FastPack™ diagnostic business, to Chembio Diagnostics, Inc. (“Chembio”), a subsidiary of Biosynex, S.A. As consideration for the shares of Qualigen, Inc., we received cash payments of approximately $4.9 million, which payment is subject to post-closing adjustments. An additional $450,000 was delivered by Chembio to an escrow account to satisfy our indemnification obligations. The escrow account was closed on June 4, 2024 by mutual agreement; $350,000 was paid to us, and $100,000 was paid to Chembio. Upon the consummation of the July 2023 transaction, Qualigen, Inc. became a wholly-owned subsidiary of Chembio.

### Amendment and Settlement Agreement with NanoSynex Ltd.

On July 20, 2023, we entered into and effectuated the NanoSynex Amendment, by which we agreed to, among other things, forfeit 281,000 Series B Preferred Shares of NanoSynex held by us, resulting in our ownership in NanoSynex being reduced from approximately 52.8% to approximately 49.97% of the voting equity of NanoSynex. In addition, we agreed to cancel approximately $3.0 million of promissory notes which NanoSynex had issued to us under the NanoSynex Funding Agreement, relieving NanoSynex of any repayment obligations to us with respect to such notes. The NanoSynex Amendment superseded any NanoSynex Funding Agreement obligations to provide funding to NanoSynex, except we agreed to provide future loans as follows: (i) $560,000 on or before November 30, 2023, and (ii) $670,000 on or before March 31, 2024. However, on November 22, 2023, in full settlement of any additional funding obligations to NanoSynex, we forfeited certain of our shares of Series A-1 Preferred Stock of NanoSynex in an amount that reduced our ownership in NanoSynex from approximately 49.97% to 39.90%. Accordingly, NanoSynex was deconsolidated from our financial statements as of July 20, 2023, and is reported as Discontinued Operations in this Quarterly Report. Our investment in NanoSynex will be accounted for in the future as an equity method investment.

### Marizyme

On April 11, 2024, we entered into a Co-Development Agreement with Marizyme. Under the Co-Development Agreement (as amended on August 6, 2024), we agreed to pay Marizyme a Funding Payment of up to $1,750,000 and an Exclusivity Fee of $200,000. The Exclusivity Fee of $200,000 and a Funding Payment of $500,000 was paid to Marizyme on April 12, 2024. The Exclusivity Fee entitles us to an exclusivity period until May 31, 2024 for purposes of proposing and outlining a broader strategic relationship with Marizyme with regard to Marizyme’s DuraGraft business. The Funding Payment is designed to provide financial support for commercialization of Marizyme’s DuraGraft™ vascular conduit solution, which is indicated for adult patients undergoing coronary artery bypass grafting surgeries and is intended for the flushing and storage of the saphenous vein grafts used in coronary artery bypass grafting surgery. In return for the Funding Payment we will receive quarterly a 33% payment in the nature of royalties on any Net Sales (as defined with a meaning tantamount to gross profit on net sales) of DuraGraft, capped at double the amount of the Funding Payment cash provided. No such payments-in-the-nature-of-royalties would accrue until after DuraGraft has been launched in the United States and a cumulative total of $500,000 of DuraGraft Net Sales have been made in the United States.

On July 15, 2024, the Company advanced $1,250,000 to Marizyme, Inc., a Nevada corporation (“Marizyme”), against which Marizyme had previously delivered its demand promissory note to the Company of like principal amount dated July 12, 2024 (the “Marizyme Note”). The Marizyme Note bears interest the rate of eighteen percent (18%) per annum. Marizyme may pre-pay all or any part of the outstanding principal or interest of the Marizyme Note at any time and from time to time, in whole or in part, without premium or penalty.

### Critical Accounting Policies and Estimates

Our condensed consolidated financial statements historically have not separated our diagnostics-related activities from our therapeutics-related activities. All of our historically reported revenue was diagnostics-related. Before the third quarter of 2023, our reported expenses represented the total of our diagnostics-related and therapeutics-related expenses. In this Quarterly Report, all diagnostics-related revenues and expenses have been reclassified to discontinued operations (See Note 5 - Discontinued Operations).

This discussion and analysis is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to impairment of goodwill and other intangible assets, fair value of warrant liabilities, and stock-based compensation. We base our estimates on historical experience, known trends and events and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 1 to our condensed consolidated financial statements, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our financial condition and results of operations:

- Research and development
- Discontinued operations
- Derivative financial instruments and warrant liabilities
- Stock-based compensation
- Income taxes

### Derivative Financial Instruments and Warrant Liabilities

On April 12, 2024, in connection with an 8% Convertible Debenture in the principal amount of $1,100,000 issued to Yi Hua Chen (“Chen”) (see Note 7 Warrant Liabilities), we issued a liability classified warrant to Chen purchase 1,800,032 shares of our common stock, exercisable until February 27, 2029, which remains outstanding and exercisable as of June 30, 2024.

The fair value of liability classified warrants will be determined each quarter on a “mark-to-market” basis, it could result in significant variability in our future quarterly and annual consolidated statement of operations and consolidated balance sheets based on changes in our public market common stock price. Pursuant to U.S. GAAP, a quarter-to-quarter increase in our stock price would result in an increase in the fair value of the warrant liabilities and a quarter-to-quarter decrease in our stock price would result in a decrease in the fair value of the warrant liabilities.

### Results of Operations

### Comparison of the Three Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023:

| EXPENSES | For the Three Months June 30, 2024 | 2023 |
| --- | ---: | ---: |
| General and administrative | $986,484 | $2,427,066 |
| Research and development | 754,287 | 1,174,646 |
| Total expenses | 1,740,771 | 3,601,712 |
| **LOSS FROM OPERATIONS** | (1,740,771) | (3,601,712) |
| **OTHER EXPENSE (INCOME), NET** |  |  |
| Gain on change in fair value of warrant liabilities | (493,206) | (440,294) |
| Gain on change in fair value of derivative liabilities | (10,116) | — |
| Interest expense, net | 263,560 | 377,416 |
| Loss on issuance of convertible debt | — | — |
| Gain on voluntary conversion of convertible debt into common stock | (83,800) | — |
| Loss on monthly redemptions of convertible debt into common stock | 61,655 | — |
| Other income, net | (1,094) | (5,509) |
| Total other expense (income), net | (263,001) | (68,387) |
| **LOSS BEFORE PROVISION FOR INCOME TAXES** | (1,477,770) | (3,533,325) |
| **(BENEFIT) PROVISION FOR INCOME TAXES** | (1,212) | 4,036 |
| **NET LOSS FROM CONTINUING OPERATIONS** | (1,476,558) | (3,537,361) |
| **DISCONTINUED OPERATIONS** |  |  |
| Income from discontinued operations, net of tax | — | 29,672 |
| Loss on disposal from discontinued operations, net of tax | (100,000) | — |
| **GAIN (LOSS) FROM DISCONTINUED OPERATIONS** | (100,000) | 29,672 |
| **NET LOSS** | (1,576,558) | (3,507,689) |
| Net loss attributable to non-controlling interest from discontinued operations | — | (43,484) |
| **Net loss available to Qualigen Therapeutics, Inc.** | $(1,576,558) | $(3,464,205) |
| **Deemed dividend arising from warrant down-round provision** | $— | $— |
| **Net loss attributable to Qualigen Therapeutics, Inc** | (1,576,558) | (3,464,205) |
| **Net loss per common share, basic and diluted - continuing operations** | $(0.20) | $(0.70) |
| **Net loss per common share, basic and diluted - discontinued operations** | $(0.01) | $0.01 |
| **Total net loss per common share, basic and diluted** | $(0.21) | $(0.69) |
| Weighted—average number of shares outstanding, basic and diluted | 7,603,252 | 5,052,463 |
| **Other comprehensive loss, net of tax** |  |  |
| Net loss | $(1,576,558) | $(3,507,689) |
| Foreign currency translation adjustment from discontinued operations | — | (56,747) |
| Other comprehensive loss | (1,576,558) | (3,564,436) |
| Comprehensive loss attributable to noncontrolling interest from discontinued operations | — | (43,484) |
| **Comprehensive loss attributable to Qualigen Therapeutics, Inc.** | $(1,576,558) | $(3,520,952) |

30

### Expenses

#### General and Administrative Expenses

General and administrative expenses decreased from $2.4 million for the three months ended June 30, 2023, to $1.0 million for the three months ended June 30, 2024, a decrease of $1.4 million or 59%. This is primarily due to decreases in stock-based compensation of $0.6 million, payroll of $0.4 million, professional fees of $0.3 million and insurance of $0.1 million.

#### Research and Development Costs

Research and development expenses decreased from $1.2 million for the three months ended June 30, 2023, to $0.8 million for the three months ended June 30, 2024, a decrease of $0.4 million or 36%. This was primarily due to decreases in QN-302 program expenses of $0.6 million, a decrease in RAS program expenses of $0.3 million, a decrease in payroll of $0.1 million and a decrease in stock-based compensation of $0.1 million, offset by an increase of $0.7 million in expenses under the Marizyme co-development agreement.

### Other Expense (Income), Net

#### Gain on Change in Fair Value of Warrant Liabilities

During the three months ended June 30, 2024 and 2023, we experienced a gain of approximately $493,000 million and a gain of approximately $440,000 million, respectively, on change in fair value of warrant liabilities, primarily due to changes in our stock price and expiration of warrants during the current period, and changes in our stock price in the prior period. Typically, a decline in our stock price would result in a decline in the fair value of our warrant liabilities, generating a gain, while an increase in our stock price would result in an increase in the fair value of our warrant liabilities, generating a loss.

#### Gain on Change in Fair Value of Derivative Liabilities

During the three months ended June 30, 2024 we experienced a gain of approximately $10,000 on change in fair value of derivative liabilities, compared to $0 for the three months ended June 30, 2023. The fair value of derivative liabilities declined during the current period due to changes in our stock price and a reduction in the remaining term of the underlying instruments. Derivative liabilities in the prior period had no fair value.

#### Interest Expense, Net

Interest expense during the three months ended June 30, 2024 was approximately $264,000 compared to interest expense of approximately $377,000 during the three months ended June 30, 2023. The decrease was primarily due to reduced accretion of discount on convertible debt during the current period.

#### Gain on Voluntary Conversion of Convertible Debt Into Common Stock

During the three months ended June 30, 2024, we issued 1,400,000 shares of common stock with a fair value of approximately $280,000, upon Alpha’s partial voluntary conversion of the 2022 Alpha Debenture at a weighted average share price of $0.26. Upon conversion to shares, we recognized a gain on voluntary conversion of convertible debt into common stock of approximately $84,000. There were no voluntary conversions of convertible debt for the three months ended June 30, 2023.

#### Loss on Monthly Redemptions of Convertible Debt into Common Stock

During the three months ended June 30, 2024, we issued 1,136,312 shares of common stock with a fair value of approximately $357,000, in lieu of cash for monthly redemptions of $280,000 principal and approximately $15,000 accrued interest redeemed, pursuant to the terms of the 2022 Alpha Debenture at a weighted average share price of $0.26. Upon redemption in shares, we recognized a loss on monthly redemptions of convertible debt into common stock of approximately $62,000.

#### Other Income, Net

Other income, net was immaterial during the three months ended June 30, 2024 and 2023.

### Discontinued Operations

There was a $100,000 loss from discontinued operations during the three months ended June 30, 2024, compared to income from discontinued operations of approximately $30,000 during the three months ended June 30, 2023. The $100,000 loss from discontinued operations during the current period was generated from the early settlement of an escrow account from the sale of Qualigen, Inc. The income of $30,000 from discontinued operations during the three months ended June 30, 2023 consisted of approximately $114,000 in net income from our former Qualigen, Inc. subsidiary and approximately a net loss of approximately $84,000 from NanoSynex. (See Note 5 - Discontinued Operations).

There was no loss attributable to non-controlling interest from discontinued operations during the three months ended June 30, 2024, compared to a loss attributable to non-controlling interest from discontinued operations of approximately $43,000 during the three months ended June 30, 2023 (See Note 5 - Discontinued Operations).

### Comparison of the Six Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

| EXPENSES | For the Six Months June 30, 2024 | 2023 |
| --- | ---: | ---: |
| General and administrative | $2,047,419 | $3,796,068 |
| Research and development | 1,118,672 | 2,456,463 |
| Total expenses | 3,166,091 | 6,252,531 |
| **LOSS FROM OPERATIONS** | (3,166,091) | (6,252,531) |
| **OTHER EXPENSE (INCOME), NET** |  |  |
| Gain on change in fair value of warrant liabilities | (359,906) | (1,478,967) |
| Gain on change in fair value of derivative liabilities | (174,613) | — |
| Interest expense, net | 400,117 | 921,652 |
| Loss on issuance of convertible debt | 358,279 | — |
| (Gain) loss on voluntary conversion of convertible debt into common stock | (83,800) | 1,077,287 |
| Loss on monthly redemptions of convertible debt into common stock | 208,852 | — |
| Other income, net | (2,713) | (5,509) |
| Total other expense (income), net | 346,216 | 514,463 |
| **LOSS BEFORE PROVISION FOR INCOME TAXES** | (3,512,307) | (6,766,994) |
| **(BENEFIT) PROVISION FOR INCOME TAXES** | (2,998) | 5,429 |
| **NET LOSS FROM CONTINUING OPERATIONS** | (3,509,309) | (6,772,423) |
| **DISCONTINUED OPERATIONS** |  |  |
| Loss from discontinued operations, net of tax | — | (842,515) |
| Loss on disposal from discontinued operations, net of tax | (100,000) | — |
| **LOSS FROM DISCONTINUED OPERATIONS** | (100,000) | (842,515) |
| **NET LOSS** | (3,609,309) | (7,614,938) |
| Net loss attributable to non-controlling interest from discontinued operations | — | (304,512) |
| **Net loss available to Qualigen Therapeutics, Inc.** | $(3,609,309) | $(7,310,426) |
| **Deemed dividend arising from warrant down-round provision** | $(60,017) | $— |
| **Net loss attributable to Qualigen Therapeutics, Inc** | (3,669,326) | (7,310,426) |
| **Net loss per common share, basic and diluted - continuing operations** | $(0.53) | $(1.35) |
| **Net loss per common share, basic and diluted - discontinued operations** | $(0.01) | $(0.11) |
| **Total net loss per common share, basic and diluted** | $(0.54) | $(1.46) |
| Weighted—average number of shares outstanding, basic and diluted | 6,773,533 | 5,006,050 |
| **Other comprehensive loss, net of tax** |  |  |
| Net loss | $(3,609,309) | $(7,614,938) |
| Foreign currency translation adjustment from discontinued operations | — | 119,473 |
| Other comprehensive loss | — | (7,495,465) |
| Comprehensive loss attributable to noncontrolling interest from discontinued operations | (3,609,309) | (304,512) |
| **Comprehensive loss attributable to Qualigen Therapeutics, Inc.** | $— | $(7,190,953) |

32

### Expenses

#### General and Administrative Expenses

General and administrative expenses decreased from approximately $3.8 million, during the six months ended June 30, 2023 to approximately $2.0 million during the six months ended June 30, 2024, a decrease of approximately $1.8 million or 46%. This decrease was primarily due to a $0.8 million decrease in stock-based compensation expense, a $0.6 million decrease in professional fees and a $0.4 million decrease in payroll expenses.

#### Research and Development Costs

Research and development expenses decreased from approximately $2.5 million for the six months ended June 30, 2023, to approximately $1.1 million for the six months ended June 30, 2024, a decrease of $1.4 million or 54%. This was primarily due to an decrease in QN-302 program costs of $1.2 million, a decrease in RAS program expenses of $0.7 million, and a decrease in wages of $0.2 million, offset by an increase of $0.7 million in expenses under the Marizyme co-development agreement.

### Other Expense (Income), Net

#### Gain on Change in Fair Value of Warrant Liabilities

During the six months ended June 30, 2024 and 2023, we experienced a gain of approximately $0.4 million, and a gain of approximately $1.5 million, respectively, on change in fair value of warrant liabilities, primarily due to changes in our stock price and expiration of warrants during the current period, and changes in our stock price in the prior period. Typically, a decline in our stock price would result in a decline in the fair value of our warrant liabilities, generating a gain, while an increase in our stock price would result in an increase in the fair value of our warrant liabilities, generating a loss.

#### Gain on Change in Fair Value of Derivative Liabilities

During the six months ended June 30, 2024, we experienced a gain of approximately $0.2 million on change in fair value of derivative liabilities, compared to $0 for the six months ended June 30, 2023. The fair value of derivative liabilities declined during the current period due to changes in our stock price and a reduction in the remaining term of the underlying instruments. Derivative liabilities in the prior period had no fair value.

#### Interest Expense

Interest expense during the six months ended June 30, 2024 was approximately $400,000, compared to interest expense of approximately $922,000 during the six months ended June 30, 2023, The decrease was primarily due to reduced accretion of discount on convertible debt during the current period.

#### Loss on Issuance of Convertible Debt

During the six months ended June 30, 2024 we incurred a loss on issuance of convertible debt of approximately $358,000 due to the fair value of the 2024 Alpha Debenture and derivative liabilities exceeding the cash proceeds.

#### Gain on Voluntary Conversion of Convertible Debt Into Common Stock

During the six months ended June 30, 2024, we issued 1,400,000 shares of common stock with a fair value of approximately $280,000, upon partial voluntary conversion of the 2022 Alpha Debenture at a weighted average share price of $0.26. Upon redemption in shares, we recognized a gain on voluntary conversion of convertible debt into common stock of approximately $84,000.

During the six months ended June 30, 2023, we recognized a $1.1 million loss due to a voluntary conversion by Alpha of approximately $1.1 million of convertible debt into 841,726 shares of common stock.

#### Loss on Monthly Redemptions of Convertible Debt into Common Stock

During the six months ended June 30, 2024, we issued 2,274,847 shares of common stock with a fair value of approximately $903,000, in lieu of cash for monthly redemptions of $660,000 principal and approximately $34,000 accrued interest redeemed, pursuant to the terms of the 2022 Alpha Debenture at a weighted average share price of $0.29. Upon redemption in shares, we recognized a loss on monthly redemptions of convertible debt into common stock of approximately $209,000.

#### Other Income, Net

Other income, net was immaterial during the six months ended June 30, 2024 and 2023.

### Discontinued Operations

There was a loss from discontinued operations of $0.1 million during the six months ended June 30, 2024, compared to a loss from discontinued operations of approximately $0.8 million during the six months ended June 30, 2023. The $0.1 million loss from discontinued operations during the six months ended June 30, 2024 was generated from the early settlement of an escrow account from the sale of Qualigen, Inc. The $0.8 million loss from discontinued operations during the six months ended June 30, 2023 consisted of approximately a $0.2 million loss from our former Qualigen, Inc. subsidiary and approximately a $0.6 million loss from NanoSynex (See Note 5 - Discontinued Operations).

There was no loss attributable to non-controlling interest from discontinued operations during the six months ended June 30, 2024, compared to a loss attributable to non-controlling interest from discontinued operations of approximately $0.3 million during the six months ended June 30, 2023 (See Note 5 - Discontinued Operations).

### Liquidity and Capital Resources

As of June 30, 2024, we had approximately $119,000 in cash and an accumulated deficit of $120.4 million. For the six months ended June 30, 2024 and year ended December 31, 2023, we used cash of $2.3 million and $10.3 million, respectively, in operations.

We currently expect our cash balances to fund operations into the fourth quarter of 2024. We expect to continue to have net losses and negative cash flow from operations, which will challenge our liquidity. These factors raise substantial doubt regarding our ability to continue as a going concern for the one-year period following the date that the financial statements in this Quarterly Report were issued. There is no assurance that we will ever achieve profitable operations, or, if achieved, could be sustained on a continuing basis.

Historically, our principal sources of cash have, in addition to previous revenue from product sales and license revenues from the FastPack product of line of Qualigen, Inc. (which we divested in July 2023), included proceeds from the issuance of common and preferred equity and proceeds from the issuance of debt. There can be no assurance that further financing can be obtained on favorable terms, or at all. If we are unable to obtain funding, we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, and we could be unable to continue operations.

During the six months ended June 30, 2024 we raised approximately $1.5 million less expenses, in convertible debt. In February 2024 we issued to Alpha Capital Anstalt (“Alpha”) an 8% Convertible Debenture (the “2024 Alpha Debenture”) with a principal amount of $550,000; in connection with this issuance, we also issued to Alpha a 5-year common stock purchase warrant to purchase (at $0.26 per share) 900,016 shares of our common stock. We also granted to Alpha an option, exercisable until July 1, 2024, to purchase from us additional 8% Convertible Debentures, of like tenor, with face amounts of up to an aggregate of $1,100,000 (and with a proportional number of accompanying common stock warrants of like tenor, up to a total of 1,800,032 additional warrants). In April 2024, Alpha assigned this option to Yi Hua Chen (“Chen”) and Chen exercised the option in full; in exchange for $1,000,000 (less expenses) we issued to Chen an 8% Convertible Debenture with a principal amount of $1,100,000; in connection with this issuance, we also issued to Chen a 5-year common stock purchase warrant to purchase (at $0.26 per share) 1,800,032 shares of our common stock.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through third-party funding, commercialization, marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. In addition, any future financing (depending on the terms and conditions) may be subject to the approval of Alpha and Chen under the terms of the Debentures and/or trigger certain adjustments to the Debentures or warrants held by Alpha and Chen.

In June 2024, by way of a negotiated early release of escrow, we received $350,000 from the $450,000 escrow account established in connection with our July 2023 sale of Qualigen, Inc. The escrow account had originally been subject to release in January 2025. In exchange for the early release, $100,000 from the escrow account was paid to Chembio Diagnostics, Inc., the buyer of Qualigen, Inc.

The Company and an institutional investor entered into a Securities Purchase Agreement dated July 5, 2024 (the “Agreement”), providing for the Company to issue to the investor at par an unsecured, nonconvertible $2,000,000 18% senior note (the “Senior Note”) with a scheduled maturity date of July 8, 2025. The Senior Note includes a requirement for partial prepayments from a percentage of any future Company financings. Otherwise, principal and interest on the Senior Note is not payable until maturity. On July 12, 2024, the investor funded the $2,000,000 loan to the Company and the Company issued the Senior Note to the investor.

Delisting of our common stock from Nasdaq would have a serious negative effect on any future financing efforts. As described in Note 14 in our condensed consolidated financial statements, a hearing before a Nasdaq Hearing Panel was held on July 16, 2024. On August 2, 2024, the Company received the Panel decision which granted the Company until October 31, 2024 to regain compliance with the Bid Price Rule and the Equity Rule. If the Company is unable to regain compliance with the listing standards of Nasdaq by October 31, 2024, the Company’s securities may be delisted from The Nasdaq Stock Market.

The accompanying financial statements have been prepared assuming that we will continue as a going concern. The financial statements do not include any adjustments that would be necessary should we be unable to continue as a going concern, and therefore, be required to liquidate its assets and discharge its liabilities in other than the normal course of business and at amounts that may differ from those reflected in the accompanying financial statements.

Our current liabilities at June 30, 2024 include approximately $1.9 million of accounts payable, $1.7 million of convertible debt and derivative liabilities, $1.0 million of accrued expenses and other current liabilities, $0.3 million in warrant liabilities.

### Contractual Obligations and Commitments

We have no material contractual obligations that are not fully recorded on our condensed consolidated balance sheets or fully disclosed in the notes to the financial statements.

#### License and Sponsored Research Agreements

We have obligations under various license and sponsored research agreements to make future payments to third parties that become due and payable on the achievement of certain development, regulatory and commercial milestones (such as the start of a clinical trial, filing for product approval with the FDA or other regulatory agencies, product approval by the FDA or other regulatory agencies, product launch or product sales) or on the sublicense of our rights to another party. We have not included these commitments on our balance sheet because the achievement and timing of these events is not determinable. Certain milestones are in advance of receipt of revenue from the sale of products and, therefore, we may require additional debt or equity capital to make such payments.

We have multiple license agreements with ULRF. Under these agreements, we have taken over development, regulatory approval and commercialization of various drug compounds from ULRF and are responsible for maintenance of the related intellectual property portfolio. Under the terms of these agreements, we are required to make patent maintenance payments and payments based upon development, regulatory and commercial milestones for any products covered by the in-licensed intellectual property. The maximum aggregate milestone payments we may be obligated to make per product are $5 million. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low single digits. The royalty is subject to reduction for any third-party payments required to be made, with a minimum floor in the low single digits. We have the right to sublicense our rights under these agreements, but we will be required to pay ULRF a percentage of any sublicense income.

In January 2022, we entered into a License Agreement with UCL Business Limited to obtain an exclusive worldwide in-license of a genomic quadruplex (G4)-selective transcription inhibitor drug development program which had been developed at University College London, including lead and back-up compounds, preclinical data and a patent estate. (UCL Business Limited is the commercialization company for University College London.) We are further developing the program’s lead compound under the name QN-302. The License Agreement requires (if and when applicable) tiered royalty payments in the low to mid-single digits, clinical/regulatory/sales milestone payments, and sharing of a percentage of any non-royalty sublicensing consideration paid to the Company. In November 2023, we became obligated to pay $100,000 to UCL Business Limited upon the first patient dosing of QN-302, which was paid in January 2024.

### 2022 Convertible Debenture

On December 22, 2022, we issued to Alpha an 8% Senior Convertible Debenture in the aggregate principal amount of $3,300,000 for a purchase price of $3,000,000 pursuant to the terms of a Securities Purchase Agreement, dated December 21, 2022 (the “2022 Securities Purchase Agreement”). The 2022 Debenture has a maturity date of December 22, 2025 and is convertible, at any time, and from time to time, until the 2022 Debenture is no longer outstanding, at Alpha’s option, into shares of our common stock (the “Conversion Shares”), at a price initially equal to $1.32 per share, subject to adjustment as described in the 2022 Debenture and other terms and conditions described in the 2022 Debenture. On July 13, 2023, we obtained stockholder approval, for purposes of complying with Nasdaq Listing Rule 5635(d), for the issuance to Alpha of more than 20% of our issued and outstanding shares of common stock pursuant to the terms and conditions of (a) the 2022 Debenture, and (b) the common stock purchase warrant dated December 22, 2022 issued by us to Alpha. Between January 9 - 12, 2023, we issued 841,726 shares of common stock upon Alpha’s partial conversion of the 2022 Debenture at $1.32 per share for a total of $1,111,078 principal. In October and December 2023, we issued 309,665 shares of common stock to Alpha in lieu of cash for monthly redemption payments on the 2022 Debenture at a weighted average price of $0.71 per share. During the three months ending March 31, 2024, we issued 1,138,535 shares of common stock to Alpha in lieu of cash for monthly redemption payments of the 2022 Debenture at a weighted average conversion price of $0.33 per share, and a weighted average fair value of $0.49 per share, and during the three months ending June 30, 2024, we issued 2,536,312 shares of common stock to Alpha in lieu of cash for monthly redemption payments of the 2022 Debenture at a weighted average conversion price of $0.26 per share, and a weighted average fair value of $0.25 per share.

As of June 30, 2024, approximately 1,518,929 shares of common stock were issuable under the 2022 Debenture, based on the $0.26 per share figure.

Between July 3 - 5, 2024, Alpha voluntarily converted the remaining principal balance of $394,921 of the December 2022 8% Senior Convertible Debenture into 1,518,931 shares of common stock of the Company, at the conversion price of $0.26 per share.

### 2024 Convertible Debentures

On February 27, 2024, upon our receipt of a cash purchase price payment of $500,000 (less expenses), we issued to Alpha an 8% Convertible Debenture (the “2024 Alpha Debenture”) in the principal amount of $550,000. The 2024 Alpha Debenture matures no later than December 31, 2024 and is convertible, at any time, and from time to time, at Alpha’s option, into shares of common stock of the Company, at $0.6111 per share, subject to adjustment as described in the 2024 Alpha Debenture. Except in respect of an Exempt Issuance, the 2024 Alpha Debenture contains a “ratchet” antidilution provision, with an $0.1164 floor. The 2024 Alpha Debenture accrues interest on its outstanding principal balance at the rate of 8% per annum, payable at maturity. In connection with this issuance, we also issued to Alpha a 5-year common stock purchase warrant to purchase (at $0.26 per share) 900,016 shares of our common stock.

We also granted to Alpha an option, exercisable until July 1, 2024, to purchase from us additional 8% Convertible Debentures, of like tenor, with face amounts of up to an aggregate of $1,100,000 (and with a proportional number of accompanying common stock warrants of like tenor, up to a total of 1,800,032 additional warrants). On April 11, 2024, Alpha assigned this option to Yi Hua Chen, who exercised it in full on April 12, 2024 (see Note 8 - Convertible Debt to the Company’s condensed consolidated financial statements).

### NanoSynex Funding Agreement

As a condition to our acquisition of a majority voting equity interest in NanoSynex from Alpha and NanoSynex, we entered into a Master Agreement for the Operational and Technological Funding of NanoSynex (the “Funding Agreement”), on May 26, 2022, pursuant to which we agreed to fund NanoSynex up to an aggregate of approximately $10.4 million, subject to NanoSynex’s achievement of certain performance milestones specified in the Funding Agreement and the satisfaction of other terms and conditions described in the Funding Agreement.

On July 20, 2023, we entered into the NanoSynex Amendment, which amended the Funding Agreement, pursuant to which the Company agreed to, among other things, forfeit 281,000 Series B Preferred Shares of NanoSynex held by the Company, resulting in our ownership in NanoSynex being reduced from approximately 52.8% to approximately 49.97% of the voting equity of NanoSynex. In addition, we agreed to cancel approximately $3.0 million of promissory notes which NanoSynex had issued to us under the NanoSynex Funding Agreement, relieving NanoSynex of any repayment obligations to us with respect to such notes. The surrender of shares reducing our interest in NanoSynex from approximately 52.8% to approximately 49.97% occurred on July 20, 2023. Accordingly, NanoSynex was deconsolidated from our financial statements as of July 20, 2023, and is reported as Discontinued Operations in this Quarterly Report.

The NanoSynex Amendment superseded any payment obligations contemplated by the original Funding Agreement and amended our obligations to provide funding to NanoSynex, except we agreed to provide future funding as follows: (i) $560,000 on or before November 30, 2023, and (ii) $670,000 on or before March 31, 2024, in each case issued in the form of a promissory note to the Company with a face value in the amount of such funding. However, on November 22, 2023, in full settlement of any additional funding obligations to NanoSynex, we forfeited certain of our shares of Series A-1 Preferred Stock of NanoSynex in an amount that reduced our ownership in NanoSynex from approximately 49.97% to 39.90%. Our investment in NanoSynex will be accounted as an equity method investment prospectively from the July 20, 2023 deconsolidation date.

### Marizyme

On April 11, 2024, we entered into a Co-Development Agreement with Marizyme, Inc. (“Marizyme”). Under the Co-Development Agreement (as amended on August 6, 2024), we agreed to pay Marizyme a Funding Payment of up to $1,750,000 and an Exclusivity Fee of $200,000. The Exclusivity Fee of $200,000 and a Funding Payment of $500,000 was paid to Marizyme on April 12, 2024. The Exclusivity Fee entitled us to an exclusivity period until May 31, 2024 for purposes of proposing and outlining a broader strategic relationship with Marizyme with regard to Marizyme’s DuraGraft business. The Funding Payment is designed to provide financial support for commercialization of Marizyme’s DuraGraft™ vascular conduit solution, which is indicated for adult patients undergoing coronary artery bypass grafting surgeries and is intended for the flushing and storage of the saphenous vein grafts used in coronary artery bypass grafting surgery. In return for the Funding Payment we will receive quarterly a 33% payment in the nature of royalties on any Net Sales (as defined with a meaning tantamount to gross profit on net sales) of DuraGraft, capped at double the amount of the Funding Payment cash provided. No such payments-in-the-nature-of-royalties would accrue until after DuraGraft has been launched in the United States and a cumulative total of $500,000 of DuraGraft Net Sales have been made in the United States.

On July 15, 2024, the Company advanced to Marizyme, Inc., a Nevada corporation (“Marizyme”) $1,250,000 against which Marizyme had previously delivered its demand promissory note to the Company of like principal amount dated July 12, 2024 (the “Marizyme Note”). The Marizyme Note bears interest the rate of eighteen percent (18%) per annum. Marizyme may pre-pay all or any part of the outstanding principal or interest of the Marizyme Note at any time and from time to time, in whole or in part, without premium or penalty.

### Other Service Agreements

We enter into contracts in the normal course of business, including with clinical sites, contract research organizations, and other professional service providers for the conduct of clinical trials, contract manufacturers for the production of our product candidates, contract research service providers for preclinical research studies, professional consultants for expert advice and vendors for the sourcing of clinical and laboratory supplies and materials. These contracts generally provide for termination on notice, and therefore are cancelable contracts.

### Cash Flows

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

| Net cash (used in) provided by: | For the Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Operating activities | $(2,258,118) | $(5,562,416) |
| Investing activities | 350,000 | (246,418) |
| Financing activities | 1,625,000 | — |
| Effect of exchange rate on cash | — | 115,803 |
| Net decrease in cash and restricted cash | **$(283,118)** | **$(5,693,031)** |

#### Net Cash Used in Operating Activities

During the six months ended June 30, 2024, operating activities used $2.3 million of cash, primarily resulting from a loss from continuing operations of $3.5 million. Cash flows from operating activities for the six months ended June 30, 2024 were positively impacted by adjustments for $0.4 million loss on issuance of convertible debt, $0.1 million in stock-based compensation expense, $0.3 million in accretion of discount on convertible debt, $0.2 million loss on monthly redemptions of convertible debt into common stock, and a $0.8 million decrease in prepaid expenses and other assets and a $0.5 million increase in accrued expenses and other current liabilities. Cash flows from operating activities for the six months ended June 30, 2024 were negatively impacted by adjustments for a $0.4 million gain on change in fair value of warrant liabilities, a $0.2 million gain on change in fair value of derivative liabilities, a $0.1 million gain on voluntary conversion of convertible debt into common stock and a $0.4 million decrease in accounts payable.

During the six months ended June 30, 2023, operating activities used $5.6 million of cash, primarily resulting from a loss from continuing operations of $6.8 million. Cash flows from operating activities for the six months ended June 30, 2023 were positively impacted by adjustments for $0.9 million in stock-based compensation expense, a $1.1 million loss on voluntary conversion of convertible debt, accretion of discount of $0.8 million on convertible debt, and a $0.6 million increase in accounts payable, a $0.2 million decrease in prepaid expenses and other assets and a $0.3 million increase in accrued expenses and other current liabilities. Cash flows from operating activities for the six months ended June 30, 2023 were negatively impacted by an adjustment for a $1.5 million decrease in fair value of warrant liabilities and net cash used in discontinued operations of $1.2 million.

#### Net Cash Provided by (Used in) Investing Activities

During the six months ended June 30, 2024, net cash provided by investing activities from disposal of discontinued operations was $350,000, due to the early release of escrow from the sale of Qualigen, Inc.

During the six months ended June 30, 2023, net cash used in investing activities from discontinued operations was approximately $246,000, due to purchase of property and equipment.

#### Net Cash Provided by Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2024 was $1,625,000, of which $1,475,000 was due to issuances of convertible debt, and $150,000 was due to warrant exercises.

Net cash provided by financing activities for the six months ended June 30, 2023 was $0.

## Market risk

As filed, 163 characters.

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.

## Controls and procedures

As filed, 3,877 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2024, the end of the period covered by this Quarterly Report.

Based on this evaluation, our principal executive officer and principal financial officer have concluded that, due to the material weakness described below, our disclosure controls and procedures as of June 30, 2024 were not effective to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act’), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. We believe that a disclosure controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the disclosure controls system are met, and no evaluation of disclosure controls can provide absolute assurance that all disclosure control issues, if any, within a company have been detected.

### Changes in Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP. As of December 31, 2023, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework, or 2013 Framework. In connection with the audit of our financial statements as of and for the year ended December 31, 2023, we identified material weaknesses related to a lack of sufficient number of personnel within our accounting function to adequately segregate duties, and we have not designed and implemented effective Information Technology General Controls (“ITGC”) related to access controls to financial accounting systems. We lack the resources to employ additional personnel to help mitigate these material weaknesses and we foresee that these material weaknesses will not be remediated until we receive additional funding to support our accounting department. We cannot assure you that these or other measures will fully remediate the material weakness in a timely manner.

There was no change in our internal control over financial reporting in the second quarter of 2024.

Notwithstanding the identified material weakness, our management believes that the condensed consolidated financial statements included in this Quarterly Report fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP. Nonetheless, we also believe that an internal control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the internal control system are met, and no evaluation of internal control can provide absolute assurance that all internal control issues and instances of fraud, if any, within a company are detected.

## Risk factors

As filed, 640 characters.

The Company’s business, reputation, results of operations and financial condition, as well as the price of its stock, can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the Company’s 2023 Annual Report under the heading “Risk Factors.” When any one or more of these risks materialize, the Company’s business, reputation, results of operations and financial condition, as well as the price of its stock, can be materially and adversely affected. Except as described below, there have been no material changes to the Company’s risk factors since the 2023 Annual Report.

Filed Aug 14, 2024.
Source: SEC EDGAR, the filing index for accession 0001493152-24-032161. Last ingested by Listed: Oct 26, 2026, 17:26 ET. No prices; not investment advice.