10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-37428

Qualigen Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware	26-3474527
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2042 Corte Del Nogal, Carlsbad, California 92011

(Address of principal executive offices) (Zip Code)

(760) 918-9165

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Exchange on Which Registered
Common Stock, par value $0.001 per share	QLGN	The Nasdaq Capital Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definitions of “large accelerated filer, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of June 30, 2021, the aggregate market value of the registrant’s common stock held by non-affiliates was approximately $57,063,765 based on the closing price for the common stock of $1.99 on that date. Shares of common stock held by the registrant’s executive officers and directors have been excluded from this calculation, as such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of March 25, 2022, there were 35,295,541 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for the 2022 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the period covered by this Annual Report on Form 10-K, are incorporated by reference in Part III, Items 10 to 14 of this Annual Report on Form 10-K. Except for the portions of the Proxy Statement specifically incorporated by reference in this Form 10-K, the Proxy Statement shall not be deemed to be filed as part hereof.

TABLE OF CONTENTS

		Page Number
Part I
Item 1	Business	3
Item 1A	Risk Factors	13
Item 1B	Unresolved Staff Comments	27
Item 2	Properties	27
Item 3	Legal Proceedings	27
Item 4	Mine Safety Disclosures	27
Part II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	27
Item 6	[Reserved]	28
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 7A	Quantitative and Qualitative Disclosure About Market Risk	34
Item 8	Consolidated Financial Statements and Supplementary Data	34
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	62
Item 9A	Controls and Procedures	62
Item 9B	Other Information	62
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	62
Part III
Item 10	Directors, Executive Officers and Corporate Governance	63
Item 11	Executive Compensation	63
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	63
Item 13	Certain Relationships and Related Transactions, and Director Independence	63
Item 14	Principal Accounting Fees and Services	63
Part IV
Item 15	Exhibits and Financial Statement Schedules	64
Item 16	Form 10-K Summary	69
	Signatures	70

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements by Qualigen Therapeutics, Inc. that involve risks and uncertainties and reflect our judgment as of the date of this Report. These statements generally relate to future events or our 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 our 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.

These forward-looking statements include, but are not limited to, statements about:

● our ability to successfully develop any drugs or therapeutic devices;

● our ability to progress our drug candidates or therapeutic devices 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 or therapeutic devices;

● our ability to procure or earn sufficient working capital to complete the development, testing and launch of our prospective therapeutic products;

● the likelihood that patents will issue on our owned and in-licensed patent applications;

● our ability to protect our intellectual property;

● our ability to compete;

● our ability to maintain or expand market demand and/or market share for our diagnostic products generally, particularly in light of COVID-19-related deferral of patients’ physician-office visits and in view of FastPack reimbursement pricing challenges; and

● our ability to maintain our diagnostic sales and marketing engine without interruption once our distribution agreement with Sekisui expires.

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 Annual 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 Annual 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 Annual Report, they may not be predictive of results or developments in other future periods. Any forward-looking statement that we make in this Annual Report speaks only as of the date of this Annual Report, and we disclaim any intent or obligation to update these forward-looking statements beyond the date of this Annual 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.

PART I

As used in this Annual Report, unless the context suggests otherwise, “we,” “us,” “our,” “the Company” or “Qualigen” refer to Qualigen Therapeutics, Inc.

Item 1. Business

Overview

We are a diversified life sciences company focused on developing treatments for adult and pediatric cancers with potential for Orphan Drug designation, while also commercializing diagnostics. Our cancer therapeutics pipeline includes QN-302, QN-247 and RAS-F. Our investigational QN-302 compound is a small molecule G4 selective transcription inhibitor with strong binding affinity to G4s prevalent in cancer cells. Such binding could, by stabilizing the G4s against “unwinding,” help inhibit cancer cell proliferation. QN-247 is a DNA coated gold nanoparticle cancer drug candidate that has the potential to target various types of cancer; the nanoparticle conjugate technology is similar to the core nanoparticle coating technology used in our blood-testing diagnostic products. The foundational aptamer of QN-247 is QN-165 (formerly referred to as AS1411), which the Company has deprioritized as a drug candidate for treating COVID-19 and other viral-based infectious diseases. RAS-F is a family of RAS oncogene protein-protein interaction inhibitor small molecules for preventing mutated RAS genes’ proteins from binding to their effector proteins; preventing this binding could stop tumor growth, especially in RAS-driven tumors such as pancreatic, colorectal and lung cancers. Although we have no ongoing development efforts for STARS, a DNA/RNA-based therapeutic device product concept for removing precisely targeted tumor-produced and viral compounds from circulating blood, we are currently identifying strategic partnering opportunities.

3

Our FastPack System diagnostic instruments and test kits are sold commercially primarily in the United States, as well as certain European countries. The FastPack System menu includes a rapid, highly accurate immunoassay diagnostic testing system for cancer, men’s health, hormone function, and vitamin D status. We provide analyzers to our customers (physician offices, clinics and small hospitals) at low cost in order to increase sales volumes of higher-margin test kits. We currently use our diagnostics distribution partner Sekisui Diagnostics, LLC (“Sekisui”) for most FastPack distribution worldwide pursuant to a distribution agreement, but maintain direct distribution for certain house accounts, including selling our total testosterone test kits to Low T Center, Inc. (“Low T”), the largest men’s health group in the United States, with 40 locations. The distribution agreement with Sekisui will expire on March 31, 2022, at which time the services currently provided by Sekisui will revert to us and we will recognize 100% of the revenue from the sales of our FastPack diagnostic instruments and test kits. We have licensed and technology-transferred our FastPack System technology to Yi Xin Zhen Duan Jishu (Suzhou) Ltd. for the China diagnostics market.

Completion of Reverse Recapitalization Transaction with Ritter Pharmaceuticals, Inc.

On May 22, 2020, we completed a “reverse recapitalization” transaction with Qualigen, Inc. (not to be confused with the Company); pursuant to which our merger subsidiary merged with and into Qualigen, Inc. with Qualigen, Inc. surviving as a wholly owned subsidiary of the Company. The Company, which had previously been known as Ritter Pharmaceuticals, Inc., was renamed Qualigen Therapeutics, Inc., and the former stockholders of Qualigen, Inc. acquired, via the recapitalization, a substantial majority of the shares of the Company. Ritter/Qualigen Therapeutics common stock, which was previously traded on the Nasdaq Capital Market under the ticker symbol “RTTR,” commenced trading on Nasdaq, on a post-reverse-stock-split adjusted basis, under the ticker symbol “QLGN” on May 26, 2020.

We are no longer pursuing the gastrointestinal disease treatment business on which Ritter Pharmaceuticals, Inc. had focused before the reverse recapitalization transaction.

4

Product Candidates

Therapeutics and Diagnostics Pipeline

Our lead drug compound QN-302 (formerly SOP1812) is being developed to target regulatory regions of cancer genes that down-regulate gene expression in multiple cancer pathways. Our anticancer drug candidate, QN-247 (formerly referred to as ALAN or AS1411-GNP) is aptamer-based and currently in development to treat a variety of cancer types, including liquid and solid tumors. Our RAS-F portfolio is designed to suppress the interaction of endogenous RAS with c-RAF, upstream of the KRAS, HRAS and NRAS effector pathways.

Our Selective Target Antigen Removal System (STARS) is a therapeutic device product concept, currently in discovery stage, designed to remove circulating tumor cells, viruses, inflammation factors and immune checkpoints.

Our deprioritized, non-core drug candidate QN-165 (formerly referred to as AS1411, thus not featured in the chart above) is a drug candidate for the potential broad-spectrum treatment of infectious diseases such as COVID-19.

QN-302 (formerly referred to as SOP1812)

We exclusively in-licensed the global rights to the G4 selective transcription inhibitor platform from University College London (“UCL”) in January 2022. The licensed technology comprises lead compound QN-302 (formerly SOP1812) and back-up compounds that target regulatory regions of cancer genes that down-regulate gene expression in multiple cancer pathways. Developed by Dr. Stephen Neidle and his group at UCL, the G4 binding concept is derived from over 30 years in nucleic acid research, including that of G4s, which are higher order DNA and RNA structures formed by sequences containing guanine-rich repeats. G4s are overrepresented in telomeres as well as promoter sequences and untranslated regions of many oncogenes. Their prevalence is therefore significantly greater in cancer cells compared to normal human cells.

G4-selective small molecules such as QN-302 and backup compounds target the regulatory regions of those cancer genes which have a high prevalence of enriched G4s in a process that can be predicted by bioinformatics. Stable G4-QN-302 complexes can be impediments to replication, transcription or translation of those cancer genes containing G4s, and the drugs’ binding to G4s stabilize the G4s against possible “unwinding.” G4 binders like QN-302 could be efficacious in a variety of cancer types with a high prevalence of G4s. This has been supported by in-vitro and in-vivo studies that have shown that G4 stabilization by QN-302 results in inhibition of target gene expression and cessation of cell growth in a variety of G4 prevalent cancers, including pancreatic ductal adenocarcinoma (“PDAC”) which represents 98% of pancreatic cancers.

Pancreatic cancer is the tenth most common cancer and fifth deadliest cancer in the United States and has one of the lowest rates of survival of all cancer types, with 98% of those diagnosed dying from the disease and one in four dying within the first month of diagnosis. The chemotherapy drug gemcitabine has been standard of care for patients with metastatic pancreatic cancer for more than 15 years. Numerous clinical trials have tested new drugs, either alone or in combination, with gemcitabine. We believe that QN-302 has the potential to demonstrate superior efficacy and activity against PDAC compared to existing agents, with a distinct mechanism of action and preclinical target profile.

In vitro studies show QN-302 potently inhibits the growth of several PDAC cell lines at low nM concentrations. Likewise, QN-302 shows longer survival duration in a KPC genetic mouse model for pancreatic cancer than gemcitabine has historically shown. Additional preclinical studies suggest activity in gemcitabine resistant PDAC. Data from therapy studies on three patient-derived PDAC xenografts indicated that QN-302 had significant anti-tumor activity in PDAC. Early safety indicators suggest no adverse toxic effects at proposed therapeutic doses in pancreatic cancer in-vivo models.

5

We plan to seek to obtain Orphan Drug status for QN-302 for one or more indications, such as PDAC. Orphan Drug status, if obtained, would be expected to confer advantages that may include faster regulatory review and increased market protection.

QN-247 (formerly referred to as ALAN or AS1411-GNP)

QN-247 is an aptamer-based drug candidate that is designed to treat different types of cancer, including liquid and solid tumors. QN-247 inhibits nucleolin, a key multi-functional regulatory protein that is overexpressed in cancer cells; QN-247 may thereby be able to inhibit the cells’ proliferation. QN-247 has shown promise in preclinical studies for the treatment of acute myeloid leukemia (“AML”). This novel technology may have several other potential applications, including enhancement of radiation therapy, enhancement of tumor imaging, and delivery of other anti-cancer compounds directly to tumor cells.

A key component of this drug candidate, DNA aptamer QN-165, has been shown, primarily on a preclinical basis, to have the potential to target and destroy cancer cells. This component has been administered in Phase 1 and Phase 2 clinical trials to over 100 AML or renal cell carcinoma cancer patients and appears to be well tolerated with no evidence of severe side effects, with at least seven patients appearing to have long-lasting clinical responses where their cancers disappeared or shrank substantially. (QN-165 may also be useful against infectious diseases – see below.)

QN-247 is an enhanced version of QN-165 (which in turn was formerly referred to as AS1411) where the DNA aptamer is attached to a gold nanoparticle.

In a Qualigen-sponsored University of Louisville (“UofL”) in-vitro preclinical study involving tumor-associated macrophages, QN-247 was shown to have stronger anti-cancer activity than QN-165 alone did. Tumor-associated macrophages are a class of immune cells present in high numbers around solid tumors and affect most aspects of tumor cell biology; they drive pathological phenomena including tumor cell proliferation, tumor angiogenesis, invasion and metastasis, immunosuppression, and drug resistance. In most cancers, the tumor-associated macrophages have an M2 phenotype, which may inhibit the anti-tumor effects of immune checkpoint inhibitor drugs, such as Merck’s Keytruda (pembrolizumab). We believe that converting these M2 macrophages to the M1 phenotype could enhance the activity of these immune checkpoint inhibitors. In the UofL study, QN-247 increased the conversion of M2 macrophages to the M1 phenotype, while also reducing the overall proliferation of macrophages.

A UofL in-vitro preclinical study with triple negative breast cancer cells (MDA-MB-231) indicated that QN-247, in combination with radiation therapy, resulted in reduced tumor cell colony size (i.e., resulted in increased tumor cell necrosis) compared to radiation alone.

We plan to seek to obtain Orphan Drug status for QN-247 for one or more indications, such as pancreatic cancer, AML and pediatric neuroblastoma. Orphan Drug status, if obtained, would be expected to confer advantages that may include faster regulatory review and increased market protection.

In October 2020, we entered into an amended sponsored research agreement with UofL to advance development of our QN-247 drug candidate. The work being performed under the original sponsored research agreement, entered into in August 2018, comprises animal studies to assess antitumor efficacy and safety of different QN-247 compositions designed to treat pediatric and adult AML. Under the amended sponsored research agreement, UofL is performing preclinical studies on AML and on additional indications including glioblastoma, a malignant brain cancer that is difficult to treat because most drugs cannot pass the blood-brain membrane, and non-small cell lung cancer, which comprises approximately 85% of the 1.6 million global lung cancer cases each year. Additionally, we and UofL will study how QN-247 may inhibit metastasis of cancer cells as a potential adjuvant therapy.

RAS-F

In July 2020, we entered into an exclusive worldwide license agreement with UofL for the intellectual property covering the “RAS-F” family of RAS oncogene protein-protein interaction inhibitor small molecule drug candidates, which would work by blocking RAS mutations directly and thereby inhibiting tumor formation (especially in pancreatic, colorectal and lung cancers). Pursuant to the license agreement, we in-licensed the “RAS-F” compound family of drug candidates and will seek to identify and develop a lead drug candidate from the compound family and, upon commercialization, will pay UofL royalties in the low-to-mid-single-digit percentages on net sales of RAS protein-protein interaction inhibitor licensed products.

6

RAS is the most common oncogene in human cancer. Activating mutations in one of the three human RAS gene isoforms (KRAS, HRAS or NRAS) are present in about one-fourth of all cancers. For example, mutant KRAS is found in 98% of pancreatic ductal adenocarcinomas, 52% of colon cancers, and 32% of lung adenocarcinomas. For these three cancer types, cancers with mutant KRAS are diagnosed in more than 170,000 people each year in the United States and cause more than 120,000 deaths. There is currently no FDA-approved direct RAS protein inhibitor available. Drugs that target signaling downstream of RAS are available; however, such drugs have shown disappointing clinical activity because RAS is a “hub” that activates multiple effectors, so drugs that block a single pathway downstream do not account for the many other activated pathways.

In March 2022, we signed an amendment to our active sponsored research agreement with UofL to extend our partnership. Under the revised agreement, the collaboration extends until the first quarter of 2023 and commits additional resources to support ongoing discovery and preclinical efforts for the RAS-F platform.

STARS™

Our FastPack diagnostic system and related core technologies are now the basis for potential blood-filtering therapeutic applications for the treatment of cancer and infectious disease. Our Selective Target Antigen Removal System (“STARS”) therapeutic device concept is intended to utilize core expertise in advanced reagents and coatings to remove disease associated agents, including viruses and tumor-produced compounds, directly from a patient’s blood. The key components of STARS, membranes coated with target capture reagents, will utilize several proprietary processes developed and used in the FastPack product lines. Proprietary STARS cartridges are expected to be designed for use with conventional dialysis or hemofiltration machines to remove immune checkpoints, metastatic cells and inflammation factors from cancer patients’ bloodstreams. We believe STARS may also be able to be developed to treat infectious diseases, by removing circulating viruses sufficiently to facilitate patient stabilization and recovery. Although we have no ongoing development efforts for STARS, we are currently identifying strategic partnering opportunities.

In August 2020, the United States Patent and Trademark Office issued to us patent No. 10,744,258 entitled “Devices and Methods for On-Line Whole Blood Treatment” regarding our STARS technology.

QN-165 (formerly referred to as AS1411)

In June 2020, we entered into an exclusive royalty-bearing license agreement with UofL for UofL’s intellectual property for the use of QN-165 as a drug candidate for the treatment of COVID-19. In September 2020 we and UofL jointly filed a United States provisional patent application, entitled “Methods of inhibiting or treating coronavirus infection, and methods for delivering an anti-nucleolin agent.” The application was filed in conjunction with Drs. Paula J. Bates and Kenneth E. Palmer from UofL, and covers methods for using QN-165 as an antiviral drug candidate to prevent SARS-CoV-2 from entering the body through mucous membranes in the nose, mouth and eyes. As stated in the patent application, we believe that QN-165 could be administered by means of inhalers, nose spray or eye drops to individuals who have recently come in contact with SARS-CoV-2, or are at high risk of contracting the virus.

We believe that the mechanism by which QN-165 is believed to work, by blocking the ability of viruses to replicate in the body, may also make the drug candidate effective against future mutations in COVID-19 as well as against other dangerous viruses including seasonal influenza. Moreover, we believe that in addition to its proposed use as a therapeutic, QN-165 might be able to be used as a protective defense or prophylaxis against COVID-19 and/or other viral-based diseases such as seasonal influenza.

On July 13, 2021, we filed an Investigational New Drug (“IND”) application with the U.S. Food and Drug Administration (“FDA”) to seek approval to commence Phase 1b/2a clinical studies with QN-165 in hospitalized COVID-19 patients. On August 11, 2021, the FDA informed us that additional preclinical studies would be required in order for such application to be cleared. There can be no assurance when (if ever) the FDA would clear this IND application or any other IND application we may file. We have decided to deprioritize the QN-165 program as our therapeutics strategy is focused on oncology.

FastPack^®

The FastPack System is a patent-protected rapid, onsite immunoassay testing system consisting of the FastPack Analyzer and the FastPack test pouch, a single-use, disposable, foil packet which includes the FastPack reagent chemistry. Since the initial conception of the system, we have developed successive versions of the analyzer and test pouch, known as “1.0,” “IP” and “PRO”, and have expanded our assay menu to nine tests, including tests for prostate cancer, thyroid function, metabolic disorders, and research applications. We have sold FastPack products in the United States and overseas for over 20 years, and since inception, our sales of FastPack products have exceeded $120 million. We manufacture the FastPack products at our FDA and International Standards Organization (“ISO”) certified Carlsbad, California facility. We maintain direct distribution for certain house accounts, including Low T, but pursuant to a distribution agreement, our diagnostics distribution partner Sekisui holds most FastPack distribution rights until March 31, 2022, after which time we will resume full commercial responsibility.

7

In July 2020, we submitted an official notification to the FDA to commence sales in the United States of our FastPack SARS-CoV-2 IgG test for COVID-19 antibodies, which was designed for use with our new FastPack PRO. The test was previously submitted to the FDA for Emergency Use Authorization (“EUA”). In April 2021, we withdrew this EUA. During the nine months during which the EUA was with the FDA, alternative tests and testing practices became widespread and we determined that there was no longer a viable business case for scale-up of the test.

Strategic Partners

As of January 2022, we have entered into a royalty-bearing license agreement with UCL, including intellectual property and know-how covering lead and backup compounds for our G4 selective transcription inhibitor program, QN-302.

We have entered into a royalty-bearing license agreement for key components of QN-247 from UofL and we have commissioned sponsored research from UofL’s development teams in order to optimize and prepare QN-247 for human trials. A separate team at UofL, funded by us under a sponsored research agreement, is developing RAS-F. We have an active royalty-bearing license agreement for the RAS-F program as well.

In 2016, we entered into an agreement with Sekisui, whereby Sekisui distributes our diagnostic product line worldwide. As described above, this distribution agreement will expire on March 31, 2022.

We in-license patents from DIAsource ImmunoAssays S.A. and Future Diagnostics B.V., for reagents that are used in our FastPack Vitamin D assay.

We had exclusive rights to the core QN-165 aptamer from Advanced Cancer Therapeutics, LLC; this agreement terminated on March 1, 2022.

Sales Channels

We currently sell our FastPack diagnostic product line primarily through our distribution partner Sekisui under a distribution agreement whereby Sekisui receives a portion of sales revenue. In the United States, Sekisui commercializes the FastPack product line through its own direct sales force and distribution agreements with McKesson Medical-Surgical, Henry Schein Medical, Medline Industries and National Distribution & Contracting, the largest distributors of physician office laboratory products in the United States. Outside of the United States, Sekisui commercializes the FastPack product line through a network of distributors in Europe, Asia, Middle East, and North Africa. Our distribution agreement with Sekisui will expire on March 31, 2022, at which time the services currently provided by Sekisui will revert to us and we will recognize 100% of the revenue from the sales of our FastPack diagnostic instruments and test kits. Once the distribution agreement expires, we do not expect any interruption to our diagnostics sales and marketing engine as we will continue to leverage established partnerships with our various distributors in both the United States and abroad.

In addition, among our other direct sales accounts, we currently sell FastPack products directly to Low T. Sales to Sekisui accounted for 62% of our total revenues during the fiscal year ended December 31, 2021, and sales to Low T accounted for 22% of our total revenues during this period. The remaining revenue was comprised of warranties and product sales to our other direct sales accounts as well as license revenues.

In October 2020, we entered into an agreement with Yi Xin Zhen Duan Jishu (Suzhou) Ltd (“Yi Xin”), pursuant to which Yi Xin obtained exclusive rights to manufacture and sell new generations of FastPack-based products as well as Yi Xin-manufactured versions of our existing FastPack 1.0, IP and PRO product lines in China. We would be entitled to receive royalties on any such sales. After May 1, 2022, Yi Xin will have the right to sell its new generations of FastPack-based diagnostic test systems throughout the world, other than to our then-current FastPack customers; and on a worldwide basis, except in the United States, Yi Xin will also have the right to sell Yi Xin-manufactured versions of our existing FastPack 1.0, IP and PRO product lines. We would be entitled to receive royalties on any of these sales, as well. After March 31, 2022, Yi Xin will have the right to buy Qualigen FastPack 1.0, IP and PRO products from us at distributor prices for resale in the United States, again excluding resales toward our then-current FastPack customers.

8

Manufacturing

We develop, manufacture and assemble our diagnostic products at our approximately 23,000 square feet facility in Carlsbad, California. Our laboratory and manufacturing practices are governed by a series of internally published Standard Operating Procedures, in accordance with FDA and ISO guidelines. While we produce many of our own raw materials and sub-components for diagnostic products, we also purchase certain materials from third-party suppliers such as Thermo Fisher Scientific, Equitech-Bio, Surmodics, OYC Americas, Amcor, 3M, VWR, Gilson, Impact Project Management, Enstrom, Hi-Tech Products, and Hamamatsu.

We do not have in-house manufacturing capability for our therapeutics product candidates.

Research and Development

For research and development of our drug candidates, we are leveraging the scientific and technical resources and laboratory facilities of UofL and UCL, through technology licensing, sponsored research, and other consulting agreements, which are focused on Aptamer technology and applications in the cancer and infectious disease fields. We would engage contract research organizations for any clinical trials of our drug candidates. We intend to focus our internal research and development on continuing support of the FastPack diagnostic line.

Regulatory Matters

We have obtained 17 FDA clearances/approvals and 28 CE Marks for our diagnostic products (FastPack analyzers, immunoassays, control kits, calibration kits and verifications kits) to date. We have not obtained FDA or other regulatory approval for any drug candidate.

Medical Device Regulatory Clearances and Approvals

The medical devices that we manufacture and market are subject to regulation by numerous worldwide regulatory bodies, including the FDA and comparable international regulatory agencies. These agencies require manufacturers of medical devices to comply with applicable laws and regulations governing development, testing, manufacturing, labeling, marketing and distribution. Medical devices are also generally subject to varying levels of regulatory control based on the risk level of the device.

In the United States, unless an exemption applies, before we can commercially distribute medical devices, we must obtain, depending on the type of device, either premarket notification clearance or premarket approval (“PMA”) from the FDA. The FDA classifies medical devices into one of three classes. Devices deemed to pose lower risks are placed in either class I or II, which typically requires the manufacturer to submit to the FDA a premarket notification requesting permission to commercially distribute the device. Some low-risk devices are exempted from this requirement. Devices deemed by the FDA to pose the greatest risks, such as life-sustaining, life-supporting or implantable devices, or devices deemed not substantially equivalent to a previously cleared device, are placed in class III, generally requiring PMA.

The premarket notification process requires that a premarket notification (510(k)) be made to the FDA to demonstrate that a new device is as safe and effective as, or substantially equivalent to, a legally marketed device (the “predicate” device). This process is generally known as obtaining 510(k) clearance for a new device. Under this process, applicants must submit performance data to establish substantial equivalence. In some instances, data from human clinical trials must also be submitted in support of a 510(k) premarket notification. If so, these data must be collected in a manner that conforms to the applicable Investigational Device Exemption (“IDE”) regulations. The FDA must issue a decision finding substantial equivalence before commercial distribution can occur. Changes to cleared devices that do not significantly affect the safety or effectiveness of the device can generally be made without additional 510(k) premarket notifications; otherwise, a new 510(k) is required.

The PMA approval process requires the submission of a PMA application to the FDA to demonstrate that the new device is safe and effective for its intended use. This approval process applies to most Class III devices and generally requires clinical data to support the safety and effectiveness of the device, obtained in adherence with IDE requirements. The FDA will approve the PMA application if it finds that there is a reasonable assurance that the device is safe and effective for its intended purpose and that the proposed manufacturing is in compliance with the Quality System Regulation (“QSR”). For novel technologies, the FDA may seek input from an advisory panel of medical experts and seek their views on the safety, effectiveness and benefit-risk of the device. The PMA process is generally more detailed, lengthier and more expensive than the 510(k) process.

9

In the European Union (“EU”), we are required to comply with the Medical Device Regulation (“MDR” or “EU MDR”), which became effective May 2021, superseding existing Medical Device Directives. Medical devices that have a valid CE Certificate to the prior Directives (issued before May 2021) can continue to be sold until May 2024 or until the CE Certificate expires, whichever comes first, providing there are no significant changes to the design or intended use. The CE Mark, which is required to sell medical devices in the EU is affixed following a Conformity Assessment and either approval from the appointed independent Notified Body or through self-certification by the manufacturer. The selected pathway to CE marking is based on device risk classification. CE marking indicates conformity to the applicable General Safety and Performance Requirements (“GSPRs”) for the MDR. The MDR changes multiple aspects of the regulatory framework for CE marking, such as increased clinical evidence requirements, changes to labelling, and new requirements, including Unique Device Identification (“UDI”), and many new post-market reporting obligations. MDR also modifies and increases the compliance requirements for the medical device industry and will continue to require significant investment over the next few years to transition all products by May 2024. The CE mark continues to be a prerequisite for successful registration in many other global geographies.

We are also required to comply with the regulations of every other country where we commercialize products before we can launch or maintain new products on the market. Regulatory requirements are becoming more stringent, with the China National Medical Product Administration (“NMPA”) recently increasing the regulatory requirements to market and maintain products in China, and the introduction of such regulatory requirements in many countries in the Middle East and Southeast Asia that previously did not have medical device regulations, or had minimal regulations. As a result of the United Kingdom’s departure from the EU, we also expect a U.K. Regulation to be implemented beginning July 2023, with requirements to sell in the U.K. already in place including appointment of a U.K. Responsible Person and device registration with The Medicines and Healthcare products Regulatory Agency (“MHRA”). In addition, other EU countries continue to impose significant local registration requirements despite the implementation of MDR.

The FDA and other worldwide regulatory agencies and competent authorities actively monitor compliance to local laws and regulations through review and inspection of design and manufacturing practices, record-keeping, reporting of adverse events, labeling and promotional practices. The FDA can ban certain medical devices, detain or seize adulterated or misbranded medical devices, order recall or market withdrawal of these devices and require notification of health professionals and others with regard to medical devices that present unreasonable risks of substantial harm to the public health. The FDA may also enjoin and restrain a company for certain violations of the Food, Drug and Cosmetic Act (“FDCA”) and the Safe Medical Devices Act, pertaining to medical devices, or initiate action for criminal prosecution of such violations. Regulatory agencies and authorities in the countries where we do business can halt production in or distribution within their respective country or otherwise take action in accordance with local laws and regulations.

International sales of medical devices manufactured in the United States that are not approved by the FDA for use in the United States, or that are banned or deviate from lawful performance standards, are subject to FDA export requirements. Additionally, exported devices are subject to the regulatory requirements of each country to which the device is exported. Some countries do not have medical device regulations, but in most foreign countries, medical devices are regulated. Frequently, regulatory approval may first be obtained in a foreign country prior to application in the United States due to differing regulatory requirements; however, other countries, such as China, for example, require approval in the country of origin first. Most countries outside of the United States require that product approvals be recertified on a regular basis. The recertification process requires the evaluation of any device changes and any new regulations or standards relevant to the device and, where needed, conduct appropriate testing to document continued compliance. Where recertification applications are required, they must be approved in order to continue selling our products in those countries.

Medical Device Quality Assurance

We are committed to providing high quality products to our customers and the patients they serve. Our quality system starts with the initial product specification and continues through the design of the product, component specification process and the manufacturing, sale and servicing of the product. Our quality system is intended to build in quality and process control and to utilize continuous improvement concepts throughout the product life. Our quality system is also designed to enable us to satisfy various international quality system regulations, including those of the FDA with respect to products sold in the United States. All of our medical device manufacturing facilities and distribution centers are certified under the ISO 13485 quality system standard, established by the ISO for medical devices, which includes requirements for an implemented quality system that applies to component quality, supplier control, product design and manufacturing operations. This certification can be obtained only after a complete audit of a company’s quality system by an independent outside auditor, and maintenance of the certification requires that these facilities undergo periodic re-examination.

United States—FDA Drug Approval Process

The research, development, testing, and manufacture of product candidates are extensively regulated by governmental authorities in the United States and other countries. In the United States, the FDA regulates drugs under the FDCA and its implementing regulations.

The steps required to be completed before a drug may be marketed in the United States include, among others:

● preclinical laboratory tests, animal studies, and formulation studies, all performed in accordance with the FDA’s Good Laboratory Practice (“GLP”) regulations;

● submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials may begin and for which progress reports must be submitted annually to the FDA;

10

● approval by an independent institutional review board (“IRB”) or Ethics Committee (“EC”) at each clinical trial site before each trial may be initiated;

● adequate and well-controlled human clinical trials, conducted in accordance with applicable IND regulations, Good Clinical Practices (“GCP”), and other clinical trial related regulations, to establish the safety and efficacy of the drug for each proposed indication to the FDA’s satisfaction;

● submission to the FDA of a New Drug Application (“NDA”) and payment of user fees for FDA review of the NDA (unless a fee waiver applies);

● satisfactory completion of an FDA pre-approval inspection of one or more clinical trial site(s) at which the drug was studied in a clinical trial(s) and/or of us as a clinical trial sponsor to assess compliance with GCP regulations;

● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current GMPs regulations;

● agreement with the FDA on the final labeling for the product and the design and implementation of any required Risk Evaluation and Mitigation Strategy (“REMS”); and

● FDA review and approval of the NDA, including satisfactory completion of an FDA advisory committee review, if applicable, based on a determination that the drug is safe and effective for the proposed indication(s).

Preclinical tests include laboratory evaluation of product chemistry, toxicity, and formulation, as well as animal studies. The conduct of the preclinical tests and formulation of the compounds for testing must comply with federal regulations and requirements, including GLP regulations. The results of the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND application, which must become effective before human clinical trials may begin. An IND application will automatically become effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions about issues such as the conduct of the trials as outlined in the IND application, and places the clinical trial(s) on a clinical hold. In such a case, the IND application sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can proceed. We cannot be certain that submission of an IND application will result in the FDA allowing clinical trials to begin.

Clinical trials necessary for product approval are typically conducted in three sequential phases, but the Phases may overlap or be combined. The study protocol and informed consent information for study subjects in clinical trials must also be approved by an IRB for each institution where the trials will be conducted, and each IRB must monitor the study until completion. Study subjects must provide informed consent and sign an informed consent form before participating in a clinical trial. Clinical testing also must satisfy the extensive GCP regulations for, among other things, informed consent and privacy of individually identifiable information.

● Phase 1—Phase 1 clinical trials involve initial introduction of the study drug in a limited population of healthy human volunteers or patients with the target disease or condition. These studies are typically designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the study drug in humans, evaluate the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness.

● Phase 2—Phase 2 clinical trials typically involve administration of the study drug to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.

● Phase 3—Phase 3 clinical trials typically involve administration of the study drug to an expanded patient population to further evaluate dosage, to provide substantial evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the study drug and to provide an adequate basis for product approval. Generally, two adequate and well-controlled Phase 3 clinical trials are required by the FDA for approval of an NDA.

11

Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after receiving initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication and are commonly intended to generate additional safety data regarding use of the product in a clinical setting. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA or, in certain circumstances, post-approval.

The FDA has various programs, including fast track designation, breakthrough therapy designation, priority review and accelerated approval, which are intended to expedite or simplify the process for the development, and the FDA’s review of drugs (e.g., approving an NDA on the basis of surrogate endpoints subject to post-approval trials). Generally, drugs that may be eligible for one or more of these programs are those intended to treat serious or life-threatening diseases or conditions, those with the potential to address unmet medical needs for those disease or conditions, and/or those that provide a meaningful benefit over existing treatments. For example, a sponsor may be granted FDA designation of a drug candidate as a “breakthrough therapy” if the drug candidate is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. If a drug is designated as breakthrough therapy, the FDA will take actions to help expedite the development and review of such drug. Moreover, if a sponsor submits an NDA for a product intended to treat certain rare pediatric or tropical diseases or for use as a medical countermeasure for a material threat, and that meets other eligibility criteria, upon approval such sponsor may be granted a priority review voucher that can be used for a subsequent NDA. From time to time, we anticipate applying for such programs where we believe we meet the applicable FDA criteria. A company cannot be sure that any of its drugs will qualify for any of these programs, or even if a drug does qualify, that the review time will be reduced.

The results of the preclinical studies and of the clinical studies, together with other detailed information, including information on the manufacture and composition of the drug, are submitted to the FDA in the form of an NDA requesting approval to market the product for one or more proposed indications. The testing and approval process requires substantial time, effort and financial resources. Unless the applicant qualifies for an exemption, the filing of an NDA typically must be accompanied by a substantial “user fee” payment to the FDA. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the product in the proposed patient population to the satisfaction of the FDA. After an NDA is accepted for filing, the FDA substantively reviews the application and may deem it to be inadequate, and companies cannot be sure that any approval will be granted on a timely basis, if at all. The FDA may also refer the application to an appropriate advisory committee, typically a panel of clinicians, for review, evaluation and a recommendation as to whether the application should be approved, but is not bound by the recommendations of the advisory committee.

Before approving an NDA, the FDA usually will inspect the facility or the facilities at which the drug is manufactured and determine whether the manufacturing and production and testing facilities are in compliance with cGMP regulations. The FDA also may audit the clinical trial sponsor and one or more sites at which clinical trials have been conducted to determine compliance with GCPs and data integrity. If the NDA and the manufacturing facilities are deemed acceptable by the FDA, it may issue an approval letter, and, if not, the Agency may issue a Complete Response Letter (“CRL”). An approval letter authorizes commercial marketing of the drug with specific prescribing information for a specific indication(s). A CRL indicates that the review cycle of the application is complete and the application is not ready for approval. A CRL may require additional clinical data and/or an additional pivotal Phase 3 clinical trial(s), and/or other significant, expensive and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. Even if such additional information is submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. The FDA could also require, as a condition of NDA approval, post-marketing testing and surveillance to monitor the drug’s safety or efficacy or impose other conditions, or a REMS that may include both special labeling and controls, known as Elements to Assure Safe Use, on the distribution, prescribing, dispensing and use of a drug product. Once issued, the FDA may withdraw product approval if, among other things, ongoing regulatory requirements are not met, certain defects exist in the NDA, or safety or efficacy problems occur after the product reaches the market.

Intellectual Property

We currently maintain a portfolio of 147 issued, allowed, in-licensed or pending patents, patent applications and provisional patent applications covering various aspects of our products and product candidates in the United States, Canada, Mexico, Europe, Japan, China, Korea, Israel, South Africa, and Australia. In addition, we have seven issued and 28 pending trademark registrations in the United States pertaining to our diagnostics and therapeutics businesses. There are currently no contested proceedings or third party claims against any Qualigen intellectual property.

Within our diagnostics patent portfolio, we hold two issued patents covering FastPack 1.0, IP and PRO and 23 issued patents covering FastPack 2.0. In addition, we in-licensed one issued patent covering our Vitamin D assay from DIAsource ImmunoAssays S.A.. We also, with Gen-Probe Incorporated, hold 24 issued joint patents covering FastPack Molecular, an inactive product program. Last, we hold five issued patents and 10 patents-pending covering our development-stage STARS theranostic system.

12

Within our therapeutics patent portfolio, we have 43 issued and 11 patents-pending, including patent applications, covering the QN-247 program set to expire 2032-2038. In addition, we have two patent applications covering the QN-165 program and 15 pending patents covering the RAS program. All 71 patents, pending patents and applications covering QN-247, QN-165, and RAS are in-licensed from ULRF. Finally, we exclusively in-licensed 11 patents, two of which are issued, from UCL covering our QN-302 program and set to expire 2030-2033.

Human Capital Management

As of March 25, 2022, we had 46 employees, 39 of whom were full-time employees. None of our employees is represented by a labor union or covered by a collective bargaining agreement.

Employee Engagement, Benefits & Development. We believe that our future success is dependent upon our ability to recruit, hire and retain exceptional employees. We frequently benchmark our compensation practices and benefits programs against those of comparable industries and in the geographic area where our facility is located. We provide our employees with competitive cash compensation, opportunities to own equity, and an employee benefit program that promotes well-being, including healthcare, a 401(k) Plan with matching contributions, and paid time-off. The success of our business is fundamentally connected to the well-being, health and safety of our employees. In an effort to protect the health and safety of our employees, we took proactive action from the earliest signs of the COVID-19 outbreak, which included implementing social distancing policies at our facilities, facilitating remote working arrangements and imposing employee travel restrictions.

Diversity & Inclusion. We value diversity across our workforce and we will continue to focus on diversity and inclusion initiatives. We seek to have an inclusive and positive culture that is centered on our shared corporate mission and values, and that is free from discrimination of any kind, including sexual or other discriminatory harassment. Our employees have multiple avenues available through which inappropriate behavior can be reported. All reports of inappropriate behavior are promptly investigated with appropriate action taken to stop such behavior.

Additional Information

Ritter Pharmaceuticals, Inc. (our predecessor) was formed as a Nevada limited liability company on March 29, 2004 under the name Ritter Natural Sciences, LLC. In September 2008, this company converted into a Delaware corporation under the name Ritter Pharmaceuticals, Inc. On May 22, 2020, upon completing the “reverse recapitalization” transaction with Qualigen, Inc., Ritter Pharmaceuticals, Inc. was renamed Qualigen Therapeutics, Inc. Qualisys Diagnostics, Inc. was formed as a Minnesota corporation in 1996, reincorporated to become a Delaware corporation in 1999, and then changed its name to Qualigen, Inc. in 2000. Qualigen, Inc. is now a wholly-owned subsidiary of the Company.

Our website address is www.qualigeninc.com. We post links to our website to the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, information statements, beneficial ownership reports and any amendments to those reports or statements filed or furnished pursuant to Sections 13(a), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All such filings are available through our website free of charge. However, the information contained on or accessed through our website does not constitute part of this Annual Report, and references to our website address in this Annual Report are inactive textual references only.

Item 1A. Risk Factors

An investment in our common stock involves risks. You should carefully consider the risks described below, together with all of the other information included in this Annual Report, as well as in our other filings with the SEC, in evaluating our business. If any of the following risks actually occur, our business, financial condition, operating results and future prospects could be materially and adversely affected. In that case, the trading price of our common stock may decline and you might lose all or part of your investment. The risks described below, which are the risks we judge (rightly or wrongly) to be the most significant to investors, are not the only ones we face. Additional risks that we currently do not judge to be among the “most significant” may also impair our business, financial condition, operating results and prospects.

Certain statements below are forward-looking statements. For additional information, see the section of this Annual Report under the caption “Cautionary Note Regarding Forward-Looking Statements.”

13

Risks Related to Our Therapeutics and Diagnostics Pipeline

Our business strategy is high-risk

We are focusing our resources and efforts primarily on development of therapeutic product candidates, which requires extensive cash needs for research and development activities. This is a high-risk strategy because there is no assurance that our products will ever become commercially viable (commercial risk), that we will prevent other companies from depriving us of market share and profit margins by selling products based on our inventions and developments (legal risk), that we will successfully manage a company in a new area of business and on a different scale than we have operated in the past (operational risk), that our product candidates will be able to achieve the desired therapeutic results (scientific risk), or that our cash resources will be adequate to develop our product candidates until we become profitable, if ever (financial risk). This may make our stock an unsuitable investment for many investors.

We do not currently have enough working capital to execute fully our strategic plan.

We have suffered recurring losses from operations, and we will need capital to support our intended development of our therapeutics business. We believe that future financings will be necessary in order for us to properly execute our strategic plan. There can be no assurance that such future financings will be able to be obtained (or, if they can be obtained, that they can be obtained on desirable terms).

We may, in the short and long-term, seek to raise capital through the issuance of equity securities or through other financing sources. To the extent that we seek to raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may include financial and other covenants that could restrict our use of the proceeds from such financing or impose other business and financial restrictions on us. In addition, we may consider alternative approaches such as licensing, joint venture, or partnership arrangements to provide long term capital. Additional funding may not be available to us on acceptable terms, or at all.

Our product candidates are still in the early stages of development. We have not begun clinical trials or obtained regulatory approval for any drug candidate or STARS. We may never obtain approval for any of our drug candidates or STARS.

We are still early in our development efforts and have not yet begun enrollment in any clinical trials evaluating QN-302, QN-247, RAS-F or STARS. There can be no assurance that QN-302, QN-247, RAS-F or STARS will achieve success in their clinical trials or obtain regulatory approval.

Our ability to generate revenues from drug candidates or STARS will depend on the successful development and eventual commercialization of QN-302, QN-247, RAS-F or STARS. The success of these products will depend on several factors, including the following:

● successful completion of preclinical studies and clinical trials;

● acceptance of an IND or IDE application by the FDA or other clinical trial or similar applications from foreign regulatory authorities for our future clinical trials for our pipeline;

● timely and successful enrollment of patients in, and completion of, clinical trials with favorable results;

● demonstration of safety, efficacy and acceptable risk-benefit profiles of our products to the satisfaction of the FDA and foreign regulatory agencies;

● receipt and related terms of marketing approvals from applicable regulatory authorities, including the completion of any required post-marketing studies or trials;

● obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our products;

● developing and implementing marketing and reimbursement strategies;

● establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others;

● acceptance of our drugs or STARS, if and when approved, by patients, the medical community and third-party payors;

● effectively competing with other therapies;

● obtaining and maintaining third-party payor coverage and adequate reimbursement; and

● maintaining a continued acceptable safety profile of the products following approval.

14

Many of these factors are beyond our control, and it is possible that none of our drug candidates or STARS will ever obtain regulatory approval even if we expend substantial time and resources seeking such approval. If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our drug candidates or STARS. For example, our business could be harmed if results of the clinical trials of QN-302, QN-247, RAS-F, any other drug candidates or STARS vary adversely from our expectations.

Drug and device development involves a lengthy and expensive process. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of QN-302, QN-247, RAS-F or STARS.

Most drug candidates fail, and taking a medical device from concept through clinical trials and regulatory approval is not easy or guaranteed. We are unable to predict when or if our drug candidates or STARS, our therapeutic medical device concept, will prove effective or safe in humans or will obtain marketing approval. Before obtaining marketing approval from regulatory authorities for the sale of these products, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of these products for humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to the outcome. A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim or preliminary results of a clinical trial do not necessarily predict final results.

We may experience numerous unforeseen events that could delay or prevent our ability to obtain marketing approval or commercialize our drug candidates or STARS, including:

● regulators or IRBs or ECs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;

● clinical trials for our drug candidates and STARS may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials, delay clinical trials or abandon product development programs;

● the number of patients required for clinical trials for our drug candidates and STARS may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or the duration of these clinical trials may be longer than we anticipate;

● competition for clinical trial participants from investigational and approved therapies may make it more difficult to enroll patients in our clinical trials;

● our third-party contractors may fail to meet their contractual obligations to us in a timely manner, or at all, or may fail to comply with regulatory requirements;

● we may have to suspend or terminate clinical trials for our drug candidates or STARS for various reasons, including a finding that the participants are being exposed to unacceptable health risks;

● our drug candidates or STARS may have undesirable or unexpected side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs/ECs to suspend or terminate the trials;

● the cost of clinical trials for our drug candidates and STARS may be greater than we anticipate; and

● the supply or quality of our drug candidates, STARS or other materials necessary to conduct clinical trials may be insufficient or inadequate and result in delays or suspension of our clinical trials.

Our product development costs will increase if we experience delays in preclinical studies or clinical trials or in obtaining marketing approvals. We do not know whether any of our planned preclinical studies or clinical trials will begin on a timely basis or at all, will need to be restructured or will be completed on schedule, or at all. For example, the FDA may place a partial or full clinical hold on any of our clinical trials for a variety of reasons.

15

Significant preclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our drug candidates or STARS or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our drug candidates or STARS.

Any delays in the commencement or completion, or termination or suspension, of our future clinical trials, if any, could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.

Before we can initiate clinical trials of a drug candidate or STARS, we must submit the results of preclinical studies to the FDA along with other information as part of an IND or IDE application or similar regulatory filing, and the FDA (or corresponding foreign regulatory body) must approve the application. We have not yet submitted our IND application for QN-302 for pancreatic cancer) and we remain in a development stage with respect to STARS and any subsequent IDE. We cannot guarantee the timing for submitting the IND application for QN-302, and we do not know when this IND application (or any other IND or IDE application) would be approved, if ever.

Before obtaining marketing approval from the FDA for the sale of QN-302, QN-247, RAS-F, any other drug candidate or STARS, we must conduct extensive clinical studies to demonstrate safety and efficacy. Clinical testing is expensive, time consuming and uncertain as to outcome. The FDA may require us to conduct additional preclinical studies for any drug candidate or STARS before it allows us to initiate clinical trials under any IND or IDE, which may lead to additional delays and increase the costs of our preclinical development programs.

Any delays in the commencement or completion of our ongoing, planned or future clinical trials could significantly increase our costs, slow down our development and approval process and jeopardize our ability to commence product sales and generate revenues. We do not know whether our planned trials will begin on time or at all, or be completed on schedule, if at all. The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to:

● the FDA disagreeing as to the design or implementation of our clinical trials or with our recommended dose for any of our pipeline programs;

● obtaining FDA authorization to commence a trial or reaching a consensus with the FDA on trial design;

● obtaining approval from one or more IRBs/ECs;

● IRBs/ECs refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial;

● changes to clinical trial protocol;

● clinical sites deviating from trial protocol or dropping out of a trial;

● failing to manufacture or obtain sufficient quantities of drug candidate, STARS or, if applicable, combination therapies for use in clinical trials;

● patients failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up;

● patients choosing an alternative treatment, or participating in competing clinical trials;

● lack of adequate funding to continue the clinical trial;

● patients experiencing severe or unexpected drug-related adverse effects;

● occurrence of serious adverse events in trials of the same class of agents conducted by other companies;

● selecting or being required to use clinical end points that require prolonged periods of clinical observation or analysis of the resulting data;

16

● a facility manufacturing our drug candidates, STARS or any of their components, including without limitation, our own facilities being ordered by the FDA to temporarily or permanently shut down due to violations of cGMP, regulations or other applicable requirements, or infections or cross-contaminations in the manufacturing process;

● lack of stability of our clinical trial material or any quality issues that arise with the clinical trial material;

● any changes to our manufacturing process that may be necessary or desired;

● Qualigen, or our third-party contractors, not performing data collection or analysis in a timely or accurate manner or improperly disclosing data prematurely or otherwise in violation of a clinical trial protocol; or

● any third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.

We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs/ECs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using the product under investigation, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs/ECs for reexamination, which may impact the costs, timing or successful completion of a clinical trial.

If we experience delays or difficulties in enrolling patients in our ongoing or planned clinical trials, our receipt of necessary regulatory approval could be delayed or prevented.

We may not be able to initiate or continue our ongoing or planned clinical trials for our products if we are unable to identify and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA. In addition, some of our competitors may have ongoing clinical trials for products that would treat the same patients as QN-302, QN-247, RAS-F or STARS, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ products. In addition, introduction of new drugs or devices to the marketplace may have an effect on the number of patients available or timing of the availability of the patients.

Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether.

Adverse side effects or other safety risks associated with QN-302, QN-247, RAS-F or STARS product candidates could delay or preclude approval, cause us to suspend or discontinue any clinical trials or abandon further development, limit the commercial profile of an approved label, or result in significant negative consequences following regulatory approval, if any.

Results of our planned clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable side effects caused by our products could result in the delay, suspension or termination of clinical trials by us or the FDA for a number of reasons.

Moreover, if our products are associated with undesirable side effects in clinical trials or have characteristics that are unexpected, we may elect to abandon or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for our products, if approved. We may also be required to modify our study plans based on findings in our clinical trials. Many drug candidates that initially showed promise in early stage testing have later been found to cause side effects that prevented further development. In addition, regulatory authorities may draw different conclusions or require additional testing to confirm these determinations.

It is possible that as we test our drug candidates and STARS in larger, longer and more extensive clinical trials, including with different dosing regimens, or as the use of our drug candidates and STARS becomes more widespread following any regulatory approval, illnesses, injuries, discomforts and other adverse events that were observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by patients.

17

The development and commercialization of pharmaceutical and device products are subject to extensive regulation, and we may not obtain regulatory approvals for QN-302, QN-247, RAS-F, STARS or any other product candidates, on a timely basis or at all.

The clinical development, manufacturing, labeling, packaging, storage, recordkeeping, advertising, promotion, export, import, marketing, distribution, adverse event reporting, including the submission of safety and other post-marketing information and reports, and other possible activities relating to QN-302, QN-247, RAS-F and STARS, as well as any other product candidate that we may develop in the future, are subject to extensive regulation.

Regulatory approval of drugs in the United States requires the submission of an NDA to the FDA and we are not permitted to market any pharmaceutical product candidate in the United States until we obtain approval from the FDA of the NDA for that product. An NDA must be supported by extensive clinical and preclinical data, as well as extensive information regarding pharmacology, chemistry, manufacturing and controls.

The current anticipated regulatory pathway for STARS in the United States will require the submission of a PMA to the FDA to demonstrate that the device is safe and effective for its intended use. This approval process generally requires clinical data to support the safety and effectiveness of the device.

FDA approval of an NDA or PMA is not guaranteed, and the review and approval process is an expensive and uncertain process that may take several years. The FDA also has substantial discretion in the approval process. The number and types of preclinical studies and clinical trials that will be required for NDA or PMA approval varies depending on the product candidate, the disease or the condition that the product candidate is designed to treat and the regulations applicable to any particular product candidate. Despite the time and expense associated with preclinical studies and clinical trials, failure can occur at any stage. The results of preclinical and any clinical trials of QN-302, QN-247, RAS-F, STARS or any other product candidate may not be predictive of the results of our later-stage clinical trials.

Clinical trial failure may result from a multitude of factors including flaws in trial design, dose selection, placebo effect, patient enrollment criteria and failure to demonstrate favorable safety or efficacy traits, and failure in clinical trials can occur at any stage. Companies in the pharmaceutical and device industry frequently suffer setbacks in the advancement of clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Based upon negative or inconclusive results, we may decide, or regulators may require us, to conduct additional clinical trials or preclinical studies. In addition, data obtained from clinical trials are susceptible to varying interpretations, and regulators may not interpret our data as favorably as we do, which may further delay, limit or prevent regulatory approval.

Even if we are able to commercialize any drug candidates, the products may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which would harm our business.

The regulations that govern marketing approvals, pricing, coverage and reimbursement for new drug products vary widely from country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our drug candidate to other available therapies. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain marketing approval for a drug candidate in a particular country, but then be subject to price regulations that delay commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenues, if any, we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more drug candidates, even if such drug candidates obtain regulatory approval.

Our ability to commercialize any drug candidates successfully also will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from third-party payors, including government healthcare programs, private health insurers and other organizations. Third-party payors decide which medications they will pay for and establish reimbursement levels. A primary trend in the U.S. healthcare industry and elsewhere has been cost containment. Third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Coverage and reimbursement may not be available for any product that we commercialize and, even if these are available, the level of reimbursement may not be satisfactory. Reimbursement may affect the demand for, or the price of, any drug candidate for which we obtain regulatory approval. Obtaining and maintaining coverage and adequate reimbursement for our products may be difficult. We may be required to conduct expensive pharmacoeconomic studies to justify coverage and reimbursement or the level of reimbursement relative to other therapies. If coverage and adequate reimbursement are not available or reimbursement is available only to limited levels, we may not be able to successfully commercialize any drug candidate for which we obtain regulatory approval.

18

There may also be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or similar regulatory authorities outside of the United States. Moreover, eligibility for coverage and reimbursement does not imply that a drug will be paid for in all cases or at a rate that covers our costs, including research, development, intellectual property, manufacture, sale and distribution expenses. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies, but also have their own methods and approval process apart from Medicare determinations.

We expect that the Affordable Care Act, as well as other healthcare reform measures that may be adopted in the future, may continue to result in more rigorous coverage criteria and in additional downward pressure on the price that providers receive for any approved therapeutics products of ours. This would adversely affect the prices we receive and could also adversely affect providers’ willingness to prescribe our therapeutics products, if any.

We may not be able to obtain or maintain orphan drug designation or exclusivity for our drug candidates.

Regulatory authorities in some jurisdictions, including the United States, may designate drugs for relatively small patient populations as “orphan drugs.” Under the Orphan Drug Act of 1983, as amended, the FDA may designate a drug candidate as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States, or if the disease or condition affects more than 200,000 individuals in the United States and there is no reasonable expectation that the cost of developing and making a drug product available in the United States for the type of disease or condition will be recovered from sales of the product.

Orphan drug designation entitles a party to financial incentives, such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers. Additionally, if a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity. This means that the FDA may not approve any other applications to market the same drug or biological product for the same indication for seven years, except in certain circumstances, including proving clinical superiority (i.e., another product is safer, more effective or makes a major contribution to patient care) to the product with orphan exclusivity. Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity, or obtain approval for the same product but for a different indication than that for which the orphan product has exclusivity. In addition, exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the orphan-designated indication or may be lost if the FDA later determines that the request for designation was materially defective.

We intend to seek orphan drug designation in the United States for QN-302, QN-247, and/or RAS-F for one or more indications, such as pancreatic cancer, AML and pediatric neuroblastoma. Orphan drug status does not ensure that we will receive marketing exclusivity in a particular market, and there is no assurance that any application for orphan drug designation will be granted. Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process.

We rely, and intend to continue to rely, on third parties to conduct our preclinical studies and clinical trials and perform some of our research and preclinical studies. If these third parties do not satisfactorily carry out their contractual duties, fail to comply with applicable regulatory requirements or do not meet expected deadlines, our development programs may be delayed or subject to increased costs or we may be unable to obtain regulatory approval.

We are dependent on third parties to conduct our planned preclinical studies and clinical trials of QN-302, QN-247, RAS-F and STARS. The timing of the initiation and completion of these trials will therefore be partially controlled by such third parties and may result in delays to our development programs. We have relied heavily, and expect to continue to rely, on UofL for preclinical studies related to QN-247 and RAS-F, and we expect to rely heavily on contract research organizations (“CROs”) and sponsored academic researchers for preclinical studies related to QN-302. As to any clinical trials, we expect to rely on CROs, sponsored academic researchers, clinical investigators and consultants to play a significant role in the conduct of these trials and the subsequent collection and analysis of data. However, we will not be able to control all aspects of their activities. Nevertheless, we are responsible for ensuring that each clinical trial is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, including GCP, requirements, and our reliance on the CROs and other third parties does not relieve us of our regulatory responsibilities.

19

There is no guarantee that any such CROs, clinical trial investigators or other third parties on which we rely will devote adequate time and resources to our development activities or perform as contractually required. If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, otherwise perform in a substandard manner, or terminate their engagements with us, the timelines for our development programs may be extended or delayed or our development activities may be suspended or terminated. If a Qualigen clinical trial site terminates for any reason, we may experience the loss of follow-up information on subjects enrolled in such clinical trial unless we are able to transfer those subjects to another qualified clinical trial site, which may be difficult or impossible.

If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for QN-302, QN-247, RAS-F or STARS and will not be able to, or may be delayed in our efforts to, successfully commercialize our products.

Manufacturing pharmaceutical products is complex and subject to product loss for a variety of reasons. We contract with third parties for the manufacture of our product candidates for preclinical testing and clinical trials and expect to continue to do so for commercialization. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.

We rely, and expect to continue to rely, on third parties for the manufacture of our products for preclinical and any clinical testing, as well as for commercial manufacture if any of our product candidates obtain regulatory approval. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.

We may be unable to establish any agreements with third-party manufacturers or to do so on favorable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:

● reliance on the third-party for regulatory, compliance and quality assurance;

● operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier or the issuance of an FDA Form 483 notice or warning letter;

● the possible breach of the manufacturing agreement by the third-party; and

● the possible termination or nonrenewal of the agreement by the third-party at a time that is costly or inconvenient for us.

We do not have manufacturing agreements in place for any of our current drug candidates. We acquire many key materials on a purchase order basis. As a result, we do not have long-term committed arrangements with respect to our product candidates and other materials. If we obtain regulatory approval for any of our product candidates, we will need to establish an agreement for commercial manufacture with a third-party.

Any performance failure on the part of our existing or future manufacturers could delay clinical development or regulatory approval. We do not currently have arrangements in place for redundant supply or a second source for bulk drug substance for QN-302, QN-247 or RAS-F.

We may enter into collaborations with third parties for the development and commercialization of our products. If those collaborations are not successful, we may not be able to capitalize on the market potential of these products. Even if they are successful, they may result in a limitation of our upside potential.

We may in the future seek third-party collaborators for the development and commercialization of some of our products on a selected basis. Our likely collaborators for any collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. We face significant competition in seeking appropriate collaborators. Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors.

20

If we do enter into any such arrangements with any third parties, we will likely have limited control over the amount and timing of resources that such collaborators dedicate to the development or commercialization of our products. Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements.

Any collaboration will necessarily result in a sharing of economics with the collaborator, which might otherwise have been captured by us directly.

Even if any of our product candidates receives regulatory approval, we may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.

If any of our product candidates receives regulatory approval, we may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. For example, current cancer treatments, such as existing targeted therapies, chemotherapy, and radiation therapy, are well established in the medical community, and doctors may continue to rely on these treatments. If our product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become profitable. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

● the efficacy and potential advantages compared to alternative treatments;

● the prevalence and severity of any side effects, in particular compared to alternative treatments;

● limitations or warnings contained in the labeling approved for our product candidates by the FDA;

● the size of the target patient population;

● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

● our ability to offer our products for sale at competitive prices;

● the convenience and ease of administration compared to alternative treatments;

● the strength of marketing and distribution support;

● publicity for our product candidates and competing products and treatments;

● the existence of distribution and/or use restrictions, such as through a Risk Evaluation and Mitigation Strategy;

● the availability of third-party payor coverage and adequate reimbursement and the willingness of patients to pay for our products in the absence of such coverage and adequate reimbursement;

● the timing of any marketing approval in relation to other product approvals;

● support from patient advocacy groups; and

● any restrictions on the use of our products together with other medications.

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

The development and commercialization of pharmaceutical and device therapeutics products is highly competitive. We face competition from major pharmaceutical and device companies, specialty pharmaceutical and device companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we are developing our product candidates and other platform technologies that may be effective in developing therapeutics. Some of these competitive products, therapies and technologies are based on scientific approaches that are similar to our approach, and others are based on entirely different approaches. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

21

We expect that our oncology drug product candidates and our STARS system will face competition from traditional small or large molecule drugs that target specific cancers that are FDA-approved and marketed for the indications that we are pursuing, in addition to off-label use of current therapeutics and therapeutics in development; and from other drugs using targeted approaches to direct payloads to cancerous tumors, as well as newer approaches, such as immuno-oncology, which attempts to harness the patient’s own immune system to fight cancer itself.

Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing and selling approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific, management and sales and marketing personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are approved for broader indications or patient populations, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other marketing approval for their products more rapidly than any approval we may obtain, which could result in our competitors establishing a strong market position before we are able to enter the market. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products. The key competitive factors affecting the success of QN-302, QN-247, RAS-F and STARS are likely to be efficacy, safety, scope and limitations of marketing approval, and availability of reimbursement.

If we are unable to obtain and maintain sufficient patent protection for our therapeutic product candidates and platform technologies, or if the scope of the patent protection is not sufficiently broad, third parties, including our competitors, could develop and commercialize products similar or identical to ours, and our ability to commercialize our product candidates successfully may be adversely affected.

Our commercial success depends significantly on our ability to protect our proprietary (and exclusively in-licensed) technologies that we believe are important to our business, including pursuing, obtaining and maintaining patent protection in the United States and other countries intended to cover the composition of matter of our product candidates, for example, QN-302, QN-247, RAS-F and STARS, the methods of use, related technologies, and other inventions that are important to our business. In addition to patent protection, we also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. If we do not adequately pursue, obtain, maintain, protect or enforce our intellectual property, third parties, including our competitors and/or collaborators, may be able to erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability.

To protect our proprietary position, we file patent applications in the United States and abroad related to our product candidates, their methods of manufacture and use. The patent application and approval process is expensive, time-consuming and complex. We may not be able to prepare, file, prosecute and maintain all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, depending on the terms of any future license agreements to which we may become a party, we may not have the right to control the preparation, filing, and prosecution of patent applications, or to maintain or defend the patents, covering technology licensed from third parties. Therefore, these patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patents, whether any issued patents will be found invalid and unenforceable or will be threatened by third parties or whether any issued patents will effectively prevent others from commercializing competing technologies and product candidates. We have not filed patent applications in every jurisdiction, and some filings are only pending in the United States.

Because patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we were the first to file or invent (before March 16, 2013) the invention disclosed in any patent application related to our product candidates or technology.

22

Moreover, because the issuance of a patent, although presumptive, is not conclusive as to its inventorship, scope, validity or enforceability, our patents or pending patent applications may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or in our patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products or limit the duration of the patent protection of our technology and products. Such challenges also may result in substantial cost and require significant time from our scientists and management, even if the eventual outcome is favorable to us.

Our and our licensors’ pending and future patent applications may not result in patents being issued that protect our product candidates, in whole or in part, or that effectively prevent others from commercializing competitive products. Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us or otherwise provide us with any competitive advantage. Our competitors and other third parties may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner. Our competitors and other third parties may also seek approval to market their own products similar to or otherwise competitive with our products. Alternatively, our competitors or other third parties may seek to market generic versions of any approved products by submitting abbreviated NDAs to the FDA during which process they may claim that patents owned by us are invalid, unenforceable or not infringed. In these circumstances, we may need to defend or assert our patents, or both, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our patents invalid or unenforceable, or that our competitors are competing in a non-infringing manner. Thus, even if we have valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives.

The term of our patents may be inadequate to protect our competitive position on our products.

Given the amount of time required for the development, testing and regulatory review of drug candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. In such an event (and if we are unable to obtain patent term extension or the term of any such extension is less than we request), our competitors and other third parties may be able to obtain approval of competing products following patent expiration and take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case. Generic competition usually results in serious price erosion for the original drug brand.

Risks Related to Our Diagnostics Business

We may face challenges distributing our diagnostic products after our distribution agreement with Sekisui expires.

We currently rely on our diagnostics distribution partner Sekisui for most of our FastPack® distribution worldwide, pursuant to the terms of our distribution agreement with Sekisui. We maintain direct distribution for certain house accounts, including Low T.

Our distribution agreement with Sekisui expires on March 31, 2022. We will incur costs re-establishing and maintaining a direct sales force, and we may also face logistical issues and relationship issues with customers during the transition period. In addition, there is the risk that the direct sales force assembled and used by us will not be as efficient and effective as Sekisui’s distribution efforts.

Our diagnostic products face heavy competition.

Our FastPack system is a mature technology and faces heavy competition from manufacturers of more complex immunoassay systems designed primarily for central laboratory use, but that also are sold to physician offices. Many of our competitors have substantially greater financial, technical, research and other resources and capabilities. We also face competition from companies that have developed or are developing newer blood testing systems for use in physician offices. The FastPack system may not continue to be competitive in light of future technological developments by others.

Our diagnostic products are disadvantaged by reduced Medicare reimbursement and third-party payer pricing.

As noted above, a primary trend in the U.S. healthcare industry and elsewhere is cost containment. Third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medical devices, especially mature ones such as ours. Decreases in Medicare and private-insurer reimbursement for diagnostic tests such as ours in recent years are a negative factor in our attempts to maintain and grow our diagnostics business. This factor constrains the price that we can charge to providers for our diagnostic products. Moreover, if adequate reimbursement is not available or reimbursement is available only to limited levels, some physician offices, clinics and small hospitals may choose not to offer (or to discontinue offering) some or all of our diagnostic products. During the Transition Period, Low T discontinued our Total PSA test for this reason.

23

Yi Xin may not meet expectations in its China/overseas business.

We have largely ceded our overseas diagnostics business to Yi Xin. Yi Xin is a new and untested company and there is no assurance that its financial and other capabilities will enable it to succeed in commercializing FastPack-based diagnostic products. We would receive royalties from Yi Xin if and only if Yi Xin achieves sales of FastPack-based diagnostic products.

Risks Related to Employee Matters, Managing Growth, Potential Dilution, Stock Price Variability and Other Risks Related to Our Business

Our future success depends on our ability to retain key employees and to attract, retain and motivate qualified personnel.

We are highly dependent on Michael Poirier, our Chief Executive Officer and Chairman, Christopher Lotz, our Chief Financial Officer and Vice President of Finance, Amy Broidrick, our President and Chief Strategy Officer, Dr. Wajdi Abdul-Ahad, our Chief Scientific Officer and Vice President of Research & Development, Shishir Sinha, our Chief Operating Officer, and Dr. Tariq Arshad, MD, our Chief Medical Officer, as well as other members of scientific, operations and corporate development teams.

Our ability to compete depends upon our ability to attract, retain and motivate highly skilled and experienced personnel with scientific, clinical, regulatory, manufacturing and management skills and experience. We may not be able to attract or retain qualified personnel in the future. Many of the companies against which we compete have greater financial and other resources, different risk profiles and a longer history in the industry than we do. Our competitors may provide higher compensation, more diverse opportunities and/or better opportunities for career advancement. Any or all of these competing factors may limit our ability to continue to attract and retain high quality personnel, which could negatively affect our ability to successfully develop and commercialize our product candidates and to grow our business and operations as currently contemplated.

We expect that we will need to expand our development and regulatory capabilities as our product candidates progress through the clinic, or additional product candidates are developed; if any products are approved, we would have to implement sales, marketing and distribution capabilities, and as a result, we may encounter difficulties in managing growth, which could disrupt our operations.

As of March 25, 2022, we had 46 employees, 39 of whom were full-time employees. Although we outsource many drug development functions and may choose to continue to do so in the future, we expect to experience growth in the number of employees and the scope of our operations, particularly in the areas of clinical development, clinical operations, manufacturing, and regulatory affairs as we progress QN-302, QN-247, RAS-F and STARS through the clinic and develop additional product candidates. In addition, in anticipation of the expiration of our distribution agreement with Sekisui on March 31, 2022, we are currently recruiting direct sales personnel. If any of our therapeutics product candidates receives regulatory approval, we would potentially need to expand into sales, marketing and distribution. To manage anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. We may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert management and business development resources.

We currently rely, and for the foreseeable future will continue to rely, in substantial part, on certain third-party contract research organizations, sponsored academic researchers, advisors and consultants to provide certain services, including assuming substantial responsibilities for the conduct of our clinical trials and the manufacture of QN-302, QN-247, RAS-F, STARS or any of our other current or future product candidates. We cannot assure that the services of such third-party contract research organizations, sponsored academic researchers, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by our vendors or consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval of QN-302, QN-247, RAS-F, STARS or any of our other current or future product candidates or otherwise advance our business. We cannot assure that we will be able to properly manage our existing vendors or consultants or find other competent outside vendors and consultants on economically reasonable terms, or at all.

We may engage in strategic transactions that could impact liquidity, increase expenses and present significant distractions to management.

From time to time, we may consider strategic transactions, such as acquisitions of companies, businesses or assets and out-licensing or in-licensing of products, drug candidates or technologies. Additional potential transactions that we may consider include a variety of different business arrangements, including spin-offs, in-licensing, strategic partnerships, joint ventures, restructurings, divestitures, business combinations and investments. Any such transaction may require us to incur non-recurring or other charges, may increase near term or long-term expenditures and may pose significant integration challenges or disrupt management or business, which could adversely affect our operations and financial results. For example, these transactions may entail numerous operational and financial risks, including:

● exposure to unknown liabilities;

● disruption of business and diversion of management’s time and attention in order to develop acquired products, drug candidates or technologies;

24

● incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions;

● higher than expected acquisition and integration costs;

● write-downs of assets or impairment charges;

● increased amortization expenses;

● difficulty and cost in combining the operations, systems and personnel of any acquired businesses with our operations, systems and personnel;

● impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and

● inability to retain key employees of any acquired businesses.

Our reported financial condition and results of operations may fluctuate significantly from quarter to quarter and year to year, which makes them difficult to predict or understand.

We expect our financial condition and results of operations to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. In particular, the warrant liabilities from our issued “exploding warrants” (and change in the fair value of warrant liabilities, over a reporting period) results in distortions and sharp variability in reported periodic results. Accordingly, you should not blindly rely upon the results of any quarterly or annual periods as indications of future operating performance. Other investors may, however, attach undue significance to reported results which are heavily influenced by such distortions and variability, which in turn could cause our stock price to rise or fall despite there being no corresponding change in our prospects or position as a practical matter.

We have a substantial amount of derivative securities outstanding.

As of December 31, 2021 there were 4,841,856 stock options outstanding under our equity incentive plans for service providers. In addition, as of December 31, 2021, we had 9,821,399 outstanding warrants, of which 5,469,994 were held by Alpha Capital Anstalt. Outstanding stock options, warrants and preferred stock can potentially result in dilution to the holders of existing outstanding common stock.

We rely significantly upon information technology, and any failure, inadequacy, interruption or security lapse of that technology, including any cyber security incidents, could harm our ability to operate our business effectively and result in a material disruption of our product development programs.

We could be subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of information maintained in the information systems and networks of our company. Outside parties may attempt to penetrate our systems or those of our partners or fraudulently induce our employees or employees of our partners to disclose sensitive information to gain access to our data. Like other companies, we may experience threats to our data and systems, including malicious codes and computer viruses, cyber-attacks or other system failures. Any system failure, accident or security breach that causes interruptions in our operations, for us or our partners, could result in a material disruption of our product development programs and business operations, in addition to possibly requiring substantial expenditures of resources to remedy. For example, the loss of clinical trial data from completed clinical trials could result in delays in our regulatory approval efforts and we could incur significant increases in costs to recover or reproduce the data. The risk of cyber incidents could also be increased by cyberwarfare in connection with the ongoing conflict between Russia and Ukraine, including potential proliferation of malware from the conflict into systems unrelated to the conflict. To the extent that any disruption or security breach results in a loss of, or damage to, our data or applications, or inappropriate public disclosure of confidential or proprietary information, we may incur liabilities and the further development of our product candidates may be delayed.

25

The number and complexity of these security threats continue to increase over time. If a breach of our security systems or that of our partners occurs, the market perception of the effectiveness of our security measures could be harmed, we could lose business and our reputation and credibility could be damaged. We could be required to expend significant amounts of money and other resources to repair or replace information systems or networks. Although we develop and maintain systems and controls designed to prevent these events from occurring, and we have a process to identify and mitigate threats, the development and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. Moreover, despite our efforts, the possibility of these events occurring cannot be eliminated entirely.

COVID-19 has and may continue to adversely affect our business and prospects.

COVID-19 has had, and may continue to have, adverse impacts on the U.S. and world economy, health care systems, personnel availability, supply chains, social and political assumptions, and capital markets. Those impacts may be especially serious for smaller companies such as Qualigen. We could also be impacted by other pandemics, epidemics, or infectious diseases.

Our sales of diagnostic products fell significantly during 2020 (and net loss increased significantly), as deferral of patients’ non-emergency visits to physician offices, clinics and small hospitals sharply reduced demand for FastPack tests. In 2021 we experienced some recovery in demand, but this phenomenon may continue to some extent for the duration of the pandemic, although its degree will probably vary depending on progress toward suppressing the pandemic, lockdowns and similar responses, and personal and societal behavior changes arising from psychological factors. We continue to evaluate the extent to which COVID-19 may impact our business and operations and adjust risk mitigation planning and business continuity activities as needed.

Failures in our IT and storage systems, including as a result of cyber-security breaches, could significantly disrupt our business or force us to expend excessive costs.

We utilize complex IT systems to transmit and store information, including sensitive personal information and proprietary or confidential information, and otherwise to support our business and process. In the future, our systems may prove inadequate to our business needs and necessary upgrades may not operate as designed, which could result in excessive costs or disruptions in portions of our business. In particular, any disruptions, delays or deficiencies from our enterprise resource planning systems could adversely affect our ability to, among other matters, process orders, procure supplies, manufacture and ship products, track inventory, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.

Our IT and storage systems are potentially vulnerable to physical or electronic break-ins, ransomware attacks, computer viruses and similar disruptive problems. Sustained or repeated system failures that interrupt our ability to generate, maintain or access data could result in a material disruption in our operations. Furthermore, a security breach could be facilitated by ineffective protection measures, employee errors or omissions, and malfeasance. Despite our efforts to protect against cyber-attacks and security breaches, hackers and other cyber criminals are using increasingly sophisticated and constantly evolving techniques, and we may need to expend substantial additional resources to continue to protect against potential security breaches or to remediate problems caused by such attacks or any breach of our safeguards. In addition, a data security breach or ransomware attack could distract management or other key personnel from performing their primary operational duties. If such a breach leads to disclosure of consumer, customer, supplier, partner or employee information (including personally identifiable information or protected health information), it could harm our reputation, compel us to comply with disparate state and foreign breach notification laws and otherwise subject us to liability under laws that protect personal data, resulting in increased costs or loss of revenue. The costs of maintaining adequate protection against such threats are significant and are expected to continue to increase in the future and may be material to our financial statements.

Adverse global conditions, including economic uncertainty, may negatively impact our financial results.

Global conditions, disruptions in the financial markets, or inflation could adversely impact our business. In addition, the global macroeconomic environment has been and may continue to be negatively affected by, among other things, instability in global economic markets, increased U.S. trade tariffs and trade disputes with other countries, instability in the global credit markets, supply chain weaknesses, instability in the geopolitical environment as a result of the conflict between Russia and Ukraine, the withdrawal of the United Kingdom from the European Union, and other political tensions, and foreign governmental debt concerns. Such challenges have caused, and may continue to cause, uncertainty and instability in local economies and in global financial markets, which may adversely affect our business.

26

We or the third parties upon whom we depend may be adversely affected by natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

We are located in southern California, and are subject to risks posed by natural disasters, including wildfires, earthquakes and severe weather that may interfere with our operations. Extreme weather events and other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects. If a natural disaster, power outage or other event occurred that prevented Qualigen from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as the manufacturing facilities of our third-party contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for Qualigen to continue our business for a substantial period of time. Any disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event.

If we are unable to remediate the material weakness in our internal controls over financial reporting or if additional material weaknesses are discovered in our internal accounting procedures, the accuracy and timing of our financial reporting may be adversely affected, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

In connection with the audit of our 2021 consolidated financial statements, our management and independent registered public accounting firm noted a material weakness in our controls as discussed in Part 9.A. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

Any failure to develop or maintain effective internal controls over financial reporting or difficulties encountered in implementing or improving our internal controls over financial reporting could harm our operating results and prevent us from meeting our reporting obligations. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports. If we cannot provide reliable financial reports, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could drop significantly. In addition, investors relying upon this misinformation could make an uninformed investment decision, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities or to stockholder class action securities litigation.

We cannot assure you that measures being taken in order to remediate the material weakness described above will fully remediate such material weakness. We also cannot assure you that we have identified all of our existing control deficiencies or that we will not in the future have additional material weaknesses.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

We currently lease an approximately 23,000 square feet all-purpose facility in Carlsbad, California, where we conduct all our operations.

Item 3. Legal Proceedings.

The information set forth in “Litigation and Other Legal Proceedings” in Note 9 to the Consolidated Financial Statements included in this Annual Report is incorporated herein by reference.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock has been listed and traded on the Nasdaq Capital Market under the symbol “QLGN” since May 26, 2020. Before that date, there was no public market for Qualigen, Inc. common stock. As a matter of corporate law we are a continuation of Ritter Pharmaceuticals, Inc. under a different name, although for purposes of securities reporting and applicable accounting principles Qualigen, Inc. was the accounting acquirer in the May 22, 2020 reverse recapitalization. Before May 26, 2020, Ritter Pharmaceuticals, Inc. common stock traded on the Nasdaq Capital Market under the symbol “RTTR.”

Holders

As of March 25, 2022, there were 692 registered holders of record of our common stock. This figure does not reflect the beneficial ownership of shares held in nominee name.

Securities Authorized for Issuance Under Equity Compensation Plans

See Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information relating to our equity compensation plans.

Recent Sales of Unregistered Securities

On December 3, 2021, we issued a common stock warrant (the “Warrant”) to a consultant, entitling the consultant to purchase up to 600,000 of our shares of common stock at an exercise price of $1.32 per share until June 3, 2023. We relied on the exemption from registration provided under Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

27

PART II

Item 6. [Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes that are included elsewhere in this Annual Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or in other parts of this Annual Report. See “Cautionary Note Regarding Forward-Looking Statements” for additional information.

Overview

We are a diversified life sciences company focused on developing treatments for adult and pediatric cancers with potential for Orphan Drug designation, while also commercializing diagnostics. Our cancer therapeutics pipeline includes QN-302, QN-247 and RAS-F. Our investigational QN-302 compound is a small molecule G4 selective transcription inhibitor with strong binding affinity to G4s prevalent in cancer cells. Such binding could, by stabilizing the G4s against “unwinding,” help inhibit cancer cell proliferation. QN-247 is a DNA coated gold nanoparticle cancer drug candidate that has the potential to target various types of cancer; the nanoparticle conjugate technology is similar to the core nanoparticle coating technology used in our blood-testing diagnostic products. The foundational aptamer of QN-247, QN-165 (formerly referred to as AS1411), which the Company has deprioritized as a drug candidate for treating COVID-19 and other viral-based infectious diseases. RAS-F is a family of RAS oncogene protein-protein interaction inhibitor small molecules for preventing mutated RAS genes’ proteins from binding to their effector proteins; preventing this binding could stop tumor growth, especially in RAS-driven tumors such as pancreatic, colorectal and lung cancers. We are also identifying strategic partnering opportunities for STARS, a DNA/RNA-based therapeutic device product concept for removing precisely targeted tumor-produced and viral compounds from circulating blood.

Because our therapeutic candidates are still in the pre-clinical development stage, our only products that are currently commercially available are the FastPack System diagnostic instruments and test kits. Our FastPack System diagnostic instruments and test kits are sold commercially primarily in the United States, as well as certain European countries. The FastPack System menu includes rapid point-of-care diagnostic tests for cancer, men’s health, hormone function, and vitamin D status. We have always utilized a “razor and blades” pricing strategy, providing analyzers to our customers (physician offices, clinics and small hospitals) at low cost in order to increase sales volumes of higher-margin test kits. We currently rely on our diagnostics distribution partner Sekisui for most FastPack distribution worldwide pursuant to a distribution agreement, but maintain direct distribution for certain house accounts, including selling our total testosterone test kits to Low T, the largest men’s health group in the United States, with 40 locations. The distribution agreement with Sekisui will expire on March 31, 2022, at which time the services currently provided by Sekisui will revert to us and we will recognize 100% of the revenue from the sales of our FastPack diagnostic instruments and test kits. We have licensed and technology-transferred our FastPack System technology to Yi Xin Zhen Duan Jishu (Suzhou) Ltd. for the China diagnostics market.

We do not expect to be profitable before products from our therapeutics pipeline are commercialized, because we foresee that research and development expenses on the therapeutics programs will significantly exceed the profits, if any, that we might have from our diagnostics products. To experience losses while therapeutic products are still under development is, of course, typical for biotechnology companies.

Our financial statements do not separate out our diagnostics-related activities and our therapeutics-related activities. Although to date all our reported revenue is diagnostics-related, our reported expenses represent the total of our diagnostics-related and therapeutics-related expenses.

Completion of Reverse Recapitalization Transaction with Ritter

On May 22, 2020, we completed a “reverse recapitalization” transaction with Qualigen, Inc. (not to be confused with the Company); our merger subsidiary merged with and into Qualigen, Inc. with Qualigen, Inc. surviving as a wholly owned subsidiary of the Company. The Company, which had previously been known as Ritter Pharmaceuticals, Inc., was renamed Qualigen Therapeutics, Inc., and the former stockholders of Qualigen, Inc. acquired, via the recapitalization, a substantial majority of the shares of the Company. Ritter/Qualigen Therapeutics common stock, which was previously traded on the Nasdaq Capital Market under the ticker symbol “RTTR,” commenced trading on Nasdaq, on a post-reverse-stock-split adjusted basis, under the ticker symbol “QLGN” on May 26, 2020.

28

Because Qualigen, Inc. was the accounting acquirer in the reverse recapitalization transaction, all references to financial figures of “the Company” presented in the accompanying financial statements and Notes are those of Qualigen, Inc.; the corresponding figures of Ritter Pharmaceuticals, Inc. have been disregarded. Moreover, references in this Annual Report to “our” pre-May 22, 2020-merger history, securities and agreements are references to the pre-May 22, 2020 merger history, securities and agreements of Qualigen, Inc., except where otherwise expressly specified.

We are no longer pursuing the gastrointestinal disease treatment business on which Ritter Pharmaceuticals, Inc. had focused before the reverse recapitalization transaction.

Distribution and Development Agreement with Sekisui

In May 2016, through our wholly-owned diagnostics subsidiary Qualigen, Inc., we entered into a Distribution and Development Agreement (the “Distribution Agreement”) with Sekisui. Under the Distribution Agreement, Sekisui currently serves as the exclusive worldwide distributor for FastPack products (although we retain certain specific accounts for direct transactions). Sekisui’s exclusive distribution arrangements are effective until March 31, 2022.

Under the Distribution Agreement, we began development of a proposed “FastPack 2.0” product line, which if successfully introduced by us would have been distributed by Sekisui. Between May 2016 and January 2018, Sekisui paid us a total of approximately $5.5 million upon the achievement of specified development milestones.

Under this program, we developed a FastPack 2.0 diagnostic test for a new whole blood vitamin D assay, and we then conducted a clinical trial of it in March 2019. We determined in May 2019 that it was uncertain whether the results of the trial would enable the test to receive FDA approval, and our FastPack 2.0 project with Sekisui was discontinued. Currently no further FastPack 2.0 analyzer or test development is ongoing, and we have licensed and transferred our FastPack 2.0 technology to Yi Xin Zhen Duan Jishu (Suzhou) Ltd. for them to further develop and commercialize.

We became obligated to pay Sekisui $0.9 million for $0.5 million in research and development costs advanced by Sekisui to us and for the reimbursement of $0.4 million in certain out-of-pocket development and preclinical study expenses incurred by Sekisui. We satisfied these amounts (plus interest) by payment in full on July 21, 2020.

The Distribution Agreement with Sekisui is scheduled to expire on March 31, 2022, at which time the services currently provided by Sekisui will revert to us and we will recognize 100% of the revenue from the sales of our FastPack diagnostic instruments and test kits.

Technology Transfer Agreement with Yi Xin

Through our wholly-owned diagnostics subsidiary Qualigen, Inc., we entered into a Technology Transfer Agreement dated as of October 7, 2020 with Yi Xin, of Suzhou, China, which authorizes Yi Xin to develop, manufacture and sell new generations of diagnostic test systems based on our core FastPack technology. In addition, the Technology Transfer Agreement authorizes Yi Xin to manufacture and sell our current generations of FastPack System diagnostic products (1.0, IP and PRO) in China.

Under the Technology Transfer Agreement, we have 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 statement of operations for the fiscal year ended December 31, 2021. We will receive low- to mid-single-digit royalties on any future new-generations and current-generations product sales by Yi Xin.

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

We have provided Yi Xin the exclusive rights for China – which is a market we have not otherwise entered – both for Yi Xin’s new generations of FastPack-based products and for Yi Xin-manufactured versions of our existing FastPack product lines. Yi Xin will also have 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); any such non-China sales would, until March 31, 2022, need to be through Sekisui. After March 31, 2022, Yi Xin will have 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). Yi Xin will also have the right, after March 31, 2022, to buy Qualigen-manufactured FastPack 1.0, IP and PRO products from us at distributor prices for resale in and for the United States (but not to or toward current U.S. customers of those products). We did not license Yi Xin to sell in the United States market any Yi Xin-manufactured versions of those legacy FastPack product lines, even after March 31, 2022.

29

We agreed in the Technology Transfer Agreement that we would not, after March 31, 2022, seek new FastPack customers outside the United States.

Yi Xin is a newly-formed company and is subject to many risks. There can be no assurance that Yi Xin will successfully commercialize any products or that we will receive any royalties from Yi Xin.

Warrant Liabilities

In 2004, Qualigen, Inc. issued Series C preferred stock warrants to investors and brokers in connection with a private placement. These warrants were subsequently extended and survived the May 2020 Ritter reverse recapitalization transaction and are now exercisable for Qualigen Therapeutics common stock. These warrants were so-called “exploding warrants” – as they contained a provision that if Qualigen, Inc. issued shares (except in certain defined scenarios) at a price below the warrants’ exercise price, the exercise price would be re-set to such new price and the number of shares underlying the warrants would be increased in the same proportion as the exercise price decrease. For accounting purposes, such “exploding warrants” give rise to “warrant liabilities”. Although the fair value of the warrants was immaterial at March 31, 2020, the operation of the “double-ratchet” provisions in these “exploding warrants” in connection with the reverse-recapitalization transaction now allow the holders to exercise for a significantly higher number of shares than before and at a significantly lower price than the current market price of our shares. Accounting principles generally accepted in the United States of America (“U.S. GAAP”) require us to recognize the fair value of these warrants as warrant liabilities on our Consolidated Balance Sheets and to reflect period-to-period changes in the fair value of the warrant liabilities on our Consolidated Statements of Operations. The size of these warrant liabilities was quite large ($1.7 million and $8.3 million at December 31, 2021 and 2020 respectively) and caused a significant distortion of our Consolidated Balance Sheets and our results of operations for these periods. Because this fair value will be determined each quarter on a “mark-to-market” basis, this item 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 (possibly quite large) in the fair value of the warrant liabilities and a quarter-to-quarter decrease in our stock price would result in a decrease (possibly quite large) in the fair value of the warrant liabilities. Approximately 53% of these “exploding warrants” have been exercised as of December 31, 2021, which reduced the amplitude of this variability. (There were 2,481,614 of these “exploding warrants” outstanding at December 31, 2021 and 3,378,596 of these “exploding warrants” outstanding at December 31, 2020.) We will continue to encourage the holders of these warrants to exercise them, and if the number of outstanding “exploding warrants” is further reduced the potential amplitude of the changes in the warrant liabilities will correspondingly be further reduced.

Impact of COVID-19 Pandemic

COVID-19 has had, and will continue to have, adverse impacts on the U.S. and world economy, health care systems, personnel availability, supply chains, social and political assumptions, and capital markets. Those impacts are expected to be especially serious for smaller companies such as ours. Our sales of diagnostic products fell significantly in the nine months ended December 31, 2020 (and net loss increased significantly), as deferral of patients’ non-emergency visits to physician offices, clinics and small hospitals sharply reduced demand for FastPack tests. A resurgence of the COVID-19 pandemic, or the emergence of new vaccine resistant variants of COVID-19 or some other infectious disease could have a similar impact on our future operations, although the degree of impact will probably depend on the extent of any lockdowns and similar actions taken in response to the pandemic as well as any personal and societal behavior changes arising from psychological factors.

Critical Accounting Policies and Estimates

This discussion and analysis is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these 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 financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of warrant liabilities, stock-based compensation, amortization and depreciation, inventory reserves, allowances for doubtful accounts and returns, and warranty costs. 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 consolidated financial statements appearing in “Item 8. Financial Statements and Supplementary Data,” 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:

● Revenue recognition

● Allowance for doubtful accounts and returns

● Inventory

● Research and development

● Warrant liabilities and stock-based compensation

● Lease accounting

● Long lived assets

30

On January 1, 2021, the Company early adopted ASU No. 2021-04 Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) and ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”6, (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.”

During the nine months ended December 31, 2020, the Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, and Accounting Standards Codification Topic 842, Leases. The application of other existing accounting policies was not changed as of and for the year ended December 31, 2021.

Results of Operations

Comparison of the Twelve-Month Year Ended December 31, 2021 (“Fiscal 2021”) and Nine Months Ended December 31, 2020 (the “Transition Period”)

The following table summarizes our results of operations for Fiscal 2021 and the Transition Period:

	For the Year Ended December 31,			For the Nine Months Ended December 31,
	2021			2020
REVENUES
Net product sales	$	5,021,721		$	2,849,561
License revenue		632,004			—
Total revenues		5,653,725			2,849,561
EXPENSES
Cost of product sales		4,332,485			2,640,148
General and administrative		11,724,964			7,105,337
Research and development		11,716,718			3,316,099
Sales and marketing		542,594			307,903
Impairment loss on construction in progress		—			1,376,000
Total expenses		28,316,761			14,745,487
LOSS FROM OPERATIONS		(22,663,036	)		(11,895,926	)
OTHER EXPENSE (INCOME), NET
(Gain) loss on change in fair value of warrant liabilities		(4,723,187	)		8,310,101
Gain on loan extinguishment		—			(451,345	)
Interest (income) expense, net		(42,693	)		48,039
Other income, net		(5,446	)		(256,354	)
Total other expense (income), net		(4,771,326	)		7,650,440
LOSS BEFORE PROVISION FOR INCOME TAXES		(17,891,710	)		(19,546,366	)
PROVISION FOR INCOME TAXES		5,427			—
NET LOSS	$	(17,897,137	)	$	(19,546,366	)

Revenues

Our operating revenues are primarily generated from sales of diagnostic tests. Revenues for Fiscal 2021 were $5.6 million compared to $2.8 million for the Transition Period, an increase of $2.8 million, or 98%. This increase was primarily due to $2.2 million in increased diagnostic product sales, as well the recognition of approximately $0.6 million in license revenue from Yi Xin under the Technology Transfer Agreement, compared with no license revenue in the Transition Period.

Net product sales

Net product sales are primarily generated from sales of diagnostic tests. Net product sales for Fiscal 2021 and the Transition Period were approximately $5.0 million and $2.8 million, respectively, representing an increase of approximately $2.2 million, or 76%. This improvement was due to a recovery from the effects of COVID-19 pandemic during the prior year as well as the fact that the Transition Period had only nine months versus a full twelve months in Fiscal 2021.

License Revenue

License revenue for Fiscal 2021 was $0.6 million, due to the recognition of revenue from Yi Xin under the Technology Transfer Agreement. There was no license revenue for the Transition Period.

31

Expenses

Cost of Product Sales

Cost of product sales increased to $4.3 million for Fiscal 2021, or 86% of net product sales, compared to $2.6 million for the Transition Period, or 93% of net product sales. The increase in dollars (even after recognizing and adjusting for the fact that the Transition Period had only nine months and Fiscal 2021 had twelve months) and decrease in percentage of net product sales were primarily due to increased unit sales of product, which resulted in economies of scale.

General and Administrative Expenses

General and administrative expenses increased sharply from $7.1 million for the Transition Period to $11.7 million for Fiscal 2021. This increase was primarily due to $2.1 million in employee/director stock-based compensation expense, a $0.7 million increase in professional fees (including $0.3 million in stock-based compensation), a $0.6 million increase in insurance expenses, and a $1.2 million increase in payroll expenses, primarily due to the addition of a new President and Chief Strategy Officer position, higher strategic consulting and proxy distribution costs, as well as the fact that the Transition Period had only nine months versus a full twelve months in Fiscal 2021.

Research and Development Costs

Research and development costs include therapeutic and diagnostic research and product development costs. Research and development costs increased sharply from $3.3 million for the Transition Period to $11.7 million for Fiscal 2021. Of the $3.3 million of research and development costs for the Transition Period (nine months), $2.5 million (75%) was attributable to therapeutics and $0.8 million (25%) was attributable to diagnostics. Of the $11.7 million of research and development costs for Fiscal 2021 (twelve months), $10.4 million (88%) was attributable to therapeutics and $1.3 million (12%) was attributable to diagnostics.

The increase in diagnostic research and development costs was primarily due to $0.3 million in increased stock-based compensation expense, and $0.2 million resulting from the fact that the Transition Period had only nine months and Fiscal 2021 had twelve months. The increase in therapeutics research and development costs was primarily due to an increase of $5.6 million in expenses related to the potential application of QN-165 for the treatment of COVID-19 ($4.3 million in drug compound manufacturing costs, and a $1.3 million increase in other pre-clinical research costs), as well as pre-clinical research and development cost increases of approximately $0.7 million for QN-247, $0.5 million for RAS, and an increase of approximately $0.8 million in payroll-related expenses primarily due to the addition of a new Chief Medical Officer position, and $0.3 million in increased patent costs for Fiscal 2021 (twelve months), all as compared to the Transition Period (nine months). On August 11, 2021, the FDA informed us that additional pre-clinical studies would be required in order for the FDA to clear the IND application that we filed on July 13, 2021 for clinical studies of QN-165 for the treatment of COVID-19 in hospitalized patients. We have since decided to deprioritize this QN-165 program.

For the future, we expect our therapeutic research and development costs to continue to significantly outweigh our diagnostic research and development costs, and to be relatively lower in periods when we are focusing on pre-clinical activities and meaningfully higher in periods when we are provisioning for and conducting clinical trials, if any.

Sales and Marketing Expenses

Sales and marketing expenses for Fiscal 2021 increased to approximately $0.5 million as compared to $0.3 million for the Transition Period, primarily due to an increase in payroll-related expenses, and the fact that the Transition Period had only nine months and Fiscal 2021 had twelve months.

Impairment Loss

During the Transition Period, we evaluated the ongoing value of construction in progress related to new FastPack manufacturing equipment. Based on this evaluation, we determined the asset was impaired and wrote it down by $1.4 million to its estimated fair value of $0. There was no impairment loss for Fiscal 2021.

32

Other Expense

Change in Fair Value of Warrant Liabilities

During Fiscal 2021 we experienced (primarily due to a decrease in our stock price during the period) a $4.7 million gain in other income because of the change in fair value of the warrant liabilities arising from our “exploding warrants” series (containing a “double-ratchet” provision) issued by Qualigen, Inc. many years ago to brokers and investors in connection with a 2004 private placement. The estimated fair value of these warrants decreased to $1.7 million as of December 31, 2021 from $8.3 million as of December 30, 2020. For the Transition Period, the loss on change in fair value of warrant liabilities was $8.3 million due to an associated increase in the market price of our common stock. Typically, a decline in our stock price would result in a decline in the fair value of our warrant liabilities, generating a gain, while an increase in our stock price would result in an increase in the fair value of our warrant liabilities, generating a loss.

Because the fair value of the warrant liabilities will be determined each quarter on a “mark-to-market” basis, this item is likely to continue to result in significant variability in our future quarterly and annual Consolidated Statements of Operations based on unpredictable changes in our public market common stock price and the number of warrants outstanding at the end of each quarter.

Gain on Loan Extinguishment

We recognized a $0.5 million gain on loan extinguishment in the Transition Period when the federal government forgave our CARES Act loan. There was no similar item in Fiscal 2021.

Interest (Income) Expense, Net

There was $43,000 in net interest income during Fiscal 2021 versus net interest expense of $48,000 during the Transition Period. During the Transition Period, interest on $1.7 million principal amount of convertible notes payable ceased to accrue when they automatically converted in May 2020 upon the closing of the reverse recapitalization transaction. In addition, between April 1, 2020 and December 31, 2020 we paid off our revolving factoring line of credit facility and repaid approximately $0.9 million to Sekisui. During the second quarter of Fiscal 2021 we paid off our Equipment Financing Agreements, which eliminated all of our notes payable. Interest income was generated during both periods from cash in interest bearing bank depository accounts.

Other (Income) Expense, Net

There was $5,000 of other income during Fiscal 2021, and approximately $256,000 in other income during the Transition period, of which $250,000 resulted from a license option fee for our FastPack 2.0 technology.

Liquidity and Capital Resources

As of December 31, 2021, we had $17.5 million of cash. However, we have suffered recurring losses from operations and expect to continue to do so. Based on our current cash position, and assuming currently planned expenditures and level of operations, we believe we have sufficient capital to fund operations for the twelve-month period subsequent to the date of this Annual Report.

As a pre-clinical development-stage therapeutics biotechnology company, we expect to continue to have net losses and negative cash flow from operations, which over time will challenge our liquidity. There is no assurance that profitable operations will ever be achieved, or, if achieved, could be sustained on a continuing basis. In order to fully execute our business plan, including full clinical trials of therapeutic drug candidates, we will require significant additional financing. There can be no assurance that further financing can be obtained on favorable terms, or at all. If we are unable to obtain funding, we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect our business prospects.

Our Consolidated Balance Sheet as of December 31, 2021 included $1.7 million of warrant liabilities. We do not consider that the warrant liabilities constrain our liquidity, as a practical matter. Our current liabilities as of December 31, 2021 included $0.9 million of accounts payable and $1.8 million of accrued expenses and other current liabilities.

Contractual Obligations and Commitments

On December 15, 2021, our wholly-owned subsidiary Qualigen, Inc. entered into a Second Amendment to Lease with Bond Ranch LP. This Amendment extended the Company’s triple-net leasehold on its existing 22,624-square-foot headquarters/manufacturing facility at 2042 Corte del Nogal, Carlsbad, California for the 61-month period of November 1, 2022 to November 30, 2027. Over the 61 months, the base rent payable will total $1,950,710; however, the base rent for the first 12 months of the 61-month period will be only $335,966. Additionally, Qualigen, Inc. is entitled to a $339,360 tenant improvement allowance. See Note 9 of the consolidated financial statements for additional details.

We have no material contractual obligations not fully recorded on our Consolidated Balance Sheet or fully disclosed in the notes to the financial statements.

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 fixed and 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.

These commitments include multiple license and sponsored research agreements with UofL Research Foundation (“ULRF”). Under these agreements, we will take over development, regulatory approval and commercialization of various drug compounds from ULRF and are responsible for maintenance of the related intellectual property portfolio. We agreed to reimburse ULRF for sponsored research expenses of up to $805,000 and prior patent costs of up to $200,000 for QN-247. As of December 31, 2021 we had up to $136,000 remaining due under this sponsored research agreement for QN-247. We also agreed to reimburse ULRF for sponsored research expenses of up to $1.8 million and prior patent costs of up to $112,000 for RAS. As of December 31, 2021 we had up to $0.7 million remaining due under this sponsored research agreement for RAS. This sponsored research agreement for RAS was subsequently amended in March 2022 (see Note 15). We agreed to reimburse ULRF for sponsored research expenses of up to $430,000 and prior patent costs of up to $24,000 for QN-165. As of December 31, 2021 we had no remaining amounts due under this sponsored research agreement for QN-165. For these agreements we are required to make patent maintenance payments and payments based upon development, regulatory and commercial milestones for any products covered by the in-licensed intellectual property. The maximum aggregate milestone payments we may be obligated to make per product are $5 million. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low single digits. The royalty is subject to reduction for any third-party payments required to be made, with a minimum floor in the low single digits. We have the right to sublicense our rights under these agreements, and we will be required to pay a percentage of any sublicense income.

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.

33

Cash Flows

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

	For the Year Ended			For the Nine Months Ended
	December 31,			December 31,
	2021			2020
Net cash provided by (used in):
Operating activities	$	(14,730,742	)	$	(10,162,935	)
Investing activities		(141,364	)		(65,094	)
Financing activities		8,433,808			34,051,478
Net increase (decrease) in cash and cash equivalents	$	(6,438,298	)	$	23,823,449

Net Cash Used in Operating Activities

During the year ended December 31, 2021, operating activities used $14.7 million of cash, primarily resulting from a net loss of $17.9 million. Cash flows from operating activities (as opposed to net loss) for the twelve months ended December 31, 2021 were impacted by a $5.6 million increase in stock-based compensation expense, a $1.3 million decrease in prepaid expenses and other assets, a $1.0 million increase in accrued expenses and other current liabilities and a $0.4 million increase in accounts payable, due to higher costs related to therapeutics research and development. The decrease in prepaid expenses reflected in the statements of cash flows from operating activities was primarily due to the expensing during the period of $1.2 million of previous prepayments to STA Pharmaceutical Co., Ltd., a subsidiary of WuXi AppTec, which was our manufacturer of QN-165 drug compounds. Cash flows from operating activities (as opposed to net loss) for the twelve months ended December 31, 2021 were negatively impacted by a $4.7 million gain on change in fair value of warrant liabilities (as described above), and a $0.4 million decrease in deferred revenue primarily resulting from recognition of Yi Xin license revenue.

During the Transition Period, operating activities used $10.2 million of cash, resulting from a net loss of $19.5 million, largely offset by the $8.3 million loss on change in fair value of warrant liabilities. Cash flows from operating activities (as opposed to net loss) for the Transition Period were impacted by the $8.3 million loss on change in fair value of warrant liabilities (as described above), $2.8 million in employee/director stock-based compensation expense, a $1.4 million impairment loss on construction in progress and a $0.4 million write-off of patents and licenses. Cash flows from operating activities (as opposed to net loss) for the Transition Period were negatively impacted by a $1.5 million increase in prepaid expenses, payment of $0.9 million owed to Sekisui, a $0.5 million gain on CARES Act loan extinguishment and a $0.4 million decrease in accounts payable. The increase in prepaid expenses reflected in the statements of cash flows from operating activities was primarily due to $1.2 million of upfront deposits paid to STA Pharmaceutical Co., Ltd., a subsidiary of WuXi AppTec, which was our manufacturer of QN-165 drug compounds.

Net Cash Used in Investing Activities

During Fiscal 2021, net cash used in investing activities was approximately $0.1 million, primarily related to the purchase of property and equipment.

During the Transition Period, net cash used in investing activities was $0.1 million, primarily related to purchase of property and equipment, offset by cash and cash equivalents acquired in the May 2020 reverse recapitalization.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for Fiscal 2021 was approximately $8.4 million, due to $8.8 million of proceeds from sales of equity securities in a registered-direct offering to several institutional investors, and $0.5 million of net proceeds from warrant exercises, offset by $0.7 million in payments for offering costs related to the registered-direct offering and $0.1 million of principal payments on notes payable.

Net cash provided by financing activities for the Transition Period was $34.1 million, due to $34.0 million of proceeds from a reverse-recapitalization-time equity capital raise and later sales of equity securities in three registered-direct offerings to an institutional investor, $1.4 million in proceeds from the issuance of notes payable (including a $0.5 million CARES Act loan that ultimately was forgiven) and $1.3 million of net proceeds from warrant exercises, offset by $1.4 million in payments for offering costs related to the three registered-direct offerings and $1.3 million of principal payment of notes payable.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable to smaller reporting companies.

Item 8. Consolidated Financial Statements and Supplementary Data

34

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 23)

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Qualigen Therapeutics, Inc. (the “Company”) as of December 31, 2021 and December 31, 2020, the related consolidated statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2021 and for the nine months ended December 31, 2020, and the related notes to the consolidated financial statements (collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2021 and for the nine months ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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.

We 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 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. 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. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The 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: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters 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 matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Warrant Liabilities

Critical Audit Matter Description

As described in Note 7 to the consolidated financial statements, the Company’s warrant liability balance was $1.7 million at December 31, 2021. Certain of the warrants for the purchase of shares of common stock issued by the Company require liability classification and are recorded at fair value each reporting period. The Company determines the fair value of the warrants classified as liabilities utilizing a Monte Carlo simulation model.

We identified the warrant liabilities as a critical matter because, auditing the Company’s valuation of its warrant liabilities was especially challenging as the fair value is based on various inputs and significant assumptions used in Monte Carlo simulation models and certain of the assumptions were based on management’s judgement, and therefore are not objectively verifiable.

How We Addressed the Matter in Our Audit

The primary procedures we performed to address the critical audit matter included:

● Obtaining an understanding of the Company’s processes related to the determination of the fair value of the warrants.

● Assessing the methodology used by the Company to estimate the fair value by using a valuation specialist to review the Monte Carlo simulation models and assumptions used by the Company for reasonableness.

● Testing the accuracy and completeness of the underlying data used by the Company.

● Evaluating the reasonableness of management’s inputs by tracing the inputs to contracts and comparing third-party data and analyses.

● Analyzing changes in the fair value by comparing to prior periods and performing sensitivity analyses to evaluate the reasonable changes in the Company’s assumptions.

/s/ BAKER TILLY US, LLP

We have served as the Company’s auditor since 2018.

San Diego, California

March 31, 2022

35

QUALIGEN THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2021			2020
ASSETS
Current assets
Cash	$	17,538,272		$	23,976,570
Accounts receivable, net		822,351			615,757
Inventory, net		1,055,878			953,458
Prepaid expenses and other current assets		1,379,896			2,678,894
Total current assets		20,796,397			28,224,679
Right-of-use assets		1,645,568			430,795
Property and equipment, net		203,920			247,323
Equipment held for lease, net		296			17,947
Intangible assets, net		171,190			187,694
Other assets		18,334			18,334
Total Assets	$	22,835,705		$	29,126,772
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	886,224		$	500,768
Accrued expenses and other current liabilities		1,793,901			746,738
Notes payable, current portion		—			131,766
Deferred revenue, current portion		135,063			486,031
Operating lease liability, current portion		134,091			254,739
Warrant liabilities		1,686,200			8,310,100
Total current liabilities		4,635,479			10,430,142
Notes payable, net of current portion		—			6,973
Operating lease liability, net of current portion		1,542,564			236,826
Deferred revenue, net of current portion		92,928			158,271
Total liabilities		6,270,971			10,832,212
Commitments and contingencies (Note 9)
Stockholders’ equity
Series Alpha convertible preferred stock, $0.001 par value; 7,000 shares authorized; 0 and 180 shares issued and outstanding as of December 31, 2021 and December 31, 2020		—			1
Common stock, $0.001 par value; 225,000,000 shares authorized; 35,290,178 and 27,296,061 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively		35,290			27,296
Additional paid-in capital		101,274,073			85,114,755
Accumulated deficit		(84,744,629	)		(66,847,492	)
Total stockholders’ equity		16,564,734			18,294,560
Total Liabilities & Stockholders’ Equity	$	22,835,705		$	29,126,772

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

36

QUALIGEN THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Year Ended December 31,			For the Nine Months Ended December 31,
	2021			2020
REVENUES
Net product sales	$	5,021,721		$	2,849,561
License revenue		632,004			—
Total revenues		5,653,725			2,849,561
EXPENSES
Cost of product sales		4,332,485			2,640,148
General and administrative		11,724,964			7,105,337
Research and development		11,716,718			3,316,099
Sales and marketing		542,594			307,903
Impairment loss on construction in progress		—			1,376,000
Total expenses		28,316,761			14,745,487
LOSS FROM OPERATIONS		(22,663,036	)		(11,895,926	)
OTHER (INCOME) EXPENSE, NET
(Gain) loss on change in fair value of warrant liabilities		(4,723,187	)		8,310,100
Gain on loan extinguishment		—			(451,345	)
Interest (income) expense, net		(42,693	)		48,039
Other income, net		(5,446	)		(256,354	)
Total other (income) expense, net		(4,771,326	)		7,650,440
LOSS BEFORE PROVISION FOR INCOME TAXES		(17,891,710	)		(19,546,366	)
PROVISION FOR INCOME TAXES		5,427			—
NET LOSS	$	(17,897,137	)	$	(19,546,366	)
Net loss per common share, basic and diluted	$	(0.61	)	$	(1.12	)
Weighted—average number of shares outstanding, basic and diluted		29,334,865			17,431,714

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

37

QUALIGEN THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Series A Convertible				Series B Convertible				Series C Convertible				Series D Convertible				Series D-1 Convertible				Series Alpha Convertible
	Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock						Common Stock				Additional
	Shares		Amount $		Shares		Amount $		Shares		Amount $		Shares		Amount $		Shares		Amount $		Shares			Amount $			Shares		Amount $		Paid-In Capital			Accumulated Deficit			Total
Balance at December 31, 2020		—	$	—		—	$	—		—	$	—		—	$	—		—	$	—		180		$	1			27,296,061	$	27,296	$	85,114,755		$	(66,847,492	)	$	18,294,560
Stock issued upon cash-exercise of warrants		—		—		—		—		—		—		—		—		—		—		—			—			1,618,297		1,619		2,358,570			—			2,360,189
Stock issued upon net-exercise of warrants		—		—		—		—		—		—		—		—		—		—		—			—			227,404		227		(227	)		—			—
Issuance of common stock for conversion of preferred stock		—		—		—		—		—		—		—		—		—		—		(180	)		(1	)		243,416		243		(243	)		—			(1	)
Fair value of warrants issued for professional services		—		—		—		—		—		—		—		—		—		—		—			—			—		—		298,651			—			298,651
Shares issued pursuant to Securities Purchase Agreements		—		—		—		—		—		—		—		—		—		—		—			—			5,880,000		5,880		8,814,120			—			8,820,000
Commission and offering costs of Securities Purchase Agreements		—		—		—		—		—		—		—		—		—		—		—			—			—		—		(2,960,465	)		—			(2,960,465	)
Fair value of warrant modifications pursuant to Securities Purchase Agreements		—		—		—		—		—		—		—		—		—		—		—			—			—		—		2,253,536			—			2,253,536
Stock issued for professional services		—		—		—		—		—		—		—		—		—		—		—			—			25,000		25		101,725			—			101,750
Stock-based compensation		—		—		—		—		—		—		—		—		—		—		—			—			—		—		5,293,651			—			5,293,651
Net Loss		—		—		—		—		—		—		—		—		—		—		—			—			—		—		—			(17,897,137	)		(17,897,137	)
Balance at December 31, 2021		—	$	—		—	$	—		—	$	—		—	$	—		—	$	—		—		$	—			35,290,178	$	35,290	$	101,274,073		$	(84,744,629	)	$	16,564,734

	Series A Convertible						Series B Convertible						Series C Convertible						Series D Convertible						Series D-1 Convertible						Series Alpha Convertible
	Preferred Stock						Preferred Stock						Preferred Stock						Preferred Stock						Preferred Stock						Preferred Stock						Common Stock						Additional
	Shares			Amount $			Shares			Amount $			Shares			Amount $			Shares			Amount $			Shares			Amount $			Shares			Amount $			Shares			Amount $			Paid-In Capital			Accumulated Deficit			Total
Balance at March 31, 2020		2,412,887		$	24,129			7,707,736		$	77,077			3,300,715		$	33,007			1,508,305		$	15,083			643,511		$	6,435		$	—		$	—			5,602,214		$	56,026		$	45,161,599		$	(47,301,126	)	$	(1,927,770	)
Issuance of Series Alpha preferred shares upon closing of private placement		—			—			—			—			—			—			—			—			—			—			5,010			5			—			—			4,009,995			—			4,010,000
Issuance of Series Alpha preferred stock for conversion of notes payable		—			—			—			—			—			—			—			—			—			—			350			—			—			—			350,000			—			350,000
Issuance of common stock for conversion of preferred stock		(2,412,887	)		(24,129	)		(7,707,736	)		(77,077	)		(3,300,715	)		(33,007	)		(1,508,305	)		(15,083	)		(643,511	)		(6,435	)		(5,180	)		(4	)		13,046,931			13,046			142,690			—			—
Issuance of common stock for conversion of notes payable and accrued interest		—			—			—			—			—			—			—			—			—			—			—			—			1,775,096			1,775			1,582,633			—			1,584,408
Effect of reverse recapitalization		—			—			—			—			—			—			—			—			—			—			—			—			(2,095,826	)		(52,519	)		863,405			—			810,886
Shares and warrants issued to advisor upon closing of private placement		—			—			—			—			—			—			—			—			—			—			—			—			1,217,147			1,217			1,103,891			—			1,105,108
Fair value of shares issued to advisor upon closing of private placement		—			—			—			—			—			—			—			—			—			—			—			—			—			—			(902,250	)		—			(902,250	)
Fair value of warrants issued to advisor upon closing of private placement		—			—			—			—			—			—			—			—			—			—			—			—			—			—			(202,858	)		—			(202,858	)
Shares and warrants issued pursuant to Securities Purchase Agreements		—			—			—			—			—			—			—			—			—			—			—			—			6,008,660			6,009			29,994,771			—			30,000,781
Commission and offering costs of Securities Purchase Agreements		—			—			—			—			—			—			—			—			—			—			—			—			—			—			(1,360,800	)		—			(1,360,800	)
Stock issued for professional services		—			—			—			—			—			—			—			—			—			—			—			—			46,967			47			239,953			—			240,000
Warrants exercised		—			—			—			—			—			—			—			—			—			—			—			—			1,694,872			1,695			1,330,875			—			1,332,570
Stock-based compensation		—			—			—			—			—			—			—			—			—			—			—			—			—			—			2,800,851			—			2,800,851
Net Loss		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			(19,546,366	)		(19,546,366	)
Balance at December 31, 2020		—		$	—			—		$	—			—		$	—			—		$	—			—		$	—			180		$	1			27,296,061		$	27,296		$	85,114,755		$	(66,847,492	)	$	18,294,560

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

38

QUALIGEN THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended			For the Nine Months Ended
	December 31, 2021			December 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(17,897,137	)	$	(19,546,366	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		113,218			88,383
Amortization of right-of-use assets		225,059			154,717
Impairment loss on construction in progress		—			1,376,000
Gain on CARES Act loan extinguishment		—			(449,050	)
Accounts receivable reserves and allowances		(247,845	)		(12,669	)
Inventory reserves		(108,138	)		10,060
Common stock issued for professional services		101,750			—
Warrants issued for professional services		298,651			—
Stock-based compensation		5,293,651			2,800,851
(Gain) loss on change in fair value of warrant liabilities		(4,723,187	)		8,310,100
Write off of patents and licenses		—			374,618
Changes in operating assets and liabilities:
Accounts receivable		41,250			104,214
Inventory and equipment held for lease		111,422			(297,637	)
Prepaid expenses and other assets		1,298,998			(1,531,056	)
Accounts payable		385,455			(378,496	)
Accrued expenses and other current liabilities		1,047,163			(333,665	)
Due to related party		—			(926,385	)
Operating lease liability		(254,740	)		(171,545	)
Deferred revenue		(416,312	)		264,991
Net cash used in operating activities		(14,730,742	)		(10,162,935	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(134,471	)		(208,464	)
Payments for patents and licenses		(6,893	)		(6,455	)
Cash and cash equivalents acquired in reverse recapitalization		—			149,825
Net cash used in investing activities		(141,364	)		(65,094	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Series Alpha preferred shares upon closing of private placement		—			4,010,000
Net proceeds from warrant exercises		459,476			1,332,570
Net proceeds from the issuance of notes payable		—			1,392,463
Proceeds from issuance of shares and warrants pursuant to Securities Purchase Agreements		8,820,000			30,000,781
Offering costs of Securities Purchase Agreements		(706,929	)		(1,360,800	)
Principal payments on notes payable		(138,739	)		(1,323,536	)
Net cash provided by financing activities		8,433,808			34,051,478
Net change in cash		(6,438,298	)		23,823,449
CASH - beginning of period		23,976,570			153,121
CASH - end of period	$	17,538,272		$	23,976,570
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest	$	1,233		$	32,692
Taxes	$	5,133		$	4,774
NONCASH FINANCING AND INVESTING ACTIVITIES:
Issuance of common stock for professional services	$	—		$	240,000
Issuance of common stock for conversion of debt and accrued interest	$	—		$	1,584,408
Issuance of common stock for conversion of preferred stock before closing of reverse recapitalization	$	—		$	148,690
Issuance of preferred stock for conversion of debt	$	—		$	350,000
Fair value of shares issued to advisor upon closing of private placement	$	—		$	902,250
Fair value of warrants issued to advisor upon closing of private placement	$	—		$	202,858
Effect of reverse recapitalization	$	—		$	810,886
Issuance of common stock for conversion of preferred stock after closing of reverse recapitalization	$	243		$	6,000
Right-of-use assets obtained in exchange for operating lease liabilities	$	1,439,830		$	663,110
CARES Act loan interest forgiven	$	—		$	2,295
Fair value of shares issued for cashless warrant exercises	$	764,657		$	101,187
Net transfers to inventory from equipment held for lease	$	1,304		$	5,743
Warrant modifications pursuant to Securities Purchase Agreements	$	2,253,536		$	—
Fair value of warrant liabilities on date of exercise	$	1,900,713		$	—

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

39

QUALIGEN THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

Organization

Qualigen, Inc., now a subsidiary of Qualigen Therapeutics, Inc., was incorporated in Minnesota in 1996 to design, develop, manufacture and sell point-of-care quantitative immunoassay diagnostic products for use in physician offices and other point-of-care settings worldwide, and was reincorporated in Delaware in 1999. Qualigen Therapeutics, Inc. (the “Company”) operates in one business segment. In May 2020, Qualigen, Inc. completed a reverse recapitalization transaction with Ritter Pharmaceuticals, Inc. (“Ritter”) and Ritter was renamed Qualigen Therapeutics, Inc., recognized as a reverse recapitalization. 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 26, 2020.

Qualigen, Inc. was determined to be the accounting acquirer in a reverse recapitalization based upon the terms of the merger and other factors. All references to financial figures of the Company presented in the accompanying consolidated financial statements and in these Notes through May 22, 2020 are to those of Qualigen, Inc. All references to financial figures after May 22, 2020 are to those of Qualigen Therapeutics, Inc. and Qualigen, Inc.

Basis of Presentation

The accompanying consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), Regulation S-X and rules and regulations of the Securities and Exchange Commission (“SEC”).

Accounting Periods

During 2020, the Company changed its fiscal year end from March 31st to December 31st. In this annual report we show the twelve-month year ended December 31, 2021 (“Fiscal 2021”) and nine months ended December 31, 2020 (the “Transition Period”). All references in this report to the Transition Period are to the nine months ended December 31, 2020; and references to Fiscal 2021 are to the calendar 12-month fiscal year ending December 31, 2021.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. 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. GAAP. The Company views its operations and manages its business in one operating segment. All long-lived assets of the Company reside in the US.

Accounting Estimates

Management uses estimates and assumptions in preparing its consolidated financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The most significant estimates relate to the estimated fair value of warrant liabilities, stock-based compensation, write-off of patents and licenses, amortization and depreciation, inventory reserves, allowances for doubtful accounts and returns, and warranty costs. Actual results could vary from the estimates that were used.

Cash

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

The Company maintains its cash in bank deposits which exceed federally insured limits and could potentially be subject to significant concentrations of credit risk on cash. The Company reviews the financial stability of its depository institutions on a regular basis, and has not experienced any losses in such accounts

40

Inventory, Net

Inventory 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.

Long-Lived Assets

The Company assesses potential impairments to its long-lived assets when there is evidence that events or changes in circumstances indicate that assets may not be recoverable. An impairment loss would be recognized when the sum of the expected future undiscounted cash flows is less than the carrying amount of the assets. The amount of impairment loss, if any, will generally be measured as the difference between the net book value of the assets and their estimated fair values. During the nine months ended December 31, 2020, the Company recognized $1.4 million of such impairment losses on the construction-in-progress on a FastPack pouch filling machine project. During the year ended December 31, 2021, no such impairment losses were recorded.

Accounts Receivable, Net

The 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.

The Company records an allowance for doubtful accounts and returns equal to the estimated uncollectible amounts or expected returns. The Company’s estimates are based on historical collections and returns and a review of the current status of trade accounts receivable.

Accounts receivable is comprised of the following at:

	December 31, 2021			December 31, 2020
Accounts Receivable	$	958,448		$	629,630
Less Allowances		(136,097	)		(13,873	)
	$	822,351		$	615,757

Research and Development

The Company expenses research and development costs as incurred including therapeutics license costs.

Shipping and Handling Costs

The 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 $113,000 and $84,000, respectively, for the year ended December 31, 2021 and nine months ended December 31, 2020. Other shipping and handling costs included in general and administrative, research and development, and sales and marketing expenses totaled approximately $12,000 and $9,000 for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively.

Revenue from Contracts with Customers

We apply the following five-step model in accordance with ASC 606, Revenue from Contracts with Customers, in order to determine the revenue: (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; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

41

Product Sales

The 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 PSA, testosterone, thyroid disorders, pregnancy, and Vitamin D.

The 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. The delivery 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.

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

The 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.

The 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 contracts.

License Revenue

The Company enters into out-license agreements with counterparties to develop and/or commercialize its products in exchange for nonrefundable upfront license fees and/or sales-based royalties.

If 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 the year ended December 31, 2021 and the nine months ended December 30, 2020, the Company recognized license revenue of approximately $632,004 and $0, respectively.

Contract Asset and Liability Balances

The timing of the Company’s revenue recognition may differ from the timing of payment by the Company’s customers. The Company records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied.

42

Multiple element arrangements included contracts that combined both the Company’s analyzer and a customer’s future reagent purchases under a single contract. In some sales contracts, the Company provided analyzers at no charge to customers. Title to the analyzer was maintained by the Company and the analyzer was returned by the customer to the Company at the end of the purchase agreement.

During the year ended December 31, 2021 and nine months ended December 31, 2020, product sales are stated net of an allowance for estimated returns of approximately $150,000 and $18,300, respectively.

Deferred Revenue

Payments 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.

Research and Development

The Company expenses research and development costs as incurred.

Operating Leases

Effective April 1, 2020, the Company adopted Accounting Standard Update (“ASU”) No. 2018-11, Leases (Topic 842) Targeted Improvements (“Topic 842”). The Company determines if a contract contains a lease at inception. The Company’s material operating lease consists of a single office/manufacturing/warehouse/laboratory space. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the Company’s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company used the incremental secured borrowing rate for an existing secured loan corresponding to the maturities of the leases.

The Company’s leases typically contain rent escalations over the lease term. The Company recognizes rent expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when received and reduce the Company’s right-of-use (“ROU”) asset related to the lease. These are amortized through the ROU asset as reductions of expense over the lease term. The Company’s office/manufacturing/warehouse/laboratory lease agreement does not contain any material residual value guarantees or material restrictive covenants.

Related to the adoption of Topic 842, the Company’s policy elections were as follows:

● The Company has used the practical expedients under U.S. GAAP which allow it to not reassess whether any expired or existing contracts are considered a lease, along with grandfathering lease classifications, and treatment of indirect costs;

● The Company has elected to exclude short-term leases having initial terms of 12 months or less;

● The Company has elected not to separate non-lease components from its leases to account for them separately;

● The Company has elected not to avail itself of the practical expedient of using hindsight to determine the lease term; and

● The Company has elected the alternative transition option, by recognizing a cumulative effect adjustment to the opening balance of accumulated deficit in the period of adoption (as of April 1, 2020, the adoption of Topic 842 did not have a material effect on retained earnings).

43

Property and Equipment, Net

Property 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:

Machinery and equipment	5 years
Computer equipment	3 years
Molds and tooling	5 years
Furniture and fixtures	5 years

Leasehold 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.

The 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.

Intangible Assets, Net

Intangibles consist of patent-related costs and costs for license agreements. Management reviews the carrying value of 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 recovered.

If the Company determines that the carrying value of 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.

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

The carrying value of the patents of approximately $159,000 and $169,000 at December 31, 2021 and December 31, 2020, respectively, are stated net of accumulated amortization of approximately $320,000 and $303,000, respectively. Amortization of patents charged to operations for the year ended December 31, 2021 and the nine months ended December 31, 2020 were approximately $17,000 and $10,000, respectively. Total future estimated amortization of patent costs for the five succeeding years is approximately $19,000 for the year ending December 31, 2022, approximately $18,000 for the year ending December 31, 2023, approximately $15,000 for year 2024, approximately $14,000 for years 2025 and 2026, and approximately $79,000 thereafter.

The carrying value of the licenses of approximately $12,000 and $19,000 at December 31, 2021 and December 31, 2020 are stated net of accumulated amortization of approximately $407,000 and $400,000, respectively. Amortization of licenses charged to operations for the year ended December 31, 2021 and nine months ended December 31, 2020 was approximately $7,000 and $5,000, respectively. Total future estimated amortization of license costs for the five succeeding years is approximately $7,000 for the year ending December 31, 2022 and $5,000 for the year 2023.

Derivative Financial Instruments and Warrant Liabilities

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the Consolidated Statements of Operations. Depending on the features of the derivative financial instrument, the Company uses either the Black-Scholes option-pricing model or a Monte-Carlo simulation to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period (See Note 7).

44

Fair value measurements

The Company determines the fair value measurements of applicable assets and liabilities based on a three-tier fair value hierarchy established by accounting guidance and prioritizes the inputs used in measuring fair value. The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:

● Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date;

● Level 2 - Inputs other than quoted prices that are observable for the assets or liabilities either directly or indirectly, including inputs in markets that are not considered to be active; and

● Level 3 - Inputs that are unobservable.

Fair Value of Financial Instruments

Cash, accounts receivable, accounts payable, accrued liabilities, and debt are carried at amortized cost, which management believes approximates fair value due to the short-term nature of these instruments.

Stock-Based Compensation

Stock-based compensation cost for equity awards granted to employees and non-employees is measured at the grant date based on the calculated fair value of the award using the Black-Scholes option-pricing model, and is recognized as an expense, under the straight-line method, over the requisite service period (generally the vesting period of the equity grant). If the Company determines that other methods are more reasonable, or other methods for calculating these assumptions are prescribed by regulators, the fair value calculated for the Company’s stock options could change significantly. Higher volatility, lower risk free interest rates, and longer expected lives would result in an increase to stock-based compensation expense to employees and non-employees determined at the date of grant.

Income Taxes

Deferred income taxes are recognized for temporary differences in the basis of assets and liabilities for financial statement and income tax reporting that arise due to net operating loss carry forwards, research and development credit carry forwards and from using different methods and periods to calculate depreciation and amortization, allowance for doubtful accounts, accrued vacation, research and development expenses, and state taxes. A provision has been made for income taxes due on taxable income and for the deferred taxes on the temporary differences.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Realization of the deferred income tax asset is dependent on generating sufficient taxable income in future years.

Sales and Excise Taxes

Sales 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 balance Consolidated Balance Sheet as cash is collected from customers and remitted to the tax authority.

Warranty Costs

The 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.

Accrued warranty liabilities were approximately $60,000 and $25,000, respectively, at December 31, 2021 and December 31, 2020 and are included in accrued expenses and other current liabilities on the Consolidated Balance Sheets. Warranty costs were approximately $57,000 and $54,000 for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively, and are included in cost of product sales in the Consolidated Statements of Operations.

45

Recent Accounting Pronouncements

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), “Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)”: Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force), which contains amendments that clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The amendments set forth in this ASU are effective for all entities for annual periods beginning after December 15, 2021. Early application of the amendments in this ASU is permitted for all entities. The amendments in this ASU should be applied prospectively. The Company early adopted ASU No. 2021-04 on January 1, 2021.

In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020 and adoption must be as of the beginning of the Company’s annual fiscal year. The Company early adopted ASU No. 2020-06 on January 1, 2021.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” an amendment to the accounting guidance on fair value measurements. The guidance modifies the disclosure requirements on fair value measurements, including the removal of disclosures of the amount of and reasons for transfers between Level 1 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. The guidance also adds certain disclosure requirements related to Level 3 fair value measurements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted ASU No. 2018-13 on April 1, 2020 and the adoption of this guidance did not have a material impact on its financial statements.

In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842) Targeted Improvements (“Topic 842”), which provides for an alternative transition method by allowing companies to continue to use the legacy guidance in Topic 840, Leases, including its disclosure requirements, in the comparative periods presented in the year of adoption of the new leases standard and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than the earliest period presented. The Company adopted the standard as of April 1, 2020 and the most significant impact was the recognition of a ROU asset and lease liability for the Company’s sole operating lease—the Company had no finance leases. Adoption of the Topic 842 did not require the Company to restate previously reported results as it elected to apply a modified retrospective approach at the beginning of the period of adoption rather than at the beginning of the earliest comparative period presented.

In 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 incurred. 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 extends 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 has not completed its review of the impact of this standard on its consolidated financial statements. However, based on the Company’s history of immaterial credit losses from trade receivables, management does not expect that the adoption of this standard will have a material effect on the Company’s consolidated financial statements.

Impact of the COVID-19 Pandemic

Events surrounding the SARS-CoV-2 virus that emerged in late 2019 and the ensuing global pandemic has had a dramatic impact on businesses globally and our business as well. The severity and duration of the pandemic and economic repercussions of the virus and government actions taken in response to the pandemic remain uncertain and will ultimately depend on many factors, including the speed of global dissemination and effectiveness of the vaccination and containment efforts throughout the world, the duration and spread of the virus, as well as seasonality, variants or new outbreaks.

46

In the United States, federal, state, and local government directives and policies have been put in place to manage public health concerns and address the economic impacts, including reduced business activity and overall uncertainty presented by this new healthcare challenge. Similar actions have been taken by governments around the world. Our facilities could be required to temporarily curtail production levels or temporarily cease operations based on government mandates or as a result of the pandemic. To mitigate risks, we continue to evaluate the extent to which COVID-19 may impact our business and operations and adjust risk mitigation planning and business continuity activities as needed.

Other accounting standard updates are either not applicable to the Company or are not expected to have a material impact on the Company’s consolidated financial statements.

NOTE 2 — LIQUIDITY

The Company has incurred recurring losses from operations and has an accumulated deficit at December 31, 2021. The Company expects to continue to incur losses subsequent to the Consolidated Balance Sheet date of December 31, 2021. The Company’s reverse recapitalization transaction with Ritter closed in May 2020 together with an associated new equity capital raise of approximately $4.0 million, and approximately $1.9 million in convertible notes payable were converted into shares of the Company’s capital stock. In July, August and December 2020, the Company raised an additional $30.0 million through three Securities Purchase Agreements with a single institutional investor, and in December 2021, the Company raised an additional $8.82 million through a Securities Purchase Agreement with several institutional investors (see Note 11). Based on the Company’s current cash position, and assuming currently planned expenditures and level of operations, the Company believes it has sufficient capital to fund operations for the 12-month period subsequent to the issuance of the accompanying consolidated financial statements. However, there is no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. Also, beyond such 12-month period, planned research and development activities, capital expenditures, clinical and pre-clinical testing, and commercialization activities of the Company’s products are expected to require significant additional financing. Additional financing may not be available on acceptable terms or at all.

NOTE 3 — INVENTORY, NET

Inventory, net consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021		December 31, 2020
Raw materials	$	823,315	$	579,765
Work in process		188,135		309,826
Finished goods		44,428		63,867
	$	1,055,878	$	953,458

NOTE 4 — PREPAID EXPENSES

Prepaid expenses consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021		December 31, 2020
Prepaid insurance	$	1,197,726	$	1,307,864
Prepaid manufacturing expenses		67,410		1,181,029
Prepaid investor relations expenses		—		150,000
Other prepaid expenses		114,760		40,001
	$	1,379,896	$	2,678,894

47

NOTE 5 — PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021			December 31, 2020
Machinery and equipment	$	2,482,841		$	2,401,470
Construction in progress–equipment		—			104,400
Computer equipment		345,117			443,865
Leasehold improvements		333,271			321,033
Molds and tooling		260,002			260,002
Furniture and fixtures		143,013			138,699
		3,564,244			3,669,469
Less Accumulated depreciation		(3,360,324	)		(3,422,146	)
	$	203,920		$	247,323

Depreciation expense relating to property and equipment was approximately $73,000 and $33,000 for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively.

NOTE 6 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021		December 31, 2020
Board compensation	$	17,500	$	15,091
Franchise, sales and use taxes		14,090		30,353
Income taxes		3,620		3,326
Patent and license fees		—		7,204
Payroll		682,036		4,566
Professional fees		225,308		58,261
Research and development		232,712		237,504
Royalties		10,152		491
Vacation		282,910		230,457
Warranty liability		60,281		24,871
Other		265,292		134,614
	$	1,793,901	$	746,738

NOTE 7 – WARRANT LIABILITIES

In 2004, the Company issued warrants to various investors and brokers for the purchase of Series C preferred stock in connection with a private placement (the “Series C Warrants”). The Series C Warrants were subsequently extended and, upon closing of the reverse recapitalization transaction with Ritter, exchanged for warrants to purchase common stock of the Company, pursuant to the Series C Warrant terms as adjusted.

In exchange for the Series C Warrants, upon closing of the merger with Ritter, the holders received warrants to purchase an aggregate of 4,713,490 shares of the Company’s common stock at $0.72 per share, subject to adjustment. As of December 31, 2021, the warrants received in exchange for the Series C Warrants have remaining terms ranging from 1.9 to 2.5 years. 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 issuances.

48

The following table summarizes the activity in the Common Stock Warrants received in exchange for the Series C Warrants for the year ended December 31, 2021:

	Common Stock Warrants (received in exchange for the Series C Warrants)
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		3,378,596		$	0.72
Series C preferred stock warrants exchanged for common stock warrants upon reverse recapitalization		—			—
Exercised		(807,311	)		0.72
Forfeited		(89,671	)		0.72
Expired		—			—
Granted		—			—
Total outstanding – December 31, 2021		2,481,614		$	0.72
Exercisable		2,481,614		$	0.72	$	0.72		2.00
Non-Exercisable		—		$	—	$	—		—

The following table presents the Company’s fair value hierarchy for its Common Stock Warrant liabilities (all of which arise under the warrants received in exchange for the Series C Warrants) measured at fair value on a recurring basis as of December 31, 2021:

	Quoted
	Market		Significant
	Prices for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
Common Stock Warrant liabilities	(Level 1)		(Level 2)		(Level 3)			Total
Balance as of December 31, 2020	$	—	$	—	$	8,310,100		$	8,310,100
Exercises		—		—		(1,900,713	)		(1,900,713	)
Gain on change in fair value of warrant liabilities		—		—		(4,723,187	)		(4,723,187	)
Balance as of December 31, 2021	$	—	$	—	$	1,686,200		$	1,686,200

There were no transfers of financial assets or liabilities between category levels for the year ended December 31, 2021.

The value of the warrant liabilities was based on a valuation received from an independent valuation firm determined using a Monte-Carlo simulation. For volatility, the Company considers comparable public companies as a basis for its expected volatility to calculate the fair value of common stock warrants and transitions to its own volatility as the Company develops sufficient appropriate history as a public company. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected term of the common stock warrant. The Company uses an expected dividend yield of zero based on the fact that the Company has never paid cash dividends and does not expect to pay cash dividends in the foreseeable future. Any significant changes in the inputs may result in significantly higher or lower fair value measurements.

49

The following are the weighted average and the range of assumptions used in estimating the fair value of warrant liabilities (weighted average calculated based on the number of outstanding warrants on each issuance) as of December 31, 2021:

	December 31, 2021
	Range			Weighted Average
Risk-free interest rate		0.69% — 0.84	%		0.72	%
Expected volatility (peer group)		84% — 87	%		84.6	%
Term of warrants (in years)		1.9 — 2.5			2.01
Expected dividend yield		0.00	%		0.00	%

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

NOTE 8 — EARNINGS (LOSS) PER SHARE

Basic 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.

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

	For the Year Ended December 31,			For the Nine Months Ended December 31,
	2021			2020
Net loss used for basic earnings per share	$	(17,897,137	)	$	(19,546,366	)
Basic weighted-average common shares outstanding		29,334,865			17,431,714
Dilutive potential shares issuable from stock options and warrants		—			—
Diluted weighted-average common shares outstanding		29,334,865			17,431,714

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

NOTE 9 — COMMITMENTS AND CONTINGENCIES

Leases

The Company leases its facilities under a long-term operating lease agreement. On December 15, 2021, our wholly-owned subsidiary Qualigen, Inc. entered into a Second Amendment to Lease with Bond Ranch LP. This Amendment extended the Company’s triple-net leasehold on 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. will total $1,950,710; however, the base rent for the first 12 months of the 61-month period will be only $335,966. Additionally, under the Second Amendment to Lease Qualigen, Inc. is entitled to a $339,360 tenant improvement allowance.

50

The tables below show the operating lease right-of-use assets and operating lease liabilities as of initial measurement at April 1, 2020 and the balances as of December 31, 2021, including the changes during the periods:

	Operating lease right-of-use assets
Net right-of-use assets at December 31, 2020	$	430,795
Additional operating lease right-of-use assets at December 31, 2021		1,439,830
Less amortization of operating lease right-of-use assets		(225,057	)
Operating lease right-of-use assets at December 31, 2021	$	1,645,568

	Operating lease liabilities
Lease liabilities arising from obtaining right-of-use assets at April 1, 2020:	$	491,565
Additional operating lease liabilities at December 31, 2021		1,439,830
Less principal payments on operating lease liabilities		(254,740	)
Lease liabilities at December 31, 2021		1,676,655
Less non-current portion		(1,542,564	)
Current portion at December 31, 2021	$	134,091

As of December 31, 2021, the Company’s operating leases have a weighted-average remaining lease term of 5.8 years and a weighted-average discount rate of 8.8%.

As of December 31, 2021, the maturities of operating lease liabilities are as follows:

Year Ending December 31,	Amount
2022	$	277,192
2023		368,341
2024		379,392
2025		390,773
2026		402,497
2027		379,165
Total		2,197,360
Less present value discount		(520,705	)
Operating lease liabilities	$	1,676,655

Total lease expense was approximately $342,000 and $259,000, respectively, for the year ended December 31, 2021 and nine months ended December 31, 2020. Lease expense was recorded in cost of product sales, general and administrative expenses, research and development and sales and marketing expenses.

Litigation and Other Legal Proceedings

On November 9th, 2021, the Company was named as a defendant in an action brought by Mediant Communications Inc. (“Mediant”) in the U.S. District Court for the Southern District of New York. The complaint alleges that Qualigen entered into an implied contract with Mediant, whereby Qualigen retained Mediant to distribute proxy materials and subsequently conduct shareholder vote tabulations. The Company believes that the claims from Mediant are without merit and intends to vigorously defend the case. The Company filed a Motion to Dismiss with the District Court and on March 14, 2022 a hearing was held during which the presiding judge ruled in favor of the Motion to Dismiss. The Company and Mediant are currently conducting settlement negotiations.

NOTE 10 — RESEARCH AND LICENSE AGREEMENTS

The University of Louisville Research Foundation

Between 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 will take 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 $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 would also pay another $500,000 milestone payment for any additional regulatory marketing approval for each additional therapeutic (or diagnostic) indication. 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 $10,000 to $50,000) for such year.

51

Sponsored research expenses related to these agreements for the year ended December 31, 2021 and nine months ended December 31, 2020 were approximately $325,000 and $14,000, respectively, and these amounts are recorded in research and development expenses in the Consolidated Statements of Operations. Minimum annual royalties of $0 and $10,000 related to these agreements are included in research and development expenses in the Consolidated Statements of Operations for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively. License costs were approximately $118,000 and $470,000 related to these agreements the year ended December 31, 2021 and nine months ended December 31, 2020, respectively, and are included in research and development expenses in the Consolidated Statements of Operations.

In 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 will reimburse ULRF for sponsored research expenses of up to $693,000 for this program. In February 2021, the Company extended the term of this agreement for an additional 18 months (expires July 2022) and increased the amount that the Company will reimburse ULRF for sponsored research expenses from $693,000 to approximately $1.8 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 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 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. 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.

Sponsored research expenses related to these agreements for the year ended December 31, 2021 and nine months ended December 31, 2020 were approximately $646,000 and $283,000, respectively, and are recorded in research and development expenses in the Consolidated Statements of Operations. License costs related to these agreements for the year ended December 31, 2021 and nine months ended December 31, 2020 were approximately $60,000 and $160,000, respectively, and are included in research and development expenses in the Consolidated Statements of Operations.

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 will take 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.

In addition, the Company has agreed to pay ULRF (i) royalties, on patent-covered net sales associated with the commercialization of QN-165 as a treatment for COVID-19, 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 patents, 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 June 2020, and (iv) payments ranging from $50,000 to $5,000,000 upon the achievement of certain regulatory and commercial milestones. Milestone payments 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. 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 $5,000 to $50,000) for such year.

52

Sponsored research expenses related to these agreements for the year ended December 31, 2021 and nine months ended December 31, 2020 were approximately $243,000 and $14,000, respectively, and are recorded in research and development expenses in the statements of operations. License costs related to these agreements for the year ended December 31, 2021 and nine months ended December 31, 2020 were approximately $28,000 and $24,000, respectively, and are included in research and development expenses in the statements of operations.

Advanced Cancer Therapeutics

In 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. In addition, 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 year ended December 31, 2021 and the nine months ended December 31, 2020, there were approximately $2,000 and $285,000, respectively in costs related to this agreement which are included in research and development expenses in the Consolidated Statements of Operations.

Prediction Biosciences

In November 2015, the Company entered into a long-term development and supply agreement with Prediction Biosciences SAS to develop and manufacture diagnostic tests for use in the stroke point-of-care market. The Company recognizes development revenue and product sales over the performance period of the contract. For both the year ended December 31, 2021 and nine months ended December 31, 2020, there was no collaborative research revenue related to this agreement.

Sekisui Diagnostics

In March 2018, the Company extended a strategic partnership entered into in May 2016 with Sekisui Diagnostics, LLC (“Sekisui”). The Company appointed Sekisui as its diagnostics commercial partner and exclusive worldwide distributor with the exception of certain customer accounts retained by Qualigen; Sekisui’s distribution arrangement is currently set to expire on March 31, 2022. The agreement contains a right of first refusal for Sekisui against any potential acquisition of the Company; the right of first refusal is currently set to expire on March 31, 2022.

There were product sales to Sekisui of approximately $3.5 million and $1.6 million, respectively, for the year ended December 31, 2021 and nine months ended December 31, 2020, related to this agreement.

Yi Xin

In October 2020, the Company 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 China.

Under the Technology Transfer Agreement, we received net cash payments of $250,000 in the final quarter of the Transition Period classified as deferred revenue as of the Consolidated Balance Sheet date of December 31, 2020, and $420,000 in the first quarter of 2021. The Company will also receive low- to mid-single-digit royalties on any future new-generations and current-generations product sales by Yi Xin. Of these amounts, the Company recognized approximately $38,000 in product sales and $632,000 in license revenue included in the statement of operations for the year ended December 31, 2021. The Company provided technology transfer and patent/know-how license rights to facilitate Yi Xin’s development and commercialization.

53

The Company gave Yi Xin the exclusive rights for China – which is a market the Company has not otherwise entered – both for Yi Xin’s new generations of FastPack-based products and for Yi Xin-manufactured versions of the Company’s existing FastPack product lines. Yi Xin will also have the right to sell its new generations of FastPack-based diagnostic test systems throughout the world (but not to or toward current customers of the Company’s existing generations of FastPack products); any such non-China sales would, until March 31, 2022, need to be through Sekisui. In addition, after March 31, 2022, Yi Xin will have 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-U.S. customers of those products). Also, after March 31, 2022, Yi Xin will have the right to buy Company-manufactured FastPack 1.0, IP and PRO products from the Company at distributor prices for resale in and for the United States (but not to or toward current U.S. customers of those products); the Company did not license Yi Xin to sell in the United States market any Yi Xin-manufactured versions of those legacy FastPack 1.0, IP and PRO product lines, even after March 31, 2022. In the Technology Transfer Agreement, the Company confirmed that it would not, after March 31, 2022, seek new FastPack customers outside the United States. All of the March 31, 2022 dates in this paragraph are as established by an August 2021 amendment of the Technology Transfer Agreement.

STA Pharmaceutical

In 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 twelve months ended December 31, 2021.

Research and development expenses related to this agreement for the year ended December 31, 2021 and the nine months ended 2020 were approximately $3.2 million and $0, respectively, and are recorded in research and development expenses in the Consolidated Statements of Operations.

NOTE 11 — STOCKHOLDERS’ EQUITY

As of December 31, 2021, and 2020 the Company had two classes of capital stock: common stock and Series Alpha convertible preferred stock. As of April 1, 2020 the Company had two classes of capital stock with one being divided into five series: common stock and preferred stock (Series A convertible preferred stock, Series B convertible preferred stock, Series C convertible preferred stock, Series D convertible preferred stock and Series D-1 convertible preferred stock).

Common Stock

Holders of common stock generally vote as a class with the holders of the preferred stock and are entitled to one vote for each share held. Subject to the rights of the holders of the preferred stock to receive preferential dividends, the holders of common stock are entitled to receive dividends when and if declared by the Board of Directors. Following payment of the liquidation preference of the preferred stock, as of March 31, 2020 any remaining assets would be distributed ratably among the holders of the common stock and, on an as-if-converted basis, the holders of Series C convertible preferred stock, Series D convertible preferred stock and Series D-1 convertible preferred stock) upon liquidation, dissolution or winding up of the affairs of the Company. Following payment of the liquidation preference of the preferred stock, as of December 31, 2021 any remaining assets would be distributed ratably among the holders of the common stock and, on an as-if-converted basis, the holders of Series Alpha convertible preferred stock upon liquidation, dissolution or winding up of the affairs of the Company. The holders of common stock have no preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions.

On December 1, 2021, the Company closed a Securities Purchase Agreement (dated November 29, 2021) with several institutional investors for the purchase and sale of 5,880,000 shares of Company common stock to purchase shares of Company common stock for an exercise price of $1.50 per share, for aggregate gross proceeds of $8.82 million.

At December 31, 2021, the Company has reserved 14,663,251 shares of authorized but unissued common stock for possible future issuance. At December 31, 2021, 14,663,251 shares were reserved as follows:

Exercise of issued and future grants of stock options	4,841,856
Exercise of stock warrants	9,821,395
Total	14,663,251

54

Series A, B, C, D, D-1, Alpha Convertible Preferred Stock

At December 31, 2021 and 2020, there were no shares of Series A, B, C, D, D-1 convertible 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.

At December 31, 2021, there were no shares of Series Alpha convertible preferred stock outstanding. During 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. In the nine months ended December 31, 2020, the holder of Series Alpha convertible preferred stock converted 5,180 of its shares of Series Alpha convertible preferred stock into an aggregate of 7,004,983 shares of the Company’s common stock, and there were 180 shares of Series Alpha convertible preferred stock outstanding at December 31, 2020.

Alpha Securities Purchase Agreements

On July 10, 2020, the Company closed a Securities Purchase Agreement (dated July 8, 2020) with a single institutional investor for the purchase and sale for $8.0 million of (i) 1,140,570 shares of Company common stock, (ii) 780,198 pre-funded warrants (i.e., warrants to purchase shares of Company common stock, for which the exercise price is almost entirely prepaid) and (iii) 1,920,768 two-year warrants to purchase shares of Company common stock for an exercise price of $5.25 per share. Both sets of warrants included a 9.99% beneficial-ownership blocker provision. The 780,198 pre-funded warrants were then exercised on July 21 and 22, 2020.

On August 4, 2020, the Company closed a Securities Purchase Agreement (dated August 2, 2020) with a single institutional investor for the purchase and sale for $10.0 million of (i) 1,717,106 shares of Company common stock, and (ii) 1,287,829 two-year warrants to purchase shares of Company common stock for an exercise price of $6.00 per share. The warrants included a 9.99% beneficial-ownership blocker provision.

On December 18, 2020, the Company closed a Securities Purchase Agreement (dated December 16, 2020) with a single institutional investor for the purchase and sale for $12.0 million of (i) 2,370,786 shares of Company common stock, (ii) 1,000,000 pre-funded warrants (i.e., warrants to purchase shares of Company common stock, for which the exercise price is almost entirely prepaid), (iii) 1,348,314 two-year warrants to purchase shares of Company common stock for an exercise price of $4.07 per share, and (iv) 842,696 warrants (first exercisable 6 months after issuance, and with an expiration date 30 months after issuance) to purchase shares of Company common stock for an exercise price of $4.07 per share. The warrants included a 9.99% beneficial-ownership blocker provision.

Stock Options and Equity Classified Warrants

Stock Options

The Company recognizes all compensatory stock-based payments as compensation expense over the service period, which is generally the vesting period.

In April 2020, the Company adopted the 2020 Stock Incentive Plan (the “2020 Plan”) which provides for the granting of incentive or non-statutory common stock options to qualified employees, officers, directors, consultants and other service providers. At December 31, 2021 and December 31, 2020 there were 4,748,000 and 3,917,500 outstanding options, respectively, under the 2020 Plan and there were 2,809,157 and 139,657 of Plan shares available, respectively, for future grant. The shares available for future grant at December 31, 2021 reflect a 2020 Plan amendment approved by the Company’s stockholders on August 9, 2021 where the number of shares of common stock available for issuance under the 2020 Plan was increased by 3,500,000 shares.

55

The following represents a summary of the options granted to employees and non-employee service providers that were outstanding at December 31, 2021, and changes during the twelve months then ended:

	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		4,011,356		$	7.05		$3.52—1,465.75		9.29
Granted		835,000			1.37		$1.24 — $3.29		9.79
Expired		—			—		—
Forfeited		(4,500	)		3.68		$3.52 — $4.97
Total outstanding – December 31, 2021		4,841,856		$	6.07		$1.24 — $1,465.75		8.52
Exercisable (vested)		1,408,195		$	10.88		$3.52— $1,465.75		7.94
Non-Exercisable (non-vested)		3,433,661		$	4.10		$1.24 — $5.13		8.81

The 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 30, 2020, and changes during the nine-month period then ended:

	Shares		Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – March 31, 2020		—	$	—	$	—
Legacy Ritter options		95,124		92.80		$5.75 — $1,465.75		1.39
Granted		3,917,500		4.97		$3.52 — $5.13		9.46
Expired		(1,268)		35		$15.00 — $562.50
Forfeited		—		—
Total outstanding – December 31, 2020		4,011,356	$	7.05	$	3.52 — $1,465.75		9.29
Exercisable (vested)		108,856	$	81.38	$	3.52 — $1,465.75		2.50
Non-Exercisable (non-vested)		3,902,500	$	4.97	$	3.52 — $5.13		9.47

There was approximately $5.3 million and $2.8 million of compensation costs related to outstanding options for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively. As of December 31, 2021, there was approximately $8.2 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 1.58 years.

No stock options were exercised during the year ended December 31, 2021 or nine months ended December 31, 2020.

The exercise price for an option issued under the 2020 Plan is determined by the Board of Directors, but will be (i) in the case of an incentive stock option (A) granted to an employee who, at the time of grant of such option, is a 10% stockholder, for no less than 110% of the fair market value per share on the date of grant; or (B) granted to any other employee, for no less than 100% of the fair market value per share on the date of grant; and (ii) in the case of a non-statutory stock option, for no less than 100% of the fair market value per share on the date of grant. The options awarded under the 2020 Plan will vest as determined by the Board of Directors but will not exceed a 10-year period. The weighted average grant date fair value per share of the shares underlying options granted during the year ended December 31, 2021 was $1.10 and during the nine months ended December 31, 2020 was $4.97.

56

Fair Value of Equity Awards

The Company utilizes the Black-Scholes option pricing model to value awards under the 2020 Plan, and for equity classified compensatory warrants. Key valuation assumptions include:

● Expected dividend yield. The expected dividend is assumed to be zero, as the Company has never paid dividends and has no current plans to pay any dividends on the Company’s common stock.

● Expected stock-price volatility. The Company’s expected volatility is derived from the average historical volatilities of publicly traded companies within the Company’s industry that the Company considers to be comparable to the Company’s business over a period approximately equal to the expected term.

● Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected term.

● Expected term. The expected term represents the period that the stock-based awards are expected to be outstanding. The Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data. Therefore, the Company estimates the expected term by using the simplified method provided by the SEC. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the options.

The material factors incorporated in the Black-Scholes model in estimating the fair value of the options granted for the periods presented were as follows:

	For the Year Ended December 31, 2021
Expected dividend yield		0.00	%
Expected stock-price volatility		102	%
Risk-free interest rate		0.84% — 1.51	%
Expected average term of options (in years)		6.27
Stock price		1.24 — 3.29

The Company recorded stock-based compensation expense and classified it in the Consolidated Statements of Operations as follows:

	For the Year Ended December 31, 2021		For the Nine Months Ended December 31, 2020
General and administrative	$	4,465,911	$	2,388,380
Research and development		827,740		412,471
Total	$	5,293,651	$	2,800,851

Equity Classified Compensatory Warrants

During the year ended December 31, 2021, the Company issued equity classified compensatory warrants to a service provider for the purchase of 600,000 shares of Company common stock at an exercise price of $1.32 per share. The fair value issuance cost of approximately $0.3 million 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.

During the nine months ended December 31, 2020, in 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 811,431 shares of the Company’s common stock at an exercise price of $1.11 per share. The issuance cost of these warrants was charged to additional paid-in capital, and did not result in expense on the Company’s Consolidated Statements of Operations.

In 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 shares 514,451 of Company common stock at a weighted average exercise price of $2.30 per share. These are to be differentiated from the Series C Warrants described in Note 7 and there was no recognized or unrecognized compensation cost relating to these outstanding warrants for the year ended December 31, 2021 and nine months ended December 31, 2020.

57

The following table summarizes the equity classified compensatory warrant activity for the year ended December 31, 2021:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		1,294,217		$	1.67
Granted to advisor and its designees		600,000			1.32
Exercised		(38,390	)		2.09
Expired		—			—
Forfeited		(65,179	)		2.07
Total outstanding – December 31, 2021		1,790,648			1.52		1.11 — 2.54		2.64
Exercisable		1,790,648			1.52		1.11 — 2.54		2.64
Non-Exercisable		—		$	—	$	—		—

The following table summarizes the compensatory warrant activity for nine months ended December 31, 2020:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – March 31, 2020		—		$	—
Series C preferred stock compensatory warrants exchanged for common stock warrants upon reverse recapitalization		668,024			2.25
Granted to advisor and its designees		811,431			1.11
Exercised		(159,978	)		1.26
Expired		—			—
Forfeited		(25,260	)		2.07
Total outstanding – December 31, 2020		1,294,217		$	1.6670
Exercisable		1,290,621		$	1.66	$	1.11 — $2.54		4.17
Non-Exercisable		3,596		$	2.54	$	2.54		5.72

There was a total of approximately $0.3 million of compensation costs related to outstanding warrants for the year ended December 31, 2021 and $0 for the nine months ended December 31, 2020. As of December 31, 2021 and December 31, 2020, there was no unrecognized compensation cost related to nonvested warrants.

Noncompensatory Equity Classified Warrants

No new noncompensatory equity classified warrants were issued during the twelve months ended December 31, 2021.

During the nine months ended December 31, 2020, as a commitment fee, the Company issued noncompensatory equity classified warrants to an investor for the purchase of 270,478 shares of Company common stock at an exercise price of $1.11 per share. In addition, in July 2020 the Company issued noncompensatory equity classified warrants to an investor for the purchase of 2,700,966 shares of Company common stock at an exercise price of $5.25 per share, and in August 2020 the Company issued noncompensatory equity classified warrants to such investor for the purchase of 1,287,829 shares of Company common stock at an exercise price of $6.00 per share. Lastly, in December 2020, the Company issued noncompensatory equity classified warrants to such investor for the purchase of 1,000,000 shares of Company common stock at an exercise price of $0.01 per share and 2,191,000 shares of Company common stock at an exercise price of $4.07 per share. Warrants to purchase1,000,000 shares of Company common stock at an exercise price of $0.01 per share were exercised in February 2021.

During the year ended December 31, 2021, with the exception of the warrants to purchase 270,478 shares of the Company’s common stock at an exercise price of $1.11 per share, the exercise prices of all outstanding warrants to purchase a total of 5,399,517 shares of the Company’s common stock were all modified to an exercise price of $2.00 per share on November 29, 2021 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.

58

The following table summarizes the noncompensatory equity classified warrant activity for the year ended December 31, 2021:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		6,549,777		$	4.36
Legacy Ritter warrants		—			—
Granted		—			—
Exercised		(1,000,000	)		0.01
Expired		(640	)		2,325
Forfeited		—			—
Total outstanding – December 31, 2021		5,549,137			2.01
Exercisable		5,549,137			2.01		1.11 — 3.77		1.32
Non-Exercisable		—		$	—	$	—		—

The following table summarizes the noncompensatory equity classified warrant activity for the nine months ended December 31, 2020:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – March 31, 2020		—		$	—
Legacy Ritter warrants		81,455			21.94
Granted		7,450,193			4.18
Exercised		(980,198	)		1.11
Expired		(1,673	)		1,562.50
Forfeited		—			—
Total outstanding – December 31, 2020		6,549,777			4.36
Exercisable		5,707,081			4.40		0.01 — $2,325.00		1.43
Non-Exercisable		842,696		$	4.07	$	4.07	$	3.00

NOTE 12 — INCOME TAXES

A reconciliation of the statutory income tax rates and the Company’s effective tax rate is as follows:

	December 31, 2021			December 31, 2020
Statutory federal income tax rate		21.00	%		21.0	%
State taxes, net of federal tax benefit		6.63	%		2.5	%
Non-deductible expenses		(1.19	)%		(0.5	)%
NOL Expiration		(2.71	)%		0.0	%
Tax Credit		0.86	%		(2.8	)%
Change in fair value of warrant liability		5.54	%		(8.9	)%
True-up		(2.72	)%		(1.1	)%
Change in valuation allowance		(27.44	)%		(10.3	)%
Income taxes provision		(0.03	)%		(0.1	)%

59

Income tax expense for the year ended December 31, 2021 and nine months ended December 31, 2020 consisted of the following:

	December 31, 2021			December 31, 2020
Current
Federal	$	—		$	—
State		5,000			1,000
Total current provision		5,000			1,000
Deferred
Federal		(1,268,000	)		(1,634,000	)
State		(3,641,000	)		(384,000	)
Total deferred benefit		(4,909,000	)		(2,018,000	)
Change in valuation allowance		4,909,000			2,017,000
Total provision for income taxes	$	5,000		$	—

The components of deferred tax assets and liabilities are as follows:

	December 31, 2021			December 31, 2020
Deferred tax assets:
Net operating loss	$	33,362,000		$	28,914,000
Research and development credits		6,185,000			5,464,000
Accrued expenses		757,000			292,000
Patent		262,000			422,000
Impairment loss		—			361,000
Stock compensation		2,747,000			2,654,000
Other		—			84,000
Fixed assets		282,000			44,000
Total deferred income tax assets		43,595,000			38,235,000
Deferred tax liabilities:
Intangible assets		(34,000	)		(18,000	)
Right-of-use asset		(436,000	)		—
Total deferred income tax liabilities		(470,000	)		(18,000	)
Net deferred income tax assets		43,125,000			38,217,000
Valuation allowance		(43,125,000	)		(38,217,000	)
Deferred tax asset, net of allowance	$	—		$	—

Based on the available objective evidence, including the Company’s history of cumulative losses, management believes it is likely that the net deferred tax assets will not be realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2021 and December 31, 2020.

At December 31, 2021, the Company has federal and state net operating loss carryforwards of approximately $126,225,000 and $100,290,000, respectively, which are available to offset future taxable income. Federal and State carryovers began to expire in 2020. As a result of the May 2020 reverse recapitalization an ownership change has occurred. The Company has not completed an Internal Revenue Code Section 382 analysis. As a result, there could be substantial limitations on the Company’s ability to utilize its pre-ownership change net operating loss and tax credit carryforwards. These substantial limitations may result in both a permanent loss of certain tax benefits related to net operating loss carryforwards and federal research and development credits, and an annual utilization limitation. Due to the full valuation allowance already in place, the Company does not anticipate any change in the Company’s effective tax rate.

The Company also has research and development credit carryforwards for federal and state tax purposes of approximately $4,508,000 and $1,677,000, respectively. The research and development credit carryforwards began to expire in 2020 for federal tax purposes and have an indefinite life for state tax purposes.

The Company files income tax returns in the U.S. federal jurisdiction and in various states. The Company’s federal income tax returns for the years 2016 and beyond remain subject to examination by the Internal Revenue Service. The Company’s California income tax returns for the years 2015 and beyond remain subject to examination by the California Franchise Tax Board. In addition, all of the net operating losses, research and development credit and other tax credit carryforwards that may be used in future years are still subject to adjustment.

60

Generally accepted accounting principles clarify the accounting for uncertainty in income taxes recognized in the Company’s financial statements and prescribe thresholds for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provide guidance on de-recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company adopted these provisions effective April 1, 2009.

The Company did not have any unrecognized tax benefits as of December 31, 2021 and December 31, 2020 and does not expect this to change significantly over the next 12 months. In accordance with generally accepted accounting principles, the Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of December 31, 2021, the Company has not accrued any interest or penalties related to uncertain tax positions.

NOTE 13 — TRANSITION PERIOD COMPARATIVE DATA

The following table presents certain comparative transition period financial information for the year ended December 31, 2021 and the twelve months ended December 31, 2020, respectively.

	For the Twelve Months Ended December 31, 2021			For the Twelve Months Ended December 31, 2020 (unaudited)
Revenues	$	5,653,725		$	4,306,316
Gross profit on product sales	$	689,236		$	629,517
Net loss before income taxes	$	(17,891,710	)	$	(20,419,561	)
Net loss	$	(17,897,137	)	$	(20,421,979	)
Net loss per share – basic and fully diluted	$	(0.61	)	$	(1.17	)
Weighted average shares used in computing basic and diluted net loss per share		29,334,865			17,431,714

NOTE 14 - QUARTERLY FINANCIAL DATA (UNAUDITED)

In connection with our year-end financial close process and related preparation of our 2021 Annual Report on Form 10-K, our management identified an error in the previously issued March 31, 2021, June 30, 2021, and September 30, 2021 unaudited interim condensed consolidated financial statements in which the fair value of its exercised liability classified warrants had been inadvertently excluded from reclassification into shareholders’ equity. This error resulted in a $1.9 million overstatement of the gain on change in fair value of warrant liabilities included on the condensed Consolidated Statement of Operations. We assessed the materiality of this error in accordance with SEC Staff Accounting Bulletin: No. 108 – Financial Statement Misstatement and concluded to correct the misstatement in the accompanying condensed Consolidated Statement of Operations as of December 31, 2021. All financial information contained in the accompanying notes to these condensed consolidated financial statements has been revised to reflect the correction of this error.

	For the Quarter Ended March 31, 2021
	As reported			Corrected
Gain on change in fair value of warrant liabilities	$	(2,122,900	)	$	(552,808	)
Net loss	$	(3,672,627	)	$	(5,242,719	)
Net loss per common share	$	(0.13	)	$	(0.19	)

	For the Quarter Ended June 30, 2021						For the Six Months Ended June 30, 2021
	As reported			Corrected			As reported			Corrected
Gain on change in fair value of warrant liabilities	$	(2,075,100	)	$	(1,982,256	)	$	(4,198,000	)	$	(2,535,064	)
Net loss	$	(5,305,233	)	$	(5,398,077	)	$	(8,977,860	)	$	(10,640,796	)
Net loss per common share	$	(0.18	)	$	(0.19	)	$	(0.31	)	$	(0.37	)

	For the Quarter Ended September 30, 2021						For the Nine Months Ended September 30, 2021
	As reported			Corrected			As reported			Corrected
Gain on change in fair value of warrant liabilities	$	(1,942,900	)	$	(1,763,936	)	$	(6,140,900	)	$	(4,299,000	)
Net loss	$	(2,858,518	)	$	(3,037,482	)	$	(11,836,378	)	$	(13,678,278	)
Net loss per common share	$	(0.10	)	$	(0.10	)	$	(0.41	)	$	(0.48	)

NOTE 15 — SUBSEQUENT EVENTS

On January 13, 2022, we entered into a License Agreement with UCL Business Limited to obtain an exclusive worldwide in-license of a genomic quadruplex (G4)-selective transcription inhibitor drug development program which had been developed at University College London, including lead and back-up compounds, preclinical data and a patent estate. (UCL Business Limited is the commercialization company for University College London.) The program’s lead compound will be further developed at Qualigen under the name QN-302 as a candidate for treatment for pancreatic ductal adenocarcinoma (PDAC), which represents the vast majority of pancreatic cancers. The Agreement requires 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.

On March 4, 2022, the Company received a letter (the “Notice”) from The Nasdaq Stock Market notifying the Company that, because the closing bid price for its common stock has been below $1.00 per share for 30 consecutive business days, it no longer complies with the minimum bid price requirement for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”), and Listing Rule 5810(c)(3)(A) provides that a failure to meet the Minimum Bid Price Requirement exists if the deficiency continues for a period of 30 consecutive business days.

The Notice has no immediate effect on the listing of the Company’s common stock on The Nasdaq Capital Market. Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has been provided an initial compliance period of 180 calendar days, or until August 31, 2022 to regain compliance with the Minimum Bid Price Requirement. During the compliance period, the Company’s shares of common stock will continue to be listed and traded on The Nasdaq Capital Market. To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days during the 180 calendar day grace period.

In the event the Company is not in compliance with the Minimum Bid Price Requirement by August 31, 2022, the Company may be afforded a second 180 calendar day grace period. To qualify, the Company would be required to meet the continued listing requirements for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement. In addition, the Company would be required to provide written notice of its intention to cure the minimum bid price deficiency during this second 180-day compliance period by effecting a reverse stock split, if necessary.

The Company intends to actively monitor the bid price for its common stock between now and August 31, 2022 and will consider available options to regain compliance with the Minimum Bid Price Requirement.

On March 7, 2022, the Company extended an amendment to its sponsored research agreement with ULRF for development of several small-molecule RAS interaction inhibitor drug candidates and increased the amount that the Company will reimburse ULRF for sponsored research expenses from $1.8 million to approximately $2.7 million (see Note 10).

61

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A. Controls and Procedures.

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 defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2021, the end of the year covered by this Annual Report. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2021, our disclosure controls and procedures were not effective due to the newly identified material weakness described below. 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.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the 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 accounting principles generally accepted in the United States of America.

As of December 31, 2021, 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. Based on the material weakness described below, our management concluded that as of December 31, 2021, our internal control over financial reporting was not effective.

Description of Material Weakness

In connection with the audit of our financial statements as of and for the year ended December 31, 2021, our management and registered independent public accounting firm identified a material weakness in our internal control over financial reporting related to the lack of accounting department resources and/or policies and procedures to ensure recording and disclosure of items in compliance with U.S. GAAP. This material weakness resulted in adjustments to our warrant valuations.

We have evaluated and implemented additional procedures in order to remediate this material weakness, including utilizing external consulting resources with experience and expertise in U.S. GAAP and public company accounting and reporting requirements to assist management with its accounting and reporting of complex and/or non-recurring transactions and related disclosures. However, we cannot assure you that these or other measures will fully remediate the material weakness in a timely manner. Notwithstanding the identified material weakness, our management believes that (the indicated adjustments having been made) the consolidated financial statements included in this report fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

In response to this material weakness, we continue to take a number of remediation steps to enhance our internal controls, including implementing additional procedures and utilizing external consulting resources with experience and expertise in U.S. GAAP and public company accounting and reporting requirements to assist management with its accounting and reporting of complex and/or non-recurring transactions and related disclosures.

Changes in Internal Control over Financial Reporting

Other than as described above, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended December 31, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitation on Effectiveness of Controls

In designing and evaluating our controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. 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. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. In addition, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Item 9B. Other Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

62

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

We have adopted a code of business conduct and ethics, which we refer to as the Code of Ethics. Our Code of Ethics is designed to meet the requirements of Section 406 of Regulation S-K and the rules promulgated thereunder. We will promptly disclose on our website (i) the nature of any amendment to this Code of Ethics that applies to any covered person, and (ii) the nature of any waiver, including an implicit waiver, from a provision of this Code of Ethics that is granted to one of the covered persons. The Code of Ethics is available on our website at www.qualigeninc.com under the Investors section of the website. However, the information contained on or accessed through our website does not constitute part of this Annual Report, and references to our website address in this Annual Report are inactive textual references only.

The other information required by this item will be set forth in the sections of our proxy statement for the 2022 annual meeting of stockholders (the “Proxy Statement”) titled “Board of Directors and Corporate Governance –The Board of Directors in General,” “Executive Officers,” and “Board of Directors and Corporate Governance – Committees of the Board of Directors – Audit Committee” (or similarly titled sections), or an amendment to this Annual Report on Form 10-K (this “Annual Report”), and is incorporated herein by reference. The Proxy Statement will be filed with the SEC not later than 120 days after the close of our fiscal year ended December 31, 2021.

Item 11. Executive Compensation.

The information required by this item will be set forth in the section of our Proxy Statement titled “Executive and Director Compensation” (or a similarly titled section), or in an amendment to this Annual Report, and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item will be set forth in the sections of our Proxy Statement titled “Equity Compensation Plans” and “Ownership of the Company – Security Ownership of Certain Beneficial Owners and Management” (or similarly titled sections), or in an amendment to this Annual Report, and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item will be set forth in the sections of our Proxy Statement titled “Board of Directors and Corporate Governance – Certain Relationships and Related Party Transactions” and “- Director Independence” (or similarly titled sections), or in an amendment to this Annual Report, and is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services.

The information required by this item will be set forth in the section of our Proxy Statement titled “Relationship with Independent Registered Public Accounting Firm – Fees and Services of Baker Tilly US, LLP” (or a similarly titled section), or in an amendment to this Annual Report, and is incorporated herein by reference.

63

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report:

1. Financial Statements. The following documents are included in Part II, Item 8 of this Annual Report and are incorporated by reference herein:

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 23)	35
Financial Statements:
Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020	36
Consolidated Statements of Operations for the Year Ended December 31, 2021 and Nine Months Ended December 31, 2020	37
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Year Ended December 31, 2021 and Nine Months Ended December 31, 2020	38
Consolidated Statements of Cash Flows for the Year Ended December 31, 2021 and Nine Months Ended December 31, 2020	39
Notes to Consolidated Financial Statements	40

2. Financial Statement Schedules. Financial statement schedules have been omitted because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes thereto.

3. Exhibits. See EXHIBIT INDEX

EXHIBIT INDEX

Exhibit No.	Description	Form	File No.	Exhibit	Filing Date
2.1	Agreement and Plan of Merger, among Ritter Pharmaceuticals, Inc., RPG28 Merger Sub, Inc. and Qualigen, Inc., dated January 15, 2020	8-K	001-37428	2.1	1/21/2020
2.2	Amendment No. 1 to Agreement and Plan of Merger among Ritter Pharmaceuticals, Inc., RPG28 Merger Sub, Inc. and Qualigen, Inc., dated February 1, 2020	S-4	333-236235	Annex B	4/6/2020
2.3	Amendment No. 2 to Agreement and Plan of Merger among Ritter Pharmaceuticals, Inc., RPG28 Merger Sub, Inc. and Qualigen, Inc., dated March 26, 2020	S-4	333-236235	Annex C	4/6/2020
2.4	Contingent Value Rights Agreement, dated May 22, 2020, among the Company, John Beck in the capacity of CVR Holders’ Representative and Andrew J. Ritter in his capacity as a consultant to the Company.	8-K	001-37428	2.4	5/29/2020
3.1	Amended and Restated Certificate of Incorporation of Ritter Pharmaceuticals, Inc.	8-K	001-37428	3.1	7/1/2015
3.2	Certificate of Amendment to the Amended and Restated Certificate of Incorporation	8-K	001-37428	3.1	9/15/2017
3.3	Certificate of Amendment to the Amended and Restated Certificate of Incorporation	8-K	001-37428	3.1	3/22/2018
3.4	Certificate of Designation of Preferences, Rights and Limitations of Series Alpha Preferred Stock of the Company, filed with the Delaware Secretary of State on May 20, 2020	8-K	001-37428	3.1	5/29/2020
3.5	Certificate of Amendment to the Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on May 22, 2020 [reverse stock split]	8-K	001-37428	3.2	5/29/2020

3.6	Certificate of Merger, filed with the Delaware Secretary of State on May 22, 2020	8-K	001-37428	3.3	5/29/2020
3.7	Certificate of Amendment to the Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on May 22, 2020	8-K	001-37428	3.4	5/29/2020
3.8	Amended and Restated Bylaws of the Company, as of August 10, 2021	8-K	001-37428	3.1	8/13/2021
3.9	Certificate of Designation of Preferences, Rights and Limitations of Series Alpha Preferred Stock of Qualigen, filed with the Delaware Secretary of State on May 22, 2020	8-K	001-37428	3.6	5/29/2020
4.1	Warrant Agency Agreement between Ritter Pharmaceuticals, Inc. and Corporate Stock Transfer, Inc. and Form of Warrant Certificate	8-K	001-37428	4.1	10/4/2017

64

4.2	First Amendment to Warrant Agency Agreement between Ritter Pharmaceuticals, Inc. and Corporate Stock Transfer, Inc.	8-K	001-37428	4.1	5/7/2018
4.3	Second Amendment to Warrant Agency Agreement between the Company and Equiniti Group plc, dated November 9, 2020	10-K	001-37428	4.3	3/31/2021
4.4	Warrant, issued by the Company in favor of Alpha Capital Anstalt, dated May 22, 2020	8-K	001-37428	10.13	5/29/2020
4.6	Form of Warrant, issued by the Company in favor of GreenBlock Capital LLC and its designees, dated May 22, 2020 [post-Merger]	8-K	001-37428	10.10	5/29/2020
4.7	Common Stock Purchase Warrant for 1,920,768 shares in favor of Alpha Capital Anstalt, dated July 10, 2020	8-K	001-37428	10.2	7/10/2020
4.8	Pre-Funded Common Stock Purchase Warrant for 1,920,768 shares in favor of Alpha Capital Anstalt, dated July 10, 2020	8-K	001-37428	10.3	7/10/2020
4.9	Common Stock Purchase Warrant for 1,287,829 shares in favor of Alpha Capital Anstalt, dated August 4, 2020	8-K	001-37428	10.3	8/4/2020
4.10	“Two-Year” Common Stock Purchase Warrant for 1,348,314 shares in favor of Alpha Capital Anstalt, dated December 18, 2020	8-K	001-37428	10.3	12/18/2020
4.11	“Deferred” Common Stock Purchase Warrant for 842,696 shares in favor of Alpha Capital Anstalt, dated December 18, 2020	8-K	001-37428	10.4	12/18/2020
4.12	“Prefunded” Common Stock Purchase Warrant for 1,000,000 shares in favor of Alpha Capital Anstalt, dated December 18, 2020	8-K	001-37428	10.5	12/18/2020
4.13	Form of liability classified Warrant to Purchase Common Stock (“exploding warrant”)	10-K	001-37428	4.13	3/31/2021
4.14	Form of “service provider” (non-”exploding”) compensatory equity classified Warrant	10-K	001-37428	4.14	3/31/2021

4.15	Description of Common Stock	10-K	001-37428	4.7	3/31/2020
10.1+	Executive Employment Agreement, by and between Qualigen, Inc. and Michael Poirier, dated as of February 1, 2017 and as amended on January 9, 2018	8-K	001-37428	10.1	5/29/2020
10.2+	Executive Employment Agreement, by and between Qualigen, Inc. and Christopher Lotz, dated as of February 1, 2017 and as amended on January 9, 2018	8-K	001-37428	10.1	5/29/2020
10.3+	Executive Employment Agreement, by and between Qualigen, Inc. and Shishir Sinha, dated as of February 1, 2017 and as amended on January 9, 2018	8-K	001-37428	10.1	5/29/2020
10.4+	2015 Equity Incentive Plan	S-8	333-207709	99.3	10/30/15

65

10.5+	Amendment to 2015 Equity Incentive Plan	8-K	001-37428	10.1	6/6/2016
10.6+	Second Amendment to 2015 Equity Incentive Plan	8-K	001-37428	10.1	6/6/2017
10.7+	Third Amendment to 2015 Equity Incentive Plan	8-K	001-37428	10.1	9/15/2017
10.8+	Form of Notice of Grant of Stock Option under the 2015 Equity Incentive Plan	S-8	333-207709	99.4	10/30/15
10.9+	2020 Stock Equity Incentive Plan	S-4/A	333-236235	Annex G	4/6/2020
10.10+	Standard template of Stock Option Agreement for use under 2020 Stock Incentive Plan	8-K	001-37428	10.1	6/11/2020
10.11	Amended and Restated Common Stock Purchase Agreement, between Ritter Pharmaceuticals, Inc. and Aspire Capital Fund, LLC, dated July 23, 2019	8-K	001-37428	10.1	7/24/2019
10.12	Form of Agreement to Exchange Warrants	8-K	001-37428	10.1	2/21/2020
10.13	Consulting Agreement, by and between Qualigen, Inc. and GreenBlock Capital LLC, dated as of August 22, 2018	8-K	001-37428	10.6	5/29/2020
10.14	Amendment to Consulting Agreement, by and between Qualigen, Inc. and GreenBlock Capital LLC, dated as of March 6, 2020	8-K	001-37428	10.7	5/29/2020
10.15	Amendment No. 2 to Consulting Agreement, between Qualigen, Inc. and GreenBlock Capital LLC, dated as of May 3, 2020	8-K	001-37428	10.8	5/29/2020
10.16	Securities Purchase Agreement, between Qualigen, Inc. and Alpha Capital Anstalt, dated May 20, 2020	8-K	001-37428	10.11	5/29/2020
10.17+	Notice of Grant of Stock Option / Stock Option Agreement, between the Company and Andrew J. Ritter, dated as of May 18, 2020	8-K	001-37428	10.14	5/29/2020
10.18+	Notice of Grant of Stock Option / Stock Option Agreement, between the Company and Ira E. Ritter, dated as of May 18, 2020	8-K	001-37428	10.15	5/29/2020
10.19+	Notice of Grant of Stock Option / Stock Option Agreement, between the Company and John Beck, dated as of May 18, 2020	8-K	001-37428	10.16	5/29/2020
10.20	Consulting Agreement, between the Company and Andrew J. Ritter, dated as of May 22, 2020	8-K	001-37428	10.17	5/29/2020
10.21	Consulting Agreement, between the Company and Stonehenge Partners, LLC, dated as of May 22, 2020	8-K	001-37428	10.18	5/29/2020
10.22	Consulting Agreement, between the Company and CFB Financial, Inc., dated as of May 22, 2020	8-K	001-37428	10.19	5/29/2020

66

10.23+	Form of Indemnification Agreement – Qualigen, Inc.	8-K	001-37428	10.21	5/29/2020
10.24	Letter agreement amending M&A Advisory Agreement between the Company and A.G.P./Alliance Global Partners dated May 20, 2020	10-Q	001-37428	10.17	8/14/2020
10.25	Exclusive Agreement, by and between Qualigen, Inc. and University of Louisville Research Foundation, Inc. dated as of June 8, 2018	S-4/A	333-236235	10.58	3/13/2020
10.26	Exclusive License Agreement, between the Company and University of Louisville Research Foundation, Inc. dated as of June 9, 2020	10-Q	001-37428	10.18	8/14/2020
10.27	Exclusive License Agreement between the Company and University of Louisville Research Foundation, Inc., dated as of July 17, 2020	8-K	001-37428	10.4	8/4/2020
10.28	License Agreement between Qualigen, Inc. and Advanced Cancer Therapeutics, LLC dated December 17, 2018	S-4/A	333-236235	10.59	3/13/2020
10.29	Novation Agreement among the Company, Qualigen, Inc. and Advanced Cancer Therapeutics, LLC dated July 29, 2020	10-K	001-37428	10.31	3/31/2021
10.30	Distribution and Development Agreement, dated May 1, 2016, by and between Sekisui Diagnostics, LLC and its Affiliates, and Qualigen, Inc. and its Affiliates	S-4/A	333-236235	10.54	3/13/2020
10.31	Letter of Intent, dated March 16, 2018, by and between Sekisui Diagnostics, LLC and Qualigen, Inc.	S-4/A	333-236235	10.55	3/13/2020
10.32	Amendment to Distribution and Development Agreement, dated April 2, 2018, by and between Sekisui Diagnostics, LLC and Qualigen, Inc.	S-4/A	333-236235	10.56	3/13/2020
10.33	Amendment to Letter of Intent, dated December 6, 2019, by and between Sekisui Diagnostics, LLC and Qualigen, Inc.	S-4/A	333-236235	10.57	3/13/2020
10.34	Amended and Restated Letter of Intent, dated August 22, 2018, by and between Sekisui Diagnostics, LLC and Qualigen, Inc.	S-4/A	333-236235	10.60	3/13/2020
10.35	Letter agreement (for payment date extension) between the Company and Sekisui Diagnostics, LLC dated June 23,2020	10-Q	001-37428	10.19	8/14/2020
10.36	Securities Purchase Agreement between the Company and Alpha Capital Anstalt, dated July 8, 2020 [corrected]	8-K	001-37428	10.1	7/10/2020
10.37	Placement Agency Agreement between the Company and A.G.P./Alliance Global Partners, dated July 8, 2020	8-K	001-37428	10.4	7/9/2020

10.38 Securities Purchase Agreement between the Company and Alpha Capital Anstalt, dated August 2, 2020 8-K 001-37428 10.1 8/4/2020

67

10.39	Placement Agency Agreement between the Company and A.G.P./Alliance Global Partners, dated August 2, 2020	8-K	001-37428	10.2	8/4/2020
10.40	Technology Transfer Agreement dated as of October 7, 2020 between Qualigen, Inc. and Yi Xin Zhen Duan Jishu (Suzhou) Ltd.	8-K	001-37428	10.1	10/9/2020
10.41	Securities Purchase Agreement between the Company and Alpha Capital Anstalt, dated December 16, 2020	8-K	001-37428	10.1	12/18/2020
10.42	Placement Agency Agreement between Qualigen Therapeutics, Inc. and A.G.P./Alliance Global Partners, dated December 15, 2020	8-K	001-37428	10.2	12/18/2020
10.43	Novation Agreement among the Company, Qualigen, Inc. and University of Louisville Research Foundation, Inc. dated January 30, 2021	10-Q	001-37428	10.1	5/14/2021
10.44	Novation Agreement among the Company, Qualigen, Inc. and University of Louisville Research Foundation, Inc. dated March 1, 2021	10-Q	001-37428	10.2	5/14/2021
10.45	Amendment to Distribution and Development Agreement between Sekisui Diagnostics, LLC and Qualigen, Inc., dated as of July 1, 2021 [signed August 2, 2021].	8-K	001-37428	10.1	8/13/2021
10.46	Hire offer letter from the Company to Tariq Arshad, dated April 22, 2021	8-K	001-37428	10.1	8/16/2021
10.47	Amendment to Distribution and Development Agreement between Sekisui Diagnostics, LLC and Qualigen, Inc., dated as of July 1, 2021 [signed August 2, 2021]	10-Q	001-37428	10.1	11/15/2021
10.48	Amendment to Technology Transfer Agreement between Yi Xin Zhen Duan Jishu (Suzhou) Ltd. and Qualigen, Inc., dated August 5, 2021	10-Q	001-37428	10.2	11/15/2021
10.49	Amendment to 2020 Stock Incentive Plan (approved by the Board of Directors on April 27, 2021 and by the Stockholders on August 9, 2021)	10-Q	001-37428	10.3	11/15/2021
10.50**	(Form of) Securities Purchase Agreement, dated November 29, 2021.	8-K	001-37428	10.1	12/1/2021
10.51	Placement Agency Agreement between Qualigen Therapeutics, Inc. and A.G.P./Alliance Global Partners, dated November 29, 2021.	8-K	001-37428	10.2	12/1/2021
10.52	Waiver and Amendment between Qualigen Therapeutics, Inc. and Alpha Capital Anstalt, dated November 29, 2021.	8-K	001-37428	10.3	12/1/2021
10.53*	Executive Employment Agreement dated December 10, 2021 with Amy Broidrick
10.54*	Second Amendment to Lease with Bond Ranch LP dated December 15, 2021

68

10.55*	License Agreement with UCL Business Limited dated January 13, 2022
14.1	Code of Business Conduct and Ethics	8-K	001-37428	14.1	5/29/2020
21.1*	Subsidiaries of the Registrant
23.1*	Consent of Baker Tilly US, LLP, independent registered public accounting firm
24.1*	Power of Attorney (included on signature page)
31.1*	Certificate of principal executive officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certificate of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certificate of principal executive officer and principal financial officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS#	Inline XBRL Instance Document.
101.SCH#	Inline XBRL Taxonomy Extension Schema Document.
101.CAL#	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF#	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB#	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE#	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed or furnished herewith.

** Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedules will be furnished to the SEC upon request.

+ Indicates management contract or compensatory plan or arrangement.

# XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

Item 16. Form 10-K Summary

Not applicable.

69

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Qualigen Therapeutics, Inc.
	By:	/s/ Michael S. Poirier
		Michael S. Poirier
		Chairman of the Board, Chief Executive Officer and President
Date: March 31, 2022

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Michael S. Poirier and Christopher L. Lotz, and each of them individually, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Michael S. Poirier	Chairman of the Board, Chief Executive Officer and President	March 31, 2022
Michael S. Poirier	(Principal Executive Officer)
/s/ Christopher L. Lotz	Vice President of Finance, Chief Financial Officer	March 31, 2022
Christopher L. Lotz	(Principal Financial and Accounting Officer)
/s/ Amy S. Broidrick	Director	March 31, 2022
Amy S. Broidrick
/s/ Richard A. David	Director	March 31, 2022
Richard A. David
/s/ Sidney W. Emery, Jr.	Director	March 31, 2022
Sidney W. Emery, Jr.
/s/ Matthew E. Korenberg	Director	March 31, 2022
Matthew E. Korenberg
/s/ Kurt H. Kruger	Director	March 31, 2022
Kurt H. Kruger
/s/ Ira E. Ritter	Director	March 31, 2022
Ira E. Ritter

70

EX-10.53

Exhibit 10.53

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into effective as of December 10, 2021 (the “Effective Date”), by and between Qualigen Therapeutics, Inc., a Delaware corporation with its principal office at 2042 Corte Del Nogal, Carlsbad, CA 92011 USA (the “Company”), and Amy Broidrick (the “Executive”), whose address is 1440 Valle Grande, Escondido, CA 92025 USA.

W I T N E S S E T H:

WHEREAS, the Company has engaged the Executive as its President and Chief Strategy Officer and desires to continue to obtain the benefits of the Executive’s knowledge, skill and ability in connection with managing the strategy, business development, operations, research and development, and certain other functions of the Company and to continue to employ the Executive as its President and Chief Strategy Officer on the terms and conditions hereinafter set forth; and

WHEREAS, the Executive desires to provide her services to the Company and to accept employment by the Company on the terms and conditions set forth in this Agreement, which supersedes all prior agreements, whether written or oral, including those under any previous employment agreement between the Executive and the Company;

NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Employment and Duties; Term.

(a) Subject to the terms and conditions hereinafter set forth, the Company hereby employs the Executive as its President, and she shall have the duties and responsibilities customarily associated with such positions, including without limitation general responsibility for the management of the Company’s strategy, business development, operations, research and development, and certain other functions of the Company. The Executive shall report to the Company’s Chief Executive Officer. The Executive shall also perform such other duties and responsibilities as may be determined and directed by the Company’s Chief Executive Officer or by the Company’s Board of Directors (the “Board”), as long as such duties and responsibilities are generally consistent with those of a President.

(b) The Executive shall serve as a director of the Company or any of its subsidiaries, if validly elected or appointed, and in such executive capacity or capacities with respect to any Affiliate of the Company to which she may be elected or appointed, provided that such duties are consistent with those of a company’s President. The Executive shall receive no additional compensation for services rendered pursuant to this Section 1(b).

(c) The Executive’s job location shall be in San Diego County, California, but this provision shall not preclude the Company from moving its headquarters to a location other than in San Diego County, California. Any such relocation by the Company or failure by the Executive to relocate shall not breach the terms of this Agreement.

(d) Unless terminated earlier pursuant to any of the provisions of Section 5 of this Agreement, this Agreement shall have an initial term (the “Initial Term”) of one year, commencing as of December 10, 2021 and expiring on April 30, 2022. Following completion of the Initial Term, this Agreement shall automatically renew thereafter on a year-to-year basis for successive one-year periods (i) unless and until terminated by either party pursuant to any of the provisions of Section 5, or (ii) unless the Company or the Executive delivers to the other party written notice of non-renewal at least 90 days before the expiration of the Initial Term or any subsequent one-year term (in which event this Agreement shall then terminate upon the expiration of the Initial Term or such one-year extended term, as applicable). The Initial Term and the one-year extensions are collectively referred to herein as the “Term.”

1

2. Executive’s Performance.

(a) The Executive hereby accepts the employment contemplated by this Agreement. During the Term, the Executive shall devote substantially all of her business time to the performance of her duties under this Agreement, and she shall perform such duties diligently, in good faith and in a manner consistent with the best interests of the Company and applicable laws. During the Term, the Executive will not, without the prior written approval of the Board, serve or act as a shareholder (except for passive holdings of not more than 1% of the other entity’s outstanding stock), employee, agent, consultant, officer, director, partner, member, representative, lender or owner of any other business entity, nor (if it would require more than an insubstantial amount of business time or attention) of any non-profit entity.

(b) The Executive shall comply with all applicable governmental laws, rules and regulations and with the Company’s policies applicable to all employees of the Company.

3. Compensation and Other Benefits.

(a) Salary. For her services to the Company during the Term, the Company shall pay the Executive an annual salary (“Salary”) at the rate of $450,000 per year during the Initial Term. The Company shall make all Salary payments to the Executive less required taxes and other withholdings and otherwise in accordance with the Company’s general payroll practices and policies, provided that the Company shall pay installments of Salary to the Executive not less frequently than bi-weekly. The Executive’s Salary shall be reviewed at least annually by the Board or any compensation committee thereof and (i) may be increased from time to time in the sole discretion of the Board or any such compensation committee, and (ii) may otherwise be adjusted by mutual written agreement of the Company and the Executive.

(b) Potential bonus payments as approved from time to time in the sole discretion of the Board or any compensation committee thereof.

(c) Other Benefits. The Executive shall be eligible on the same basis as other executive officers and employees of the Company (and subject to any other eligibility requirements, cost sharing and other terms and conditions) to participate in and receive benefits under any other bonus plan or any equity or long-term incentive, deferred compensation, retirement, savings, group insurance (including, without limitation, medical, dental, life, accident and disability insurance), group health or other welfare or benefit plan or program as may be approved by the Board of the compensation committee thereof and offered to the Company’s executive officers and employees generally; provided, however, that the severance benefits (if any) payable under Section 5 of this Agreement shall be in lieu of (and not in addition to) any severance benefits that would otherwise be due to the Executive under any severance policy or plan otherwise in effect at the Company upon termination of the Executive’s employment; and provided further that the Company shall not have any obligation to maintain any particular plan or program indefinitely or for any specific period of time. In addition, the Executive shall be entitled to four weeks paid vacation per full year of service, in accordance with and subject to the Company’s vacation accrual plan and policies.

4. Reimbursement of Expenses. The Company shall reimburse the Executive, upon presentation of proper expense statements, for all authorized, ordinary and necessary out-of-pocket expenses reasonably incurred by Executive during the Term in connection with the performance of her services pursuant to this Agreement in accordance with the Company’s expense reimbursement policy.

5. Termination of Employment.

(a) Resignation by the Executive. The Executive may terminate this Agreement and her employment hereunder at any time by written resignation. A resignation for Good Reason shall be treated hereunder as if it were a termination by the Company without Cause and shall have the effects stated in Section 5(e) with regard to termination without Cause, rather than the effects stated in the sub-subsections of this Section 5(a).

2

“Good Reason” means the occurrence of any of the following circumstances, without the Executive’s express consent: the Executive resigns due to (i) a material reduction of the Executive’s title or authority, (ii) a material reduction in the Executive’s salary or benefits (other than a reduction that generally applies to the officers at the Executive’s level in the Company or, as applicable, after a transaction in which the Company or substantially all its assets is acquired, in the successor entity at that time), (iii) any material breach of this Agreement by the Company which is not cured within 30 days after written notice by the Executive; or (iv) a change of the principal non-temporary location in which the Executive is required to perform the Executive’s services to any location exceeding 35 miles from Carlsbad, California. In no event shall a resignation be considered to be with Good Reason unless the resignation occurs after but within 30 days after the initiation of the item of Good Reason.

Termination of this Agreement and of the Executive’s employment by the Executive for Good Reason shall be without prejudice to any other right or remedy to which the Executive may be entitled at law, in equity or otherwise under this Agreement.

In any circumstance involving a termination of this Agreement and of the Executive’s employment pursuant to this Section 5(a) (i.e., resignation without Good Reason):

(i) the Company shall (A) pay the Executive an amount in cash equal to the Executive’s accrued but unpaid Salary and vacation pay through the date of termination, (B) pay the Executive an amount in cash equal to any bonus that has been earned by the Executive under Section 3 hereof before the date of termination but that remains unpaid as of such date, and (C) promptly reimburse any expenses incurred by the Executive through the date of termination and for which the Executive is entitled to receive reimbursement under Section 4 hereof in accordance with the Company’s expense reimbursement policies (all such payments referenced in this subparagraph (i) being collectively referred to in this Agreement as the “Base Termination Payments”);

(ii) the Executive shall retain and receive any other rights or benefits (to the extent earned and vested as of the date of termination) under any Company employee benefit plans or arrangements in accordance with the terms of such plans and arrangements;

(iii) the Executive shall not otherwise be entitled to any severance payments or similar benefits as of the date of termination (except as and to the extent required by applicable law); and

(iv) except as otherwise expressly provided in this Section 5(a), any and all other rights of the Executive to receive a Salary, bonus or other compensation or benefits shall terminate as of the effective date of termination.”

(b) Non-Renewal as of End of lnitial or Subsequent Term. Either the Company or the Executive may terminate this Agreement and the Executive’s employment hereunder effective upon expiration of the Initial Term or any succeeding term by written notice of non-renewal delivered to the other party at least 90 days’ before the applicable expiration date of the then-current term. In any circumstance involving a termination of this Agreement and of the Executive’s employment pursuant to this Section 5(b):

(i) the Company shall make the Base Termination Payments (as defined in Section 5(a)(i));

(ii) the Executive shall retain and receive any other rights or benefits (to the extent earned and vested as of the date of termination) under any Company employee benefit plans or arrangements in accordance with the terms of such plans and arrangements;

(iii) the Executive shall not otherwise be entitled to any severance payments or similar benefits as of the date of termination (except as and to the extent required by applicable law); and

(vi) except as otherwise expressly provided in this Section 5(b), any and all other rights of the Executive to receive a Salary, bonus or other compensation or benefits shall terminate as of the effective date of termination.

3

(c) Death or Disability of the Executive. This Agreement and the Executive’s employment shall terminate immediately upon the death of the Executive. In addition, this Agreement and Executive’s employment may be terminated by the Company effective upon delivery of written notice to the Executive in the event of the Executive’s Disability. For purposes of this Agreement, the term “Disability” shall mean the Executive’s inability to perform her duties hereunder as President of the Company, as reasonably determined by the Board, as a result of prolonged absence from work for health reasons or physical or mental disability, illness or incapacity for a continuous period of 90 days, or for shorter periods aggregating four months in any 12 month period.

In any circumstance involving a termination of this Agreement and of the Executive’s employment pursuant to this Section 5(c):

(i) the Company shall make the Base Termination Payments (as defined in Section 5(a)(i));

(ii) the Executive shall retain and receive any other rights or benefits (to the extent earned and vested as of the date of termination) under any Company employee benefit plans or arrangements in accordance with the terms of such plans and arrangements;

(iii) the Executive shall not otherwise be entitled to any severance payments or similar benefits as of the date of termination (except as and to the extent required by applicable law); and

(iv) except as otherwise expressly provided in this Section 5(c), any and all other rights of the Executive to receive a Salary, bonus or other compensation or benefits shall terminate as of the effective date of termination.

(d) Termination by the Company for “Cause.”

(i) The Company, effective upon delivery of written notice to the Executive, may terminate this Agreement and the Executive’s employment for “Cause.” For purposes of this Agreement, the term “Cause” shall mean any of the following:

(A) a material breach by the Executive of any of Sections 6, 7 or 8 of this Agreement;

(B) a material breach by the Executive of any other provision of this Agreement, if such material breach (if susceptible to cure) has continued uncured for a period of at least 15 days following delivery by the Company to the Executive of written notice of such material breach;

(C) fraud, dishonesty or other breach of trust whereby the Executive obtains personal gain or benefit at the expense of or to the detriment of the Company or any of the Company’s subsidiaries or other Affiliates;

(D) a conviction of or plea of nolo contendere or similar plea by the Executive of any felony;

(E) a conviction of or plea of nolo contendere or similar plea by of any other crime involving theft, misappropriation of property, dishonesty or moral turpitude;

(F) a willful and material violation of applicable law by the Executive in connection with the performance of her duties hereunder;

(G) chronic or repeated substance abuse by the Executive, or any other use by the Executive of alcohol, drugs or illegal substances in such a manner as to interfere with the performance of her material duties hereunder; or

4

(H) failure to comply with the lawful directions of the President and Chief Executive Officer or of the Board which are otherwise consistent with the terms of this Agreement, which failure has continued for a period of at least IO days after delivery by the Company to the Executive of written demand by the Board.

Termination of this Agreement by the Company for “Cause” shall be without prejudice to any other right or remedy to which the Company may be entitled at law, in equity or otherwise under this Agreement.

(ii) In any circumstance involving a termination of this Agreement and of the Executive’s employment pursuant to the preceding Section 5(d)(i):

(A) the Company shall make the Base Termination Payments (as defined in Section 5(a)(i));

(B) the Executive shall retain and receive any other rights or benefits (to the extent earned and vested as of the date of termination) under any Company employee benefit plans or arrangements in accordance with the terms of such plans and arrangements;

(C) the Executive shall not otherwise be entitled to any severance payments or similar benefits as of the date of termination (except as and to the extent required by applicable law); and

(D) except as otherwise expressly provided in this Section 5(d)(ii), any and all other rights of the Executive to receive a Salary, bonus or other compensation or benefits shall terminate as of the effective date of termination.

(e) Termination by the Company Without “Cause.” The Company, in the sole discretion of the Board and effective upon delivery of not less than 30 days’ advance written notice to the Executive, may terminate this Agreement and the Executive’s employment hereunder at any time and for any reason, including without “Cause.” In the event that the Company terminates the Executive’s employment under this Section 5(e):

(i) the Company shall make the Base Termination Payments (as defined in Section 5(a)(i));

(ii) subject to Section 5(f), conditioned upon receipt by the Company of a general release in form reasonably acceptable to the Company and expiration of any revocation period applicable to such release without the Executive having revoked such release, and in lieu of any severance benefits that may otherwise be payable under any other severance plan or policy of the Company, the Company (A) shall continue to pay to the Executive as severance her Salary at the rate then in effect on the date of termination for a period of 12 months following the date of termination, such payments to be made by the Company at the times, subject to applicable withholdings and otherwise in accordance with the Company’s general payroll practices and policies, and (B) pay or reimburse the Executive for the cost of COBRA continuation medical and dental insurance coverage for the Executive for the 12 month severance period (less any required taxes or withholdings); provided, however, that if the Company determines in its sole discretion that it cannot provide the foregoing COBRA benefits without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to the Executive a taxable lump-sum payment in an amount equal to the monthly (or then remaining) COBRA premium that Executive would be required to pay to continue her group health coverage for herself as in effect on the termination date (which amount shall be based on the premium for the first month of COBRA coverage) until the date that is 180 days following the Executive’s date of termination. Notwithstanding the foregoing, any severance payments that otherwise would be required to be made under this subparagraph (iv) within 45 days following the Executive’s date of termination shall instead be made on the Company’s first normal payroll date that is more than 45 days following the Executive’s date of termination; and

(iii) the Executive shall retain and receive any other rights or benefits (to the extent earned and vested as of the date of termination) under any Company employee benefit plans or arrangements in accordance with the terms of such plans and arrangements; and

5

(iv) except as otherwise expressly provided in this Section 5(e), any and all other rights of the Executive to receive a Salary, bonus or other compensation or benefits shall terminate as of the effective date of termination.

(f) Offset for Material Breaches of Restrictive Covenants. If the Executive materially breaches any provision contained in either Section 6 or Section 7 of this Agreement, the Company, from the date of such breach going forward, shall no longer be obligated to make any payments or reimbursements to the Executive or provide any benefits to the Executive under this Section 5, and any rights to receive severance or COBRA benefits under Section 5(e)(iv).

6. Trade Secrets and Proprietary Information.

(a) Executive recognizes and acknowledges that the Company, through the expenditure of considerable time and money, has developed and will continue to develop in the future information concerning customers, clients, marketing, patents, products, services, business, research and development activities and operational methods of the Company and its customers or clients, contracts, financial or other data, technical data or any other confidential or proprietary information possessed, owned or used by the Company, the disclosure of which could or does have a material adverse effect on the Company, its business, any business it proposes to engage in, its operations, financial condition or prospects and that the same are confidential and proprietary and considered “Confidential Information” of the Company for the purposes of this Agreement. In consideration of her employment, the Executive agrees that she will not, during or after the Term, without the consent of the Board make any disclosure of Confidential Information now or hereafter possessed by the Company, to any person, partnership, corporation or entity either during or after the term here of, except that nothing in this Agreement shall be construed to prohibit Executive from using or disclosing such information (i) if such disclosure is necessary in the normal course of the Company’s business in accordance with Company policies or instructions or authorization from the Board, (ii) such information shall become public knowledge other than by or as a result of disclosure by a person not having a right to make such disclosure, (iii) complying with legal process as provided in Section 6(b) of this Agreement, or (iv) subsequent to the Term, if such information shall have either been developed by Executive independent of any of the Company’s confidential or proprietary information or been disclosed to Executive by a person not subject to a confidentiality agreement with or other obligation of confidentiality to the Company. For the purposes of Sections 6, 7 and 8 of this Agreement, the term “Company” shall include the Company, its parent, its subsidiaries and other Affiliates.

(b) In the event that any Confidential Information is required to be produced by Executive pursuant to legal process, the Executive shall give the Company notice of such legal process within a reasonable time, but not later than ten business days before the date such disclosure is to be made, unless Executive has received less notice, in which event the Executive shall immediately notify the Company. The Company shall have the right to object to any such disclosure, and if the Company objects (at the Company’s cost and expense) in a timely manner, the Executive shall not make any disclosure until there has been a court determination on the Company’s objections. If disclosure is required by a court order, final beyond right of review, or if the Company does not object to the disclosure, the Executive shall make disclosure only to the extent that disclosure is required by the court order, and the Executive will exercise reasonable efforts to obtain reliable assurances that confidential treatment will be accorded the Confidential Information.

(c) The Executive shall, upon expiration or termination of the Term, or earlier at the request of the Company, turn over to the Company all documents, papers, computer disks or other material in the Executive’s possession or under the Executive’s control which may contain or be derived from Confidential Information. To the extent that any Confidential Information is on Executive’s hard drive or other storage media, she shall, upon the request of the Company, cause such information to be erased from her computer disks and all other storage media.

6

7. Covenant Regarding Improper Use of Confidential Information.

(a) During the period from the date of this Agreement until one year following the date on which Executive’s employment is terminated, Executive will not, directly or indirectly:

(i) Utilize the Company’s Confidential Information to persuade or attempt to persuade any person or entity which is or was a customer, client or supplier of the Company to cease doing business with the Company, or to reduce the amount of business it does with the Company (the terms “customer” and “client” as used in this Section 7 to include any potential customer or client to whom the Company submitted bids or proposals, or with whom the Company conducted negotiations, during the term of Executive’s employment or during the 12 months preceding the termination of her employment);

(ii) Utilize the Company’s Confidential Information to solicit for herself or any other person or entity other than the Company the business of any person or entity which is a customer or client of the Company, or was a customer or client of the Company within one year before the termination of her employment; or

(iii) Persuade or attempt to persuade any employee of the Company, or any individual who was an employee of the Company during the one year period before the termination of this Agreement, to leave the Company’s employ, or to become employed by any person or entity other than the Company.

(b) The Executive acknowledges that the restrictive covenants (the “Restrictive Covenants”) contained in Sections 6 and 7 of this Agreement are a condition of her employment and are reasonable and valid in geographical and temporal scope and in all other respects. If any court or arbitrator determines that any of the Restrictive Covenants, or any part of any of the Restrictive Covenants, is invalid or unenforceable, the remainder of the Restrictive Covenants and parts thereof shall not thereby be affected and shall remain in full force and effect, without regard to the invalid portion. If any court or arbitrator determines that any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable because of the geographic or temporal scope of such provision, such court or arbitrator shall have the power to reduce the geographic or temporal scope of such provision, as the case may be, and, in its reduced form, such provision shall then be enforceable.

8. Ownership of Intellectual Property.

(a) “Inventions” means all inventions, ideas, discoveries, developments, methods, data, information, improvements, original works, know-how, including, but not limited to, algorithms, technology, trade secrets, processes, codes and hardware (whether or not reduced to practice and whether or not protectable under the patent, copyright, trade secrecy or similar laws of the United States, the People’s Republic of China or any applicable foreign country) which:

(i) relate to the Company’s business at the time of conception or reduction to practice or actual or demonstrably anticipated research or development of Company that were conceived, created or developed by the Executive (whether alone or with others, whether or not during working hours or on the Company’s premises or whether or not using material or property provided by the Company) during the Term or having conceived, created or developed before the Term while Executive was employed by the Company; and/or

(ii) were conceived, created or developed by the Executive (whether alone or with others) during the Term, even if having possibly been conceived, created or developed before the Term but completed while in the employ of the Company, or which result from any work performed by the Executive for Company.

(b) All Inventions are, will be, and shall constitute “works-for-hire” and the exclusive property of the Company, and the Company may use and exploit them without restriction or additional compensation to the Executive. The Executive shall promptly and fully disclose to the Company any and all Inventions. The Executive shall maintain complete written records of all Inventions and of all work or investigations done or carried out by the Executive at all stages thereof, which records shall be the exclusive property of the Company and will be treated as Confidential Information for all purposes of this Agreement.

(c) The Executive hereby irrevocably assigns and transfers to the Company, its successors, assigns or Affiliates, as the case may be, all of Executive’s right, title and interest in and to any Inventions without additional consideration therefor from the moment of their creation or inception, to be held and enjoyed by the Company, its successors, assigns or Affiliates, as the case may be, to the full extent of the term for which any intellectual property protection may be granted and as fully as the same would have been held by Executive had this Agreement, or such assignment or transfer not been made. In addition to the foregoing assignments of Inventions to the Company, Executive hereby irrevocably assigns and transfers to the Company: (i) all worldwide patents, trademarks, copyrights, mask works, trade secrets, applications for the foregoing and other intellectual property rights in any Inventions; and (ii) any and all “Moral Rights” (as defined below) that Executive may have in or with respect to any Inventions. Executive hereby forever waives and agrees never to assert any and all Moral Rights Executive may have in or with respect to any such Inventions, even after the termination of Executive’s employment.

7

(d) “Moral Rights” means any right to claim authorship of any Inventions, or to withdraw from circulation or control the publication or distribution of any Inventions, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a moral right.

(e) Executive agrees to cooperate fully in obtaining patent, copyright or other proprietary protection for such Inventions, all in the name of the Company, its successors, assigns or Affiliates, as the case may be, and at the Company’s cost and expense, and shall execute and deliver all requested applications, assignments and other documents and take such other actions as the Company, its successors, assigns or Affiliates, as the case may be, shall request in order to perfect, enforce and exploit the Company’s, its successors,’ assigns’ or Affiliates,’ as the case may be, right in the Inventions (including transfer of possession to the Company, its successors, assigns or Affiliates, as the case may be, of all Inventions embodied in tangible materials), including granting Company a non-revocable, royalty-free license in any pre-existing works. Executive irrevocably designates and appoints the Company and its duly authorized officers and agents as her agents and attorneys-in-fact to execute and file any and all applications and other necessary documents and to do all other lawfully permitted acts to further perfect and enforce the Company’s, its successors,’ assigns’ or Affiliates’ (as the case may be) right in the Inventions and to further the prosecution, issuance or enforcement of patents, copyrights, trade secrets and similar protections related to the Inventions with the same legal force and effect as she had executed them herself. The Executive shall receive no additional compensation for complying with Executive’s obligations under this Section 8. The Executive agrees that, to the extent this Agreement shall be construed in accordance with any laws that limit the assignability to the Company, its successors, assigns or Affiliates, as the case may be, of the Inventions, this Agreement shall be interpreted not to apply to any Invention which a court rules or the Company agrees is subject to such state limitation.

California Labor Code § 2870 provides as follows:

a. Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of her or her rights in an invention to her or her employer shall not apply to an invention that the employee developed entirely on her or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer.

(2) Result from any work performed by the employee for her employer.

b. To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

The assignment of Inventions under this Agreement, accordingly, shall not extend to those items set forth in Labor Code § 2870.

(f) Any copyrightable work created by the Executive in connection with or during the performance of her employment duties, whether published or unpublished, shall be the property of the Company as author and owner of copyright in such work.

(g) The Executive warrants and represents that there are no Inventions (whether patentable or not), patents, trade secrets, trademarks, trade names, copyrights, or other intellectual property owned by her before entering into employment with the Company hereunder, and that she has not executed and will not execute any document or instrument in conflict herewith.

8

(h) An “Affiliate” of the Company shall mean any person or entity which controls, is controlled by or is under common control with the Company.

9. Injunctive Relief. The Executive agrees that any violation or threatened violation of any of the provisions of Sections 6, 7 or 8 of this Agreement will cause immediate and irreparable harm to the Company for which money damages would not be an adequate remedy. In the event of any breach or threatened breach of any of said provisions, the Executive consents to the entry of preliminary and permanent injunctions by a court of competent jurisdiction prohibiting the Executive from any violation or threatened violation of such provisions and compelling the Executive to comply with such provisions (without posting a bond or other security). This Section 9 shall not affect or limit, and the injunctive relief provided in this Section 9 shall be in addition to, any other remedies available to the Company at law or in equity or in arbitration for any such violation by the Executive. Subject to Section 7(b) of this Agreement, the provisions of Sections 6, 7 and 8 of this Agreement and this Section 9 shall survive any termination of this Agreement and the Executive’s employment.

10. Indemnification. The Executive shall enter into a separate agreement with the Company to provide the Executive with payment of legal fees and indemnification to the maximum extent permitted by the Company’s Certificate of Incorporation, Bylaws, and Delaware law. The Company shall also provide officers and directors liability insurance of not less than $5,000,000, and the Company shall be responsible for any deductibles under such policy.

11. Key Person Insurance. The Executive will cooperate with the Company in connection with any application by ,the Company to obtain key-person life insurance on her life, on which the Company will be the beneficiary. Such cooperation shall include the execution of any applications or other documents requiring her signature and submission of insurance applications and submission to a physical examination.

12. Code Section 409A Compliance.

(a) This Agreement is intended to comply with the provisions of Section 409A of the Code, and, to the extent practicable, this Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder. Terms used in this Agreement shall have the meanings given such terms under Section 409A of the Code if, and to the extent required, in order to comply with Section 409A of the Code.

(b) The payment schedules provided hereunder are intended to be exempt from or to comply with the requirements of Section 409A of the Code and shall be interpreted consistently therewith.

(c) Any payments under Section 5 shall be made or shall commence only after the Executive has a “separation from service” with the Company, as defined under Section 409A of the Code and the guidance issued thereunder.

(d) Notwithstanding anything to the contrary in this Agreement, to the extent required to avoid additional taxes and interest charged under Section 409A of the Code, if any of the Company’s stock is publicly traded and the Executive is deemed to be a “specified employee” as determined by the Company for purposes of Section 409A(a)(2)(B) of the Code, the Executive agrees that any non-qualified deferred compensation payments due to her under this Agreement in connection with a termination. of employment that would otherwise have been payable at any time during the six-month period immediately following such termination of employment shall not be paid before, and shall instead be payable in a lump sum on the first day of the seventh month following the Executive’s separation from service (or, if the Executive dies during such period, within 30 days after the Executive’s death).

(e) Each payment of termination benefits under Section 5 of this Agreement, including, without limitation, each installment payment, shall be considered a separate payment, as described in Treasury Regulations Section 1.409A-2(b)(2), for purposes of Section 409A of the Code.

9

(f) Neither the Company nor the Executive shall have the right to accelerate or defer the delivery of any payment under this Agreement that constitutes “nonqualified deferred compensation” subject to Section 409A of the Code, except to the extent specifically permitted or required by Section 409A of the Code.

(g) If the Executive is entitled to be paid or reimbursed for any expenses under this Agreement, and such payments or reimbursements are includible in the Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. No right of the Executive to reimbursement of expenses under Section 4 or any other Section of this Agreement shall be subject to liquidation or exchange for another benefit.

(h) Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within 5 days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

(i) Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” subject to Section 409A of the Code be subject to offset, counterclaim or recoupment by any other amount payable to the Executive unless otherwise permitted by Section 409A of the Code.

13. Certain Representations, Warranties and Covenants of the Parties.

(a) The Executive hereby represents and warrants to the Company that: (i) the execution, delivery and performance of this Agreement by the Executive do not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject, (ii) this Agreement constitutes the legal, valid and binding obligation of the Executive, enforceable in accordance with its terms, and (iii) the Executive has not and will not take any action that will conflict with, violate or cause a breach of any noncompete, nonsolicitation or confidentiality agreement to which the Executive is a party or by which the Executive is bound. The Executive hereby acknowledges and represents that she has carefully reviewed this Agreement, that she has consulted with independent legal counsel regarding her rights and obligations under this Agreement (or, after carefully reviewing this Agreement, was given the opportunity to, but has freely decided not to, consult with independent legal counsel), and that she fully understands the terms and conditions contained herein.

(b) The Company represents, warrants and agrees that it has full power and authority to execute and deliver this Agreement and perform its obligations hereunder.

14. Miscellaneous.

(a) Any notice, consent or communication required under the provisions of this Agreement shall be given in writing and sent or delivered by hand, overnight courier or messenger service, against a signed receipt or acknowledgment of receipt, or by registered or certified mail, return receipt requested, or email or similar means of communication (collectively “electronic communications”) if receipt is acknowledged or if transmission is confirmed by mail as provided in this Section 14(a), to the parties at their respective addresses set forth at the beginning of this Agreement or by electronic delivery to the email (if any) set forth on the signature page of this Agreement, with notice to the Company being sent to the attention of the Chief Executive Officer of the Company. Either party may, by like notice, change the person, address or electronic communications number or address to which notice is to be sent.

(b) This Agreement shall in all respects be construed and interpreted in accordance with, and the rights of the parties shall be governed by, the laws of the State of California applicable to agreements executed and to be performed wholly in such state without regard to principles of conflicts of laws.

10

(c) If any term, covenant or condition of this Agreement or the application thereof to any party or circumstance shall, to any extent, be determined to be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant or condition to parties or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and be enforced to the fullest extent permitted by law, and any court or arbitrator having jurisdiction may reduce the scope of any provision of this Agreement, including the geographic and temporal restrictions set forth in Section 8 of this Agreement, so that it complies with applicable law.

(d) This Agreement constitutes the entire agreement of the Company and the Executive as to the subject matter hereof, superseding as of the Effective Date all prior or contemporaneous written or oral understandings or agreements, with respect to the subject matter covered in this Agreement. This Agreement may not be modified or amended, nor may any right be waived, except by a writing which expressly refers to this Agreement, states that it is intended to be a modification, amendment or waiver and is signed by both parties in the case of a modification or amendment or by the party granting the waiver. No course of conduct or dealing between the parties and no custom or trade usage shall be relied upon to vary the terms of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

(e) During and after the Executive’s employment, the Executive shall cooperate with the Company and its subsidiaries and other Affiliates in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company or its subsidiaries or affiliates (including the Executive being available to the Company and its subsidiaries and other Affiliates upon reasonable notice for interviews and factual investigations, appearing at the Company’s or any subsidiary’s or other Affiliate’s reasonable request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company and its subsidiaries and other Affiliates all pertinent information and turning over to the Company and its subsidiaries and other Affiliates all relevant documents that are or may come into the Executive’s possession, all at times and on schedules as reasonably agreed to between the Company and the Executive. In the event the Company or any of its subsidiaries or other Affiliates requires the Executive’s cooperation in accordance with this subparagraph, the Company shall reimburse the Executive for the Executive’s reasonable out-of-pocket expenses incurred in connection therewith (including lodging and meals, upon submission of receipts and compliance with the Company’s expense reimbursement policies).

(f) This Agreement is personal in nature and neither of the parties hereto will, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder; provided, however, that the Company may, without the Executive’s consent, assign its rights and obligations hereunder to (i) any Affiliate of the Company or (ii) any subsequent purchaser of the Company or any of its businesses or any material portion of its assets (whether such sale is structured as a sale of stock, sale of assets, merger, recapitalization or otherwise), in each case, in accordance with and as expressly in this Agreement. Without limiting the generality or effect of the foregoing, the Executive’s right to receive payments hereunder will not be assignable, transferable or delegable, whether by pledge, creation of a security interest, or otherwise, other than by a transfer by the Executive’s will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer by the Executive contrary to this subparagraph (f), the Company will have no liability to pay any amount so attempted to be assigned, transferred or delegated. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this subparagraph (f) or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

11

(g) Except for actions, suits, or proceedings taken pursuant to or under Section 6, 7, 8 or 9 of this Agreement, any dispute concerning this Agreement or the rights of the parties hereunder shall be submitted to binding arbitration in San Diego County, California before a single arbitrator associated with JAMS (or other mutually agreeable alternative dispute resolution service) in accordance with its Employment Arbitration Rules & Procedures and subject to JAMS Policy on Employment Arbitration Minimum Standards of Procedural Fairness (the “JAMS Rules”), a copy of which Rules can be found at www.jamsadr.com or obtained from the Company’s human resources department. The arbitration provisions of this Agreement will be governed by the Federal Arbitration Act (9 U.S.C. Section 1 et seq.). In all other respects, this provision will be construed in accordance with the laws of the State of California, without reference to conflicts of law principles. Included within this provision are any claims based on common law or violation of local, state or federal law, such as claims for discrimination or civil rights violations under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, the California Family Rights Act, the California Fair Employment and Housing Act, the California Labor Code, or similar statutes. However, claims for unemployment benefits and workers’ compensation claims will not be subject to arbitration. In addition, either party may seek provisional remedies pursuant to California Code of Civil Procedure Section 1281.S(b). There will be no right or authority for any claim subject to arbitration to be heard or arbitrated on a class or collective basis, as a private attorney general, or in a representative capacity on behalf of any other person or entity. If there is a dispute as to whether an issue or claim is arbitrable, the arbitrator will have the authority to resolve any such dispute, including claims as to fraud in the inducement or execution, or claims as to validity, construction, interpretation or enforceability.

A neutral arbitrator with experience in arbitrating employment disputes will be chosen by mutual agreement of the parties; however, if the parties are unable to agree upon an arbitrator within a reasonable period of time (not to exceed 30 days after the delivery of any demand for arbitration hereunder), then a neutral arbitrator will be appointed in accordance with the arbitrator selection procedure set forth in the JAMS Rules (or the rules of the selected alternative dispute resolution service). The issue(s) submitted to the arbitrator shall be set forth in each party’s request for arbitration. The arbitrator selected shall have the authority to grant Executive or the Company or both all remedies otherwise available by law; provided, however, that the arbitrator shall not have the power or authority to aware punitive or exemplary damages or to grant injunctive or equitable relief. The arbitrator may not consolidate more than one person’s claim, and may not otherwise preside over any form of a representative, collective or class proceeding. The parties. will be permitted to conduct discovery as provided by California Code of Civil Procedure Section 128.05. The arbitration shall provide (i) for written discovery and depositions adequate to give the parties access to documents and witnesses that are essential to the dispute and (ii) for a written decision by the arbitrator that includes the essential findings and conclusions upon which the decision is based. The arbitrator’s decision must be issued no later than 30 days after a dispositive motion is heard and/or an arbitration hearing has been completed. The award of the arbitrator shall be final, binding and conclusive on all parties, and judgment on such award may be entered in any court having jurisdiction.

The parties shall each bear their own costs and attorneys’ fees incurred in conducting the arbitration. Where Executive is asserting a claim under a state or federal statute prohibiting discrimination in employment, a public policy claim arising under a statute, or where otherwise required by applicable law to achieve the enforceability of this Agreement, the Company will pay the costs and fees charged by the arbitrator and JAMS (or other mutually selected alternative dispute resolution service) to the extent such costs would not otherwise be incurred in a court proceeding. In all other circumstances, the Executive and the Company will split equally the fees and administrative costs charged by the arbitrator and JAMS. To the extent permissible under the law, however, and following the arbitrator’s ruling on the matter, the arbitrator may rule that the arbitrator’s fees and costs be distributed in an alternative manner. If any party prevails on a statutory claim and the statute provides that the prevailing party is entitled to payment of attorneys’ fees, the arbitrator shall award reasonable fees and costs to the prevailing party based on the same standard as such fees and costs would be awarded if such claim had been asserted in state or federal court.

This mutual arbitration agreement does not prohibit or limit either Party’s right to seek a provisional remedy pursuant to California Code of Civil Procedure Section 1281.S(b), pending the resolution of a dispute by arbitration. The arbitrator shall have no authority to add to or to modify the terms described in this Agreement (including this subparagraph) or the Company’s employee handbook, shall apply all applicable law, and otherwise shall have no lesser and no greater remedial authority than would a court of law resolving the same claim or controversy.

AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

12

(h) Notwithstanding the provisions of Section 14(g) of this Agreement, with respect to any claim for injunctive relief or other equitable remedy pursuant to Section 9 of this Agreement or any claim to enforce an arbitration award or to compel arbitration, each of the parties hereby (i) consents to the exclusive jurisdiction of the federal and state courts sitting in San Diego County, California, (ii) agrees that any process in any action commenced in such court under this Agreement may be served upon it or her personally, either (A) by certified or registered mail, return receipt requested, or by an overnight courier service which obtains evidence of delivery, with the same full force and effect as if personally served upon her in San Diego County, California, or (B) by any other method of service permitted by law, and (iii) waives any claim that the jurisdiction of any such court is not a convenient forum for any such action and any defense of lack of in personam jurisdiction with respect thereof.

(i) This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to her hereunder if she had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate.

(j) The headings in this Agreement are for convenience of reference only and shall not affect in any way the construction or interpretation of this Agreement.

(k) The wording used in this Agreement shall be deemed to be the wording chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party hereto.

(1) Notwithstanding any termination of the Executive’s employment under this Agreement, Sections 6 through 14 hereof shall survive and continue in full force until the performance of the obligations thereunder, if any, in accordance with their respective terms.

(m) No delay or omission to exercise any right, power or remedy accruing to either party hereto shall impair any such right, power or remedy or shall be construed to be a waiver of or an acquiescence to any breach hereof. No waiver of any breach hereof shall be deemed to be a waiver of any other breach hereof theretofore or thereafter occurring. Any waiver of any provision hereof shall be effective only to the extent specifically set forth in an applicable writing. All remedies afforded to either party under this Agreement, by law or otherwise, shall be cumulative and not alternative and shall not preclude assertion by such party of any other rights or the seeking of any other rights or remedies against any other party.

(n) This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. This Agreement and any agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, to the extent signed and delivered by e-mail attachment (e.g., PDF), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of e-mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of e-mail as a defense to the formation of a contract and each such party forever waives any such defense.

[Signatures on following page]

13

IN WITNESS WHEREOF, the parties have executed and delivered this Executive Employment Agreement effective as of the date first above written.

/s/ AMY BROIDRICK

AMY BROIDRICK

QUALIGEN THERAPEUTICS, INC.
By:	/s/ Michael S. Poirier
Name:	Michael S. Poirier
Title:	Chairman/CEO

14

EX-10.54

Exhibit 10.54

Second AMENDMENT TO LEASE

THIS AMENDMENT TO LEASE is made and entered into as of December 15, 2021, by and between Bond Ranch LP, a California Limited Partnership (“Lessor”) and Qualigen, Inc., A Delaware Corporation (“Lessee”).

WHEREAS, on or about December 7, 2021 a Lease was entered into by and between Lessor and Lessee relating to certain real property commonly known as (street address, city, state, zip): 2042 Corte del Nogal, Suites A, B and E Carlsbad, California 92011 (the “Premises”), and

WHEREAS, Lessor and Lessee ☒ have ☐ have not previously amended said Lease, and

WHEREAS, the Lessor and Lessee now desire to amend said Lease,

NOW, THEREFORE, for payment of TEN DOLLARS and other good and valuable consideration to Lessor, the receipt and sufficiency of which is hereby acknowledged, the parties mutually agree to make the following additions and modifications to the Lease:

☒ TERM: The Expiration Date is hereby ☐ advanced ☒ extended to November 30, 2027.

☐ AGREED USE: The Agreed Use is hereby modified to: ___.

☒ BASE RENT ADJUSTMENT: Monthly Base Rent shall be as follows:

November 1, 2022 - November 30, 2022	$	30,542.40 + NNN
December 1, 2022 - December 31, 2022	$	0.00 + NNN
January 1, 2023 - October 31, 2023	$	30,542.40 + NNN
November 1, 2023 - October 31, 2024	$	31,458.67 + NNN
November 1, 2024 - October 31, 2025	$	32,402.43 + NNN
November 1, 2025 - October 31, 2026	$	33,374.51 + NNN
November 1, 2026 - October 31, 2027	$	34,375.74 + NNN
November 1, 2027 - November 30, 2027	$	35,407.01 + NNN.

☒ OTHER: SUBJECT PREMISES: The subject premises is 22,624 SF.

TENANT IMPROVEMENTS: All Tenant Improvement work shall be subject to Lessor’s review and written approval. No Tenant Improvement work shall commence until Lessor has issued written approval. Upon completion of the Tenant Improvements, Lessor shall provide Lessee a Tenant Improvement Allowance of up to $339,360 to be applied towards the cost of Tenant Improvement construction and all related fees and expenses, excepting project management fees. Lessee shall provide Lessor written notice of Tenant Improvement completion and allow inspections by the Property Manager or other Lessor designated professionals to verify satisfactory completion of the Tenant Improvements. Lessee shall not be obligated to remove or restore the Tenant Improvements in the Premises upon expiration of the Lease. Upon Lessor verifying satisfactory completion of the Tenant Improvements, Lessee shall submit an itemized list of expenses to Lessor for reimbursement within thirty (30) days

CONSTRUCTION/PLANNING & DESIGN: Lessee shall competitively bid and negotiate the Tenant Improvement construction, subject to Lessor’s written consent, from a list of mutually approved contractors. Lessee shall contract directly with contractor, architect, and project manager to complete the Tenant Improvements. Lessee shall have the right to engage its own architect/space planner/interior designer (and engineers/consultants), subject to Lessor’s reasonable approval, which shall be paid for as part of the Tenant Improvement Allowance. Lessor shall not be entitled to charge profit or a project management fee related to the Tenant Improvements. Project management fees shall be Lessee’s sole responsibility and shall not be reimbursed out of the Tenant Improvement Allowance.

BUILDING CONDITION: Lessor shall warranty the following four (4) HVAC units during the renewal term: A/C-11 Trane Unit, AC-12 Trane Unit 12, A/C 22 Bryant Unit, and A/C-21 Trane Unit. Building Condition, except as noted above, shall be as per the existing lease agreement. Lessor agrees to repair and recoat existing foam roof during calendar year 2021.

NO RIGHT OF PREMISES SUBSTITUTION: Lessor, other than in the event of Damage or Destruction, shall have no right to relocate Lessee’s Premises.

COMMISSIONS: Lessor shall pay a leasing Commission to Hughes Marino of three percent (3%) of the Base Rent, for months 1-60 of paid lease term, and two percent (2%) for any additional fixed term thereafter. Such Commission shall be paid by the Lessor fifty percent (50%) upon mutual Lease execution and fifty percent (50%) upon lease commencement.

This Amendment shall not be construed against the party preparing it, but shall be construed as if all parties jointly prepared this Amendment and any uncertainty and ambiguity shall not be interpreted against any one party. Signatures to this Amendment accomplished by means of electronic signature or similar technology shall be legal and binding.

All other terms and conditions of this Lease shall remain unchanged and shall continue in full force and effect except as specifically amended herein.

EXECUTED as of the day and year first above written.

By Lessor:	By Lessee:
Bond Ranch LP, a California Limited Partnership	Qualigen, Inc., A Delaware Corporation

By: /s/ Corinne Marteeny By: /s/ Shishir Sinha

Name Printed: Corinne Marteeny Name Printed: Shishir Sinha

Title:	General Partner	Title:	Vice President/ COO
Phone:	(619) 588-9913	Phone:

/s/ CM	/s/ SS
INITIALS	INITIALS

Page 1 of 2

Fax:	Fax:
Email:	Email:

By: By:

Name Printed: Name Printed:

Title:	Title:
Phone:	Phone:
Fax:	Fax:
Email:	Email:

Address:	P.O. Box 57, El Cajon, CA 92022	Address:	2042 Corte Del Nogal, Carlsbad, CA 92011
Federal ID No.:		Federal ID No.:

AIR CRE * https://www.aircre.com * 213-687-8777 * contracts@aircre.com

NOTICE: No part of these works may be reproduced in any form without permission in writing.

/s/ CM	/s/ SS
INITIALS	INITIALS

Page 2 of 2

OPTION(S) TO EXTEND TERM

STANDARD LEASE ADDENDUM

Dated: December 15, 2021

By and Between

Lessor:	Bond Ranch LP, a California Limited Partnership
Lessee:	Qualigen, Inc., A Delaware Corporation

Property Address:	2042 Corte del Nogal, Suites A, B and E Carlsbad, California 92011
	(street address, city, state, zip)

Paragraph: ____ OPTION(S) TO EXTEND TERM. Subject to the terms, conditions and provisions of Paragraph 39, Lessor grants Lessee one (1) option(s) to extend the term of the Lease (“Extension Option(s)”), with each Extension Option being for a term of sixty (60) months, commencing when the prior term expires (“Option Term(s)”). In order to exercise an Extension Option, Lessee must give written notice of such election to Lessor and Lessor must receive such notice at least eight (8) but not more than twelve (12) months prior to the date that the applicable Option Term would commence, time being of the essence. If timely and proper notification of the exercise of an Extension Option is not given by Lessee and/or received by Lessor, such Extension Option shall automatically expire. Except as specifically modified, the terms, conditions and provisions of the Lease shall apply during Option Terms but the amount of Rent during Option Terms shall be established by using the method(s) selected below (check method(s) to be used and fill in appropriately):

☐ I. Consumer Price Index.

(a) During the Option Term(s) which start(s) on ___, the monthly Base Rent shall be increased on ___ and every ___ months thereafter during such Option Term(s) (“Option Term CPI Increase Date(s)”) commensurate with the increase in the Option Term CPI (as herein defined) determined as follows: the monthly Base Rent scheduled for the month immediately preceding the first occurring Option Term CPI Increase Date shall be multiplied by a fraction the denominator of which is the Option Term Base CPI (as herein defined), and the numerator of which is the Option Term Comparison CPI (as herein defined). The amount so calculated shall constitute the new Base Rent until the next Option Term CPI Increase Date during the applicable Option Term, but in no event shall any such new Base Rent be less than the Base Rent for the month immediately preceding the applicable Option Term CPI Increase Date.

(b) The term “Option Term CPI” shall mean the Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor for (select one): ☐ CPI W (Urban Wage Earners and Clerical Workers) or ☐ CPI U (All Urban Consumers), for (fill in Urban Area): ___ or ☐ the area in which the Premises is located, All Items (1982-1984 = 100). The term “Option Term Comparison CPI” shall mean the CPI of the calendar month which is 2 full months prior to the applicable Option Term CPI Increase Date. The term “Option Term Base CPI” shall mean the CPI of the calendar month which is 2 full months prior to (select one): ☐ Commencement Date of the Original Term, ☐ start of the applicable Option Term, ☐ or (fill in month) ___.

(c) If compilation and/or publication of the CPI is transferred to another governmental department, bureau or agency or is discontinued, then instead the index most nearly the same as the CPI shall be used to calculate the Base Rent increases hereunder. If the Parties cannot agree on such alternative index, then the matter shall be submitted for decision to the American Arbitration Association in accordance with the then rules of said association and the decision of the arbitrators shall be binding upon the parties, with the cost of such arbitration being paid equally by the Parties.

☐ II. Fixed Percentage. During the Option Term(s) which start(s) on ___, the monthly Base Rent shall be increased on ___ and every ___ months thereafter during such Option Term(s) (“Option Term Percentage Increase Date(s)”) by ___ percent ( ___ %) of the monthly Base Rent scheduled to be paid for the month immediately preceding the applicable Option Term Percentage Increase Date.

☒ III. Fair Market Value.

(a) During the Option Term(s) which start(s) on December 1, 2027 , the amount of Rent shall be the amount forecasted to be the fair market rental value of the Premises during such Option Term established pursuant to the procedures, terms, assumptions and conditions set forth herein (“Fair Market Value”); provided, however, regardless of such Fair Market Value, Base Rent during an Option Term shall not be less than three 3 percent (3%) higher than the Base Rent scheduled as of when the prior term expires. Starting as of Lessee’s exercise of the applicable Extension Option (but not earlier than six (6) months before start of the applicable Option Term), the Parties shall for thirty (30) days (“Negotiation Period”) attempt to agree upon the Fair Market Value. If during the Negotiation Period the Parties do not agree on the Fair Market Value, then the Fair Market Value shall be established pursuant to the procedures set forth herein, which shall be binding.

(b) Each Party shall, within fifteen (15) days after the end of the Negotiation Period, in writing submit to the other Party such Party’s determination of the Fair Market Value (“Submitted Value(s)”). If a Party fails to timely provide a Submitted Value, then the other Party’s Submitted Value shall be the Fair Market Value. If both Parties timely provide Submitted Values, then each Party shall, within fifteen (15) days after both Parties have exchanged Submitted Values, in writing notify the other Party of such Party’s selected arbitrator who shall meet the qualifications set forth herein (“Advocate Arbitrator(s)”). Lessor and Lessee may select an Advocate Arbitrator who is favorable to such Party’s position and may, prior to or after appointment of an Advocate Arbitrator, consult with such Party’s Advocate Arbitrator. If a Party fails to timely and properly provide notice of such Party’s chosen Advocate Arbitrator, then the other Party’s Submitted Value shall be the Fair Market Value.

(c) If both Parties timely and properly designate Advocate Arbitrators, then such Advocate Arbitrators shall, within fifteen (15) days after their selection, choose a third (3rd) neutral arbitrator who shall meet the qualifications set forth herein (“Neutral Arbitrator”). The Neutral Arbitrator shall be engaged jointly by Lessor and Lessee. If Advocate Arbitrators fail to agree upon and timely appoint a Neutral Arbitrator, then the President of AIR CRE shall appoint such Neutral Arbitrator within fifteen (15) days after request by either Party. If the President of AIR CRE does not timely appoint the Neutral Arbitrator, then either Party may file an appropriate legal action for a judge with competent jurisdiction over the Parties to appoint the Neutral Arbitrator.

(d) The Advocate Arbitrators and the Neutral Arbitrator (“Arbitrator(s)”) shall be duly licensed real estate brokers or salespersons in good standing in the state in which the Premises is located, shall have been active over the five (5) year period before their appointment in the leasing of properties similar to the Premises within the general real estate market of the Premises. The Neutral Arbitrator shall additionally not be related to or affiliated with either Party or Advocate Arbitrator, and shall not have previously represented in a real estate transaction a Party or anyone related to or affiliated with a Party. All matters to be determined by the Arbitrators shall be decided by a majority vote of the Arbitrators, with each Arbitrator having one (1) vote. The Arbitrators may, as the Arbitrators determine, hold hearings and require briefs, including market data and additional information.

(e) Within thirty (30) days after selection of the Neutral Arbitrator, the three Arbitrators shall first reach a decision as to their own independent opinion of the Fair Market Value established by taking into account the terms, assumptions and conditions set forth herein (“Arbitrators’ Market Value”), then decide which Party’s Submitted Value is closer in monetary amount to the Arbitrators’ Market Value (“Selected Market Value”), then provide the Parties a copy of the Arbitrators’ Market Value and finally notify the Parties of the Selected Market Value. The Selected Market Value shall be the Fair Market Value. The Arbitrators shall have no right to decide a Selected Market Value which is a compromise to (or modification of) the Submitted Values. The decision of the Arbitrators shall be binding upon the Parties. The Party whose Submitted Value is not the Selected Market Value shall, within ten (10) days after the Arbitrators decide the Selected Market Value, pay the fees and costs of all three (3) Arbitrators.

(f) If the Fair Market Value has not been established before the start of the applicable Option Term, then Lessee shall continue to pay to Lessor rent in the amount payable for the month immediately preceding the start of such Option Term and Lessor’s acceptance of such rent shall not waive, adversely affect or prejudice the Parties’ right to complete establishment of the Fair Market Value or Lessor’s right to collect the full amount of the Fair Market Value once the Fair Market Value is established. Lessee shall, within ten (10) days after establishment of the Fair Market Value, pay to Lessor any deficiency in rent then due for the Option Term. Following establishment of Fair Market Value, the Parties shall, within ten (10) days after request by either Party, sign an amendment to this Lease to confirm the Fair Market Value and the expiration date of this Lease, but the Parties’ failure to request or to sign such an amendment shall not affect establishment of the Fair Market Value or extension of the Lease term.

/s/ CM	/s/ SS
INITIALS	INITIALS

Page 1 of 2

(g) The Arbitrators, in deciding the Arbitrators’ Market Value, shall take into account rent rates, rent abatements, periodic rent increases, real property taxes,insurance premiums and other operating expenses, tenant improvement and other applicable allowances, building services, length of lease term and other factors professional real estate brokers and/or appraisers customarily consider in determining fair market rent of property in an arm’s length transaction by ready, willing and able parties for space of comparable location, size, age, condition, quality, parking, visibility, view, signage and accessibility if the Premises were marketed in a normal and customary manner for a reasonable length of time on the open market to be leased to a tenant with financial strength and credit worthiness comparable to Lessee and guarantors (if any) of this Lease (as of Lessee’s exercise of the Extension Option) for a term comparable to the length of the applicable Option Term and used for the Agreed Use (or other reasonably comparable uses). The Arbitrators, in deciding the Arbitrators’ Market Value, shall not consider as a comparable transaction any of the following: a sublease, lease assignment, lease renewal or extension; lease with a tenant that has equity, is related to or affiliated with the landlord; or a lease of space that was subject to a right of first refusal, right of first offer, expansion option or other encumbrances. The Arbitrators, in deciding the Arbitrators’ Market Value, shall reduce the Fair Market Value on account of Alterations and improvements made by Lessee to the extent the cost thereof was paid solely by Lessee (in excess of any applicable improvement allowance, abated rent in lieu of improvement allowance or other consideration provided by Lessor for Lessee’s improvement of the Premises), shall not reduce the Fair Market Value on account of any real estate brokerage commission savings by Lessor, and shall not reduce the Fair Market Value on account of deferred maintenance or repair of the Premises for which Lessee was responsible under the Lease but did not perform.

☐ IV. Fixed Rental Adjustment(s) (“FRA”).

The monthly Base Rent shall be increased to the following amounts on the dates set forth below:

On (fill in FRA Adjustment Date(s)):	The new Base Rent shall be:
___	___
___	___
___	___
___	___
___	___
___	___
___	___
___	___
___	___
___	___

☐ V. Continuation of Original Term Adjustments.

The monthly Base Rent during the Option Term(s) which start(s) on ____ shall be increased in accordance with the same formula provided in the Lease to be used to calculate increases in the Base Rent during the Original Term of the Lease.

BROKER’S FEE: For each adjustment in Base Rent specified above, the Brokers shall be paid a Brokerage Fee in accordance with paragraph 15 of the Lease or if applicable, paragraph 9 of the Sublease.

AIR CRE * https://www.aircre.com * 213-687-8777 * contracts@aircre.com

NOTICE: No part of these works may be reproduced in any form without permission in writing.

/s/ CM	/s/ SS
INITIALS	INITIALS

Page 2 of 2

EX-10.55

Exhibit 10.55

LICENCE AGREEMENT

between

UCL Business Limited

and

Qualigen Therapeutics, Inc.

Dated: 13/01/2022

Ref:

INDEX

1.	Definitions	1
2.	Grant of Rights	10
3.	Know-how and other Confidential Information	15
4.	Payments	17
5.	Commercialisation	24
6.	Access to Medicines and Ethical Licensing	27
7.	Compliance with Laws	29
8.	Intellectual Property	31
9.	Warranties and Liability	33
10.	Duration and Termination	38
11.	General	42
Schedule 1 Licensed Technology		47
Schedule 2 Appointment of Expert		49
Schedule 3 Development Plan		50
Schedule 4 List of Countries and Territories for Patents		51
Schedule 5 Royalty Statement		52

1

THIS AGREEMENT is made the 13^th day of January 2022

BETWEEN:

(1)	UCL BUSINESS LIMITED, a company incorporated in England and Wales under company registration number 02776963 whose registered office is at University College London, Gower Street London WC1E 6BT (“UCLB”);
	and
(2)	Qualigen Therapeutics, Inc., a Delaware (USA) corporation whose principal place of business is at 2042 Corte del Nogal, Carlsbad, California 92011 USA (the “Licensee”).

WHEREAS:

A.	University College London (“UCL”), through the Principal Investigator, has developed certain technology and owns certain intellectual property rights relating to G-Quadruplex binding molecules, including the Patents and the Know-how.
B.	UCLB hereby represents and warrants to the Licensee that UCL has assigned to UCLB all of its right, title and interest in and to such property.
C.	The Licensee wishes to acquire rights under the Patents and to use the Know-how for the development and commercialisation of Licensed Products in the Field and in the Territory, all in accordance with the provisions of this Agreement.
D.	The Licensee acknowledges that UCLB and UCL are committed to implementing effective technology transfer strategies that promote the availability of health-related technologies in developing countries for essential medical care, as set out in UCL’s Statement of Principles and Strategies for the Equitable Dissemination of Medical Technologies, and has agreed to work with UCLB and UCL to achieve this commitment with respect to the Patents and the Know-how.
E.	The Licensee also acknowledges that it is UCL’s and UCLB’s policy neither to support Tobacco Companies nor to accept funds from Tobacco Companies. Accordingly, UCLB is required to place certain restrictions on the Licensee in this Agreement in order to support this policy.

NOW IT IS AGREED as follows:

1. DEFINITIONS

In this Agreement:

Affiliate in relation to a Party, means any entity or person that Controls, is Controlled by, or is under common Control with that Party.

2

At-Cost Markets means those markets in Developing Countries where individual poverty and insufficient public funding prevent access to healthcare at developed country prices.

Claims means all demands, claims, and liability (whether criminal or civil, in contract, tort or otherwise) for losses, damages, costs and expenses of any nature whatsoever and all costs and expenses (including legal costs) incurred in connection therewith, in each case which are payable to third parties, incurred by Indemnitees in connection with any and all suits, actions, investigations, claims or demands of a third party.

Commencement Date means the date specified above.

Confidential Information means:

a)	the existence, subject matter and terms of this Agreement;
b)	the Know-how;
c)	any and all information that would qualify as a trade secret pursuant to the EU Trade Secrets Directive or equivalent law of the United States or of the applicable constituent State of the United States;
d)	any and all information which reasonably ought to have been understood (by a reasonable business person) to be confidential and/or non-public information at the time disclosed to the Receiving Party;
e)	any and all information which is identified as being confidential or otherwise designated to show expressly that it is imparted in confidence including information relating to:

i)	the business, affairs, customers, clients, suppliers, or plans, intentions, or market opportunities of the Disclosing Party; or
ii)	the operations, specifications, research, inventions, processes, initiatives, product information, technology, know-how, designs, trade secrets or software of the Disclosing Party,

in each case which is disclosed orally, visually (for example, in electronic form) or in writing by or on behalf of one Party to the other Party, and shall include any information, analyses, compilations, studies, minutes of meetings, or other documents or physical materials prepared by or on behalf of the Receiving Party which include or otherwise derive from information received (directly or indirectly) from the Disclosing Party.

3

Control means:

(a)	holding the right by contract to require that the person under Control conducts its affairs in accordance with the wishes of the person who holds that right; or
(b)	in relation to a body corporate, the direct or indirect beneficial ownership of more than 50% (fifty percent) (or outside of a Party’s home territory, such lesser percentage as is the maximum permitted level of foreign investment) of the issued shares or securities of the other entity or the legal power to direct or cause the direction of the general management of the other entity in question, or its holding company or parent undertaking; and
(c)	in relation to a partnership, the right to a share of more than half the assets, or of more than half the income, of the partnership;

Cost-Based Price means, in respect of each Licensed Product, a price not exceeding that which fairly reflects the direct cost of manufacture of the Licensed Product plus a typical margin for a generic pharmaceutical product for the respective market.

Developing Country or Developing Countries refers to those countries that are at the relevant time:

a)	eligible for support from the Global Alliance for Vaccines and Immunization; and
b)	to the extent not included in a);

i)	defined as of the relevant time by the World Bank as Low-Income and Lower- Middle-Income Countries, as such definitions may be amended from time to time by the World Bank; and
ii)	all other countries that may be mutually agreed to by UCLB and the Licensee from time to time.

Diligent Efforts means exerting such efforts and employing such resources at least commensurate to the level of efforts and resources that a reasonable third party entity would devote to a product of similar market potential at a similar stage of its product life, when utilizing sound and reasonable scientific, medical and business practice and judgment in order to develop the product in a timely manner and maximize the economic return to the Parties from its commercialisation.

Disclosing Party has the meaning given in Clause 3.3.

Field means development, manufacture, marketing and sale of human pharmaceuticals.

First Commercial Sale means the first sale to a third party of a Licensed Product in a given regulatory jurisdiction after all regulatory and marketing approvals have been obtained for such Licensed Product in such jurisdiction. A sale shall not be deemed to have occurred if a Licensed Product is provided pursuant to an early access or compassionate use.

4

First Indication means the first Indication in cancer for which a Licensed Product has been approved by a Regulatory Authority.

Historic Patent Costs has the meaning given in Clause 4.2.

Indemnitees has the meaning given in Clause 9.6.

Indication means a separate, distinct and well-categorized class of human disease, syndrome or medical condition. For clarity, different stages of the same disease or condition will not be different Indications, varying manifestations of the same disease or condition will not be different Indications, different lines of treatment of the same disease or condition will not be different Indications, and the treatment or prevention of the same disease or condition in different demographic groups (e.g., adult and pediatric) will not be different Indications.

Insolvency Event in relation to a Party means:

(a)	a notice is issued to convene a meeting for the purpose of a passing a resolution to wind it up, or such a resolution is passed other than a resolution for its solvent reconstruction or reorganisation;
(b)	a resolution is passed by its directors to seek a winding up or a petition for a winding up order is presented against it, or such an order is made;
(c)	a receiver, administrative receiver, receiver and manager, interim receiver, custodian, sequestrator, administrator or similar officer is appointed in respect of that Party or over a substantial part of its assets, or a notice of intention to appoint an administrator is filed in respect of that Party, or an encumbrancer enforces its security, or any distress, attachment, sequestration or execution or other similar process affects any of its assets and is not discharged within 60 days;
(d)	a proposal for a voluntary arrangement is made in relation to it under Part I of the Insolvency Act 1986;
(e)	any step or event is taken or arises outside the United Kingdom which is similar or analogous to any of the steps or events listed at (a) to (d) above including the case the Licensee files, in any court or agency pursuant to any applicable law, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Licensee or of its assets, or if the Licensee is served with an involuntary petition against it, filed in any proceeding of such sort, and such petition is not dismissed within 60 days after the filing thereof, or if the Licensee overtly proposes to dissolve or liquidate, or if the Licensee makes an assignment for the benefit of its creditors;

5

(f) it proposes or makes any general assignment, composition or arrangement with or for the benefit of all or some of its creditors (other than for the sole purpose of a solvent amalgamation or solvent reconstruction), or it suspends making payments to all or some of its creditors.

Know-how means:

all technical information and know-how developed in any UCL laboratory of the Principal Investigator relating directly to the inventions claimed in the Patents (but which information/ know-how is not the subject of a Patent and is not in the public domain); and described in the Part B of Schedule 1.

Laboratory means any laboratory of the Principal Investigator at UCL.

Licensed Products means any and all products that are developed, manufactured, used, or sold by or on behalf of the Licensee or its Affiliates and which (a) are within (or are manufactured using a process described in a Valid Claim of) the Patents in the country where sold and/or (b) incorporate, or their development or manufacture makes use of, any of the Know-how.

Licensed Technology means the Patents and the Know-how.

Licensee Improvements means all improvements, modifications, adaptations and new uses of the Patents and the Know-how (and all intellectual property rights therein) generated by the Licensee, its Affiliates and its Sub-licensees during the period of this Agreement.

Marketing Authorisation means those Regulatory Approval(s) required by applicable laws and regulations in a particular country or territory in order to sell or commercially supply a medicinal product and/or device in that country or territory.

Net Receipts means the amount of any cash consideration (excluding value added or other sales tax), and if there is any tangible non-cash consideration, the relevant open market price for such non-cash consideration in the relevant country or territory or if the relevant open market price is not ascertainable, a reasonable price, assessed on an arm’s length basis, received by or due to the Licensee or its Affiliates, in relation to the development or sub-licensing (including the grant of any option over a sub-licence) of any of the Patents and the Know-how, or the grant of any right (including an option to acquire a licence) to develop, manufacture, market, or sell Licensed Products, and including any or all of the following (but all only where in relation to the development or sub-licensing (including the grant of any option over a sub-licence) of any of the Patents and the Know-how, or the grant of any right (including an option to acquire a licence) to develop, manufacture, market, or sell Licensed Products):

a) up-front, milestone (whether at the stage of development, marketing or otherwise), success, bonus, maintenance and periodic (including annual) payments, royalty and minimum royalty payments due under any sub-licence agreement;

6

b)	payments in respect of the funding of research or development activities related to the Patents and the Know-how or any Licensed Product, to the extent that such payments exceed reimbursement of the actual costs and expenses incurred by the Licensee or its Affiliates in performing the relevant research or development activities without any mark-up being applied to those costs and expenses and without any overhead charges being applied;
c)	where any sub-licence is to be granted under cross-licensing arrangements, the value of any third party licence obtained under such arrangements;
d)	any premium paid over the fair market value of shares, options or other securities in respect of any of the share capital of the Licensee or its Affiliates issued as a component of such a transaction (such fair market value to be determined on the assumption that UCLB had not granted, nor agreed to grant, any rights to the Licensee in respect of any of the Patents and the Know-how);
e)	the extra benefit (above normal market terms) of any loan, guarantee or other financial benefit made or given other than on normal market terms, occurring as a component of such a transaction;
f)	any shares, options or other securities obtained from a third party in consideration for the grant of the relevant rights; and
g)	any other payments in respect of the Patents, including payments awarded by a court or arbitrator or other authorised body but excluding any damages awarded as compensation for lost sales which will be treated as Net Sales Value.

Net Sales Value means:

a)

the gross invoiced price of Licensed Products sold by or on behalf of the Licensee or its Affiliates in arm’s length transactions for a cash consideration; and/ or

b)

where the sale is not at arm’s length and/ or is for or includes a non-cash consideration, or if Licensed Products are disposed of for free by the Licensee or its Affiliates (except in the context of or subject to Clause 5.9), the relevant open market price for the Licensed Product in the country or territory in which the sale, use or disposal takes place or if the relevant open market price is not ascertainable, a reasonable price, assessed on an arm’s length basis therefor,

7

after deduction of all documented:

i)	normal trade rebates and discounts (but excluding early payment discounts) actually granted and any credits actually given for rejected or returned Licensed Products;
ii)	amounts invoiced for Licensed Product sales but actually written off in good faith as uncollectible bad debt (net of any recoveries on written-off debt);
iii)	costs of packaging, insurance, carriage and freight, provided in each case that the amounts are separately charged to the purchaser on the relevant invoice;
iv)	value added tax or other sales tax; and
v)	import and export duties or similar applicable government levies charged to the purchaser on the relevant invoice,

provided that such deductions do not exceed reasonable and customary amounts in the markets in which such sales occurred. Sales of Licensed Products between the Licensee and its Affiliates shall not be taken into account for the purposes of calculating “Net Sales Value” unless there is subsequent sale to a third party in an arm’s length transaction for a cash consideration.

Parties means UCLB and the Licensee, and “Party” shall mean either of them.

Patents means any and all of the patents and patent applications referred to in Part A of Schedule 1, including any continuations, continuations in part, extensions, reissues, divisions, and any patents, supplementary protection certificates and similar rights that are based on or derive priority from the foregoing.

Person means any individual, partnership, limited liability company, firm, corporation, association, trust, unincorporated organization or other entity.

Phase I Study means a human clinical trial of a product in any country, the principal purpose of which is a preliminary determination of safety in healthy individuals or patients, that would satisfy the requirements of 21 C.F.R. 312.21(a), or a similar clinical study prescribed by the relevant regulatory authority in a country other than the United States.

8

Phase II Study means a clinical study of an investigational product in patients with the primary objective of characterizing its activity in a specific disease state as well as generating more detailed safety, tolerability, and pharmacokinetics information. The investigational product can be administered to patients as a single agent or in combination with other investigational or marketed agents and shall be deemed commenced when the first patient in such study has received his or her initial dose of a product. A “Phase II Study” shall include any clinical trial that would satisfy the requirements of 21 C.F.R. § 312.21(b), or a comparable clinical study prescribed by the relevant regulatory authority in a country other than the United States.

Phase III Study means a clinical study of an investigational product in patients that incorporates accepted endpoints for confirmation of statistical significance of efficacy and safety with the aim to obtain regulatory approval in any country as described in 21 C.F.R. § 312.21(c), or a comparable clinical study prescribed by the relevant regulatory authority in a country other than the United States.

Principal Investigator means Stephen Neidle, who was an employee of UCL, when the Patents and the Know-how were developed.

Receiving Party has the meaning given in Clause 3.3.

Registration means any approvals required for the marketing and sale of products based on or which utilise the Patents and/or Know-how in a country of the Territory.

Regulatory Approval means any and all approvals (including any applicable supplements, amendments, pre and post approvals, and approvals of applications for regulatory exclusivity), licenses, registrations, or authorisations of any federal, national, multinational, state, provincial or local regulatory agency, department, bureau, commission, council or other governmental entity necessary for the manufacture, distribution, use, testing, development, storage, import, export, transport, promotion, marketing and sale of a medicinal product and/or device in a country or countries.

Regulatory Authority means any regulatory authority or competent body in any jurisdiction as relevant to a Licensed Product and/or the manufacture, approval, Registration and sale thereof.

Second Indication means the second Indication in cancer for which a Licensed Product has been approved by a Regulatory Authority.

9

Sub-licensee means any third party (other than an Affiliate) to whom the Licensee grants a sub-licence of its rights under this Agreement in accordance with Clause 2.3.

Subsequent Indication means any Indication in cancer subsequent to the Second Indication for which a Licensed Product has been approved by a Regulatory Authority.

Territory means worldwide.

Third Party has the meaning as given in Clause 11.12.

Tobacco Company means: (i) any person who develops, sells or manufactures tobacco products; and/ or (ii) any person which makes the majority of its profits from the importation, marketing, sale or disposal of tobacco products. Furthermore, Tobacco Company shall include any person that is Controlled by or under common Control with any of the persons referred to in (i) and/or (ii); and for the purposes of this definition, “Control” means the possession (directly or indirectly) of fifty per cent (50%) or more of the voting stock or other equity interest of a subject entity with the power to vote, or the power in fact to control the management decisions of such entity through the ownership of securities or by contract or otherwise; and “Controlling” and “Controlled by” shall be construed accordingly.

UCL means University College London, having its principal place of business at Gower Street London WC1E 6BT.

UCLB Improvements means all improvements, modifications, adaptations and new uses of the Patents and the Know-how (and all intellectual property rights therein) which are:

a)	in the Field;
b)	generated by the Principal Investigator in any UCL laboratory and/or any other employees of UCL under the Principal Investigator’s supervision in any UCL laboratory during the period of twenty four (24) months following the Commencement Date;
c)	free (as of the time of creation, discovery or acquisition of the improvement, modification, adaptation or new use) from any ownership rights of or other obligations to third parties which would prevent UCLB from granting a licence thereof to the Licensee pursuant to Clause 2.5.2.

For clarity, any employee of UCL who is in good faith named as a principal investigator with the Principal Investigator on any grant application will not for the purposes of any research conducted pursuant to such grant be regarded as being under the supervision of the Principal Investigator.

10

Valid Claim means a claim of a patent or patent application that has not been abandoned or allowed to lapse or expired or been rejected or revoked without a right of appeal in the relevant country or territory or been held invalid or unenforceable by a court of competent jurisdiction in a final and non-appealable judgment.

2. GRANT OF RIGHTS

2.1 Licences.

UCLB hereby grants to the Licensee and its Affiliates, and the Licensee hereby accepts on its own behalf and on behalf of its Affiliates, subject to the provisions of this Agreement:

2.1.1	an exclusive licence under the Patents, with the right to sub-license, subject to Clause 2.3, to develop, have developed, manufacture, have manufactured, import, use, sell and have sold Licensed Products only in the Field and in the Territory; and
2.1.2	a non-exclusive licence to use the Know-how, with the right to sub-license, subject to Clause 2.3, to develop, have developed, manufacture, have manufactured, import, use, sell and have sold Licensed Products only in the Field and in the Territory.

2.2 Formal Licences.

UCLB shall at the Licensee’s request and cost execute such formal licences as may be necessary or appropriate to enable the Licensee to register the licences granted to it under this Agreement with the patent offices in the Territory. If there is a conflict in meaning between any formal licence and this Agreement, this Agreement shall prevail wherever possible. The Licensee shall use its best endeavours to ensure that this Agreement shall not form part of any public record.

2.3 Sub-Licensing.

The Licensee shall be entitled to grant sub-licences of its rights under this Agreement to any third party, provided that:

2.3.1	the Licensee receives UCLB’s permission (which shall not be unreasonably withheld, conditioned or delayed) prior to the grant of the sub-licence;
2.3.2	the Licensee notifies UCLB promptly of the grant of the sub-licence and shall enter into a written sub-licence agreement with such third party;

11

2.3.3	such sub-licence agreement shall include obligations on the Sub-licensee which are consistent with the obligations on the Licensee under this Agreement (but it is understood that the Sub-licensee shall not be required to make payments to UCLB corresponding to the Licensee’s payment obligations under Clause 4);
2.3.4	such sub-licence agreement shall prohibit the Sub-licensee from granting further sub- licences of its rights under the Patents and to use the Know-how;
2.3.5	the proposed sub-licensee is not a Tobacco Company or an Affiliate of such a company or a Person involved as its primary business in arms dealing, gambling operations, or the promotion of violence or an Affiliate of such Person, or if the proposed sub-licensee is a Person regularly involved in child labour or an Affiliate of such Person;
2.3.6	each sub-licence shall terminate automatically upon termination of this Agreement for any reason (but not expiry of this Agreement under Clause 10.1) except where:

(a)	the Sub-licensee was not implicated in or at fault in any circumstances which led to the termination of this Agreement;
(b)	the benefit (but not the burden) of the sub-licence agreement is validly assigned to UCLB in writing by the Licensee within seven (7) days following the date of termination of this Agreement; and
(c)	following such assignment, the Sub-licensee observes in full the terms of the sub-licence agreement including paying all sums due to the Licensee under the sub-licence agreement directly to UCLB in a timely manner,

in which case the Sub-licensee’s rights to use (to the full extent of and with the full benefit of whatever exclusivity which UCLB herein grants to the Licensee, had been afforded by the Licensee to the Sub-licensee in the sub-license) the Patents and the Know-how shall continue in full force and effect in accordance with the terms of the relevant sub-licence agreement;

2.3.7

the Licensee shall provide a certified true copy of each sub-licence agreement and of any subsequent amendments to it to UCLB within thirty (30) days following execution; and

2.3.8

the Licensee shall ensure that each Sub-licensee complies fully with the terms of the relevant sub-licence agreement. The Licensee shall be responsible for any breach of or non-compliance with a sub-licence agreement by its Sub-licensees as if the breach or non-compliance had been a breach of or non-compliance with this Agreement by the Licensee, and the Licensee shall indemnify each of the Indemnitees against any Claims which are awarded against or suffered by any of the Indemnitees as a result of any such breach or non-compliance by its Sub-licensees.

12

The Licensee acknowledges that a breach of Clauses 2.3.1 to 2.3.5 (inclusive) shall be considered a material breach of this Agreement for the purpose of Clause 10.2.1.

2.4 Reservation of Rights.

2.4.1 UCLB reserves for itself and its non-commercial Affiliates the non-exclusive, irrevocable, worldwide, royalty-free right to (but only to):

(a)	use the Patents in the Field for its or their own internal non-commercially funded research (including conducting clinical trials), academic purposes, publication and teaching;
(b)	license other academic institutions to use the Patents in the Field solely for their own internal non-commercially funded research (including conducting clinical trials), academic purposes, publication and teaching; and
(c)	grant licences to use the Patents in the Field to post graduate students of UCL for the sole purpose of conducting a wholly non-commercial programme of post graduate academic research.

2.4.2 Except for the licences expressly granted by this Clause 2, UCLB grants no rights to the Licensee and its Affiliates to or under any intellectual property or know-how other than the Patents and the Know-how, and UCLB hereby expressly reserves all rights under the Patents and the Know-how outside the Field.

2.5 Access to Improvements

2.5.1 Licensee Improvements

(a)	the Licensee shall notify UCLB of each Licensee Improvement, in sufficient detail to allow UCLB to make use thereof, as soon as reasonably practicable following the creation, discovery or acquisition of the relevant Licensee Improvement.
(b)	the Licensee hereby grants to UCLB and its wholly non-commercial Affiliates, and UCLB hereby accepts on its own behalf and on behalf of its wholly non- commercial Affiliates, subject to the provisions of this Agreement a non-exclusive, transferable, sub-licensable, royalty-free, irrevocable and perpetual licence under the Licensee Improvements:

(i) to use the Licensee Improvements solely for its or their own internal non-commercially funded research (including conducting clinical trials), academic purposes, publication and teaching;

13

(ii)	to license other academic institutions to use the Licensee Improvements solely for their own internal non-commercially funded research (including conducting clinical trials), academic purposes, publication and teaching; and
(iii)	to grant licences of the Licensee Improvements to post graduate students of UCL for the sole purpose of conducting a wholly non- commercial programme of post graduate academic research.

2.5.2 UCLB Improvements

(a)	UCLB shall notify the Licensee of each UCLB Improvement, in sufficient detail to allow the Licensee to make use thereof, as soon as reasonably practicable following the creation, discovery or acquisition of the relevant UCLB Improvement being brought to UCLB’s knowledge.
(b)	UCLB hereby grants to the Licensee an exclusive option to obtain a licence of any UCLB Improvements, such licence to be on commercial terms to be negotiated between the Parties.
(c)	The Licensee shall have a period of three (3) months from the date of UCLB’s notification to review and evaluate each UCLB Improvement (the “Evaluation Period”). The Licensee may exercise its option over each UCLB Improvement at any time during the relevant Evaluation Period by serving a written notice upon UCLB.
(d)	If the Licensee exercises its option over any UCLB Improvement in accordance with sub-clause (c) above, the Licensee and UCLB will use their reasonable endeavours to negotiate in good faith and agree the terms of a licence for the relevant UCLB Improvement within a period of twelve (12) months from the date of UCLB’s receipt of the Licensee’s written notice (the “Negotiation Period”), provided that neither Party will be obliged to enter into such a licence.

14

(e) UCLB shall not enter into a licence agreement (whether exclusive or non- exclusive) with a third party in respect of any UCLB Improvement during the relevant Evaluation Period and if the Licensee exercises its option in accordance with sub-clause (c) above, during the relevant Negotiation Period. If the Licensee does not exercise its option in relation to any UCLB Improvement within the relevant Evaluation Period or if the Licensee does exercise its option, but the Parties cannot agree upon the licence terms within the relevant Negotiation Period, UCLB shall be at liberty to use the relevant UCLB Improvement for any purpose whatsoever and to enter into any licence or other agreements or arrangements with any third party or parties to exploit the UCLB Improvement at its sole discretion.

2.6 Affiliates.

The Licensee shall:

2.6.1	ensure that its Affiliates comply fully with the terms of this Agreement;
2.6.2	be responsible for any breach of or non-compliance with this Agreement by its Affiliates as if the breach or non-compliance had been a breach of or non-compliance with this Agreement by the Licensee;
2.6.3	indemnify each of the Indemnitees against any Claims which are awarded against or suffered by any of the Indemnitees as a result of any breach of or non-compliance with this Agreement by its Affiliates; and
2.6.4	ensure that if any Affiliate ceases to be an Affiliate as a result of a change of Control or otherwise, that former Affiliate immediately upon such cessation:

(a)	ceases developing, manufacturing, having manufactured, importing, using, selling and/ or having sold Licensed Products and ceases all, use or exploitation of each Valid Claim of an issued Patent within the Licensed Technology, for as long as the applicable patent claim continues to be a Valid Claim of an issued Patent within the Licensed Technology, and ceases all use or exploitation of each item of Know-how within the Licensed Technology, for as long as the applicable item of Know-how remains confidential;
(b)	returns to the Licensee or destroys any documents or other materials in the former Affiliate’s possession or under its control and that contain UCLB’s Confidential Information or any confidential information of the Licensee relating to the Licensed Technology and/ or Licensed Products;
(c)	delivers to the Licensee a copy of all technical and clinical data relating to Licensed Products generated by the former Affiliate;

15

(d)	discloses to the Licensee full details of all and any Licensee Improvements generated by the former Affiliate; and
(e)	to the extent possible, takes all action necessary to have any former Affiliate’s product licences, marketing authorisations, pricing and/ or reimbursement approvals (and any applications for any of the foregoing) which relate to Licensed Products transferred into the name of the Licensee.

3. KNOW-HOW AND OTHER CONFIDENTIAL INFORMATION

3.1 Provision of Know-how.

Within thirty (30) days following the Commencement Date, UCLB shall deliver to the Licensee (electronically or on other appropriate media) a copy of the Know-how. UCLB shall instruct the Principal Investigator to answer all reasonable queries received from the Licensee regarding the Know-how, provided that if in order to answer any such queries the Principal Investigator is required to:

3.1.1	work more than in aggregate two (2) man days of seven and a half (7.5) hours each, the Licensee shall pay the Principal Investigator a fee for providing such assistance, such fee to be agreed between the Licensee and the Principal Investigator; and/ or
3.1.2	attend the Licensee’s premises, the Licensee shall reimburse the Principal Investigator promptly on demand for all travel (at business class rates), accommodation and subsistence costs incurred in so doing.

3.2 Confidentiality of Know-how.

The Licensee undertakes that for so long as the Know-how remains confidential, it shall (and shall ensure that its Affiliates and Sub-licensees) take all reasonable precautions to prevent unauthorised access to the Know-how and protect the Know-how in the same manner as it (or they) protect(s) its (or their) own proprietary information, and shall not (and shall ensure that its Affiliates and Sub-licensees do not) use the Know-how for any purpose, except as expressly licensed hereby and in accordance with the provisions of this Agreement.

3.3 Confidentiality Obligations.

Each Party (“Receiving Party”) undertakes:

3.3.1 to maintain as secret and confidential all Confidential Information obtained from the other Party (“Disclosing Party”) in the course of or in anticipation of this Agreement and to respect the Disclosing Party’s rights therein;

16

3.3.2	to use such Confidential Information only for the purposes of or as permitted by this Agreement;
3.3.3	not to engage in any conduct which would be regarded as infringing conduct under the EU Trade Secrets Directive; and
3.3.4	to disclose such Confidential Information only to those of its employees, contractors, Affiliates, and Sub-licensees (if any) to whom, and to the extent that, such disclosure is reasonably necessary for the purposes of this Agreement, provided however that the Licensee shall have the right to disclose Confidential Information received from UCLB to potential or actual customers of Licensed Products to the extent reasonably necessary to promote the sale or use of Licensed Products and provided that such customer has agreed to confidentiality provisions at least as restrictive as those set forth herein.

3.4 Exceptions to Obligations.

The provisions of Clause 3.3 shall not apply to Confidential Information which the Receiving Party can demonstrate by reasonable written evidence:

3.4.1	was, prior to its receipt by the Receiving Party from the Disclosing Party, in the possession of the Receiving Party and at its free disposal; or
3.4.2	is subsequently disclosed to the Receiving Party by a third party without any obligations of confidence; or
3.4.3	is or becomes generally available to the public through no act or default of the Receiving Party or its agents, employees, Affiliates or Sub-licensees;
3.4.4	is rightfully received by the Receiving Party on a non-confidential basis from a Third Party who is entitled to disclose it without breaching any confidentiality obligation (directly or indirectly) to the Disclosing Party and who, to the Receiving Party’s best knowledge, did not obtain such information, directly or indirectly, from the Disclosing Party;
3.4.5	is independently developed by or for the Receiving Party, in either case solely by personnel without any access to or use of the Confidential Information provided by the Disclosing Party;
3.4.6	the Receiving Party is required to disclose to patent offices in furtherance of the Patents;

17

3.4.7 the Receiving Party is required to disclose by or to the courts of any competent jurisdiction, or to any government regulatory agency or financial authority, provided that the Receiving Party shall:

(a)	inform the Disclosing Party as soon as is reasonably practicable of such requirement; and
(b)	at the Disclosing Party’s request and cost seek to persuade the court, agency or authority to have the information treated in a confidential manner, where this is possible under the court, agency or authority’s procedures; or

3.4.8 which a Party is advised in good faith by its information officer that it is required to disclose under the Freedom of Information Act 2000 or the Environmental Information Regulations 2004 or equivalent laws of the United States or of another country.

3.5 Disclosure to Employees and others.

The Receiving Party shall procure that all of its employees, contractors, Affiliates and Sub- licensees who have access to any of the Disclosing Party’s Confidential Information to which Clause 3.3 applies, shall be made aware of the obligations of confidence and enter into written undertakings of confidentiality at least as restrictive as those set forth herein.

4. PAYMENTS

4.1 Initial Payment.

On or before or within seven (7) days after the Commencement Date, the Licensee shall pay to UCLB a non-refundable, non-deductible licensing fee of $150,000 (one fifty thousand US dollars).

4.2 Historic Patent Costs.

On or before or within thirty (30) days after the Commencement Date, the Licensee shall reimburse all of the costs and expenses incurred by UCLB in respect of drafting, applying for and prosecuting the Patents prior to the Commencement Date, which are estimated to be in the region of $160,384.22 (one hundred sixty thousand three hundred and eighty-four point twenty-two US dollars) (“Historic Patent Costs”).

4.3 Milestone Payments.

4.3.1 Within 15 days following achievement of each of the following milestone events by the Licensee or any of its Affiliates or Sub-licensees, the Licensee shall notify UCLB in writing that the relevant milestone event has been achieved and, subject to Clause

18

4.3.2 below, pay to UCLB the amount(s) set out next to such milestone event in the table below within 30 days after receipt of UCLB’s invoice therefor:

	Amount to be paid
Milestone Event	First Indication	Second Indication and each Subsequent Indication
First patient dosed in Phase I Study, for a Licensed Product which has a first patient dosed in a Phase I Study	$100,000 (one hundred thousand US dollars)	n/a
First patient dosed in Phase II Study, for a Licensed Product which has a first patient dosed in a Phase II Study	$200,000 (two hundred thousand US dollars)	n/a
First patient dosed in Phase III Study, for a Licensed Product which has a first patient dosed in a Phase III Study	$500,000 (five hundred thousand US dollars)	n/a
Approval of a New Drug Application (NDA) in the United States by the Food and Drug Administration (FDA), for a Licensed Product which has a NDA (or, as the case may be, for a Second or Subsequent Indication) approved by the FDA in the United States	$1,000,000 (one million US dollars)	$1,000,000 dollars) (one million US
Approval of Marketing Authorization Application in the European Union or in the United Kingdom, for aLicensed Product which has a Marketing Authorization Application (or,	$1,000,000 (one million US dollars)	$1,000,000 dollars) (one million US
as the case may be, for a Second or Subsequent Indication) approved in the European Union or in the United Kingdom
Net Sales Value hitting a target figure of $500M (five hundred million US dollars) or above during a calendar year	$5,000,000 (five million US dollars)	n/a

19

If, for any reason, any of the milestones set out above are achieved without all or any of the preceding milestones having been achieved by the Licensee or its Affiliates or Sub-licensees, then upon achievement of the relevant milestone, the milestone payments for the preceding milestones which have not been achieved shall also be due and payable. By way of example only, if the second milestone is achieved without the Licensee or its Affiliates or Sub-licensees having achieved the first milestone, then upon achievement of the second milestone, the payment for the first milestone which has not been achieved shall also be due and payable. (Provided, however, that this rule shall not apply to deem the milestone of FDA approval of a NDA to have been achieved upon approval of a MAA, and this rule shall not apply to deem the milestone of FDA approval of a NDA or the milestone of approval of a MAA to have been achieved upon Net Sales Value hitting a target figure of $500M during a calendar year.)

Notwithstnding anything stated in Clause 4.3.1 to the contrary, where the Licensee has already paid against a milestone event (for an Indication, as stated above) in respect of a Licensed Product, it shall not be required to pay again against the same milestone event (for the same Indication, as stated above) with respect to a subsequent Licensed Product.

4.3.2 The Licensee shall be entitled to deduct (without duplicative deducting) an amount equal to the cumulative Minimum Royalty(ies) paid by it pursuant to Clause 4.8 from any milestone payment due against a milestone event stated in Clause 4.3.1 that immediately follows such Minimum Royalty(ies) payment.

4.4 Royalties on Net Sales Value.

The Licensee shall pay to UCLB a royalty being a percentage of the Net Sales Value of all Licensed Products or any part thereof used, sold or disposed of by or on behalf of the Licensee or its Affiliates as follows:

4.4.1 3.5% (three and a half percent) in case cumulative Net Sales Value is equal to or less than $250,000,000 (two fifty million US dollars); and

20

4.4.2 4.5% (four and a half percent) in case cumulative Net Sales Value is above $250,000,000 (two fifty million US dollars).

4.5 Royalties on Net Receipts.

The Licensee shall pay to UCLB a royalty of 15% (fifteen percent) of Net Receipts.

4.6 Combination Products.

If any Licensed Products are incorporated in or bundled with any other product (“Combination Product”) sold by the Licensee or its Affiliates and the Licensed Product is not priced separately from the Combination Product, the Net Sales Value of such Licensed Product shall be deemed to be the fair market value of the Licensed Product in the country of sale when sold separately or if not sold separately in the country of sale, in comparable countries and territories or if neither of the foregoing apply, a reasonable amount which fairly reflects the value of the Licensed Product within the Combination Product assuming the Licensed Product is not being sold as a loss leader. For avoidance of doubt, a single medical product which incorporates both a Licensed Product and a non-Licensed Product active pharmaceutical ingredient would be an instance of a Combination Product. Notwithstanding the foregoing, in no event shall the Net Sales Value of such Licensed Product be less than 50% (fifty percent) of the Net Sales Value of the Combination Product (where the Net Sales Value of the Combination Product is calculated mutatis mutandis with the references to the Licensed Products (in the definition of “Net Sales Value”) and such references to Licensed Products treated as if they were references to the Combination Product)..

4.7 Valuation of Non-Monetary Consideration; Referral to Expert.

If at any time a dispute arises or the Parties are unable to reach agreement in relation to the open market value of any non-cash consideration received by the Licensee for a Licensed Product or the value of any non-cash consideration which forms part of Net Receipts or the reasonable value for a Licensed Product when incorporated within a Combination Product and the Parties are not able to resolve such dispute within thirty (30) days following the dispute first arising, such disagreement shall be referred to an independent expert who shall be appointed and act in accordance with the provisions of Schedule 2 and whose decision shall be final and binding on the Parties.

21

4.8 Minimum Royalties.

If the royalties payable under Clause 4.4 to Clause 4.5 (inclusive) are less than the amounts described in the Table below (“Minimum Royalty”) with respect to the corresponding calendar year (i.e., 1 January to 31 December) indicated in the Table below, the Licensee shall for the avoidance of doubt in addition to the royalties payable pursuant to Clause 4.4 to 4.5, pay to UCLB the amount by which such royalties are less than the Minimum Royalty within thirty (30) days following the end of the relevant calendar year, failing which UCLB shall be entitled to terminate this Agreement and all licences granted under this Agreement by notice in writing to the Licensee given at any time after the expiry of the said thirty (30) day period. If this Agreement ends on any day other than the last day of a calendar year, the Minimum Royalty due for that year shall be reduced pro-rata calculated on the basis of the number of days of the final calendar year during which this Agreement was in force.

Calendar Year	Minimum Royalty
2025	$	20,000
2026	$	20,000
2027	$	50,000
2028 and any subsequent calendar year	$	100,000

For the avoidance of doubt, where no royalties under Clauses 4.4 and/or 4.5 are generated by the Licensee, its Affiliates or Sub-licensees for a calendar year (as stated in the Table above), the Minimum Royalty set out in the above Table shall be payable in its entirety in respect of the relevant calendar year.

4.9 Royalties to Third Parties.

If, during the term of this Agreement, the Licensee has taken appropriate professional advice from its patent agents and is advised in a written opinion by its patent agents that it is necessary to obtain a licence from any third party (“Third Party Licence”) in order to avoid infringing such third party’s patent(s) in the course of manufacture or sale of Licensed Products and provided that the Licensee has, acting reasonably, consulted with UCLB, and has taken into account any representations made to it by UCLB, in relation to the necessity of obtaining such Third Party Licence, the royalties payable under this Agreement shall be reduced by 50% (fifty percent) of the amount of royalties paid by the Licensee under the Third Party Licence. Notwithstanding the foregoing, the amount of royalty payable by the Licensee to UCLB in any quarterly period in respect of each country and territory within the Territory shall not be reduced by more than 50% (fifty percent) of the amount which would have otherwise been payable in the absence of this Clause. The reduction referred to in this Clause shall only be made where the infringement of the third party patent arises from the use of the inventions claimed in the Patents in accordance with the provisions of this Agreement, and not from the use of any other intellectual property that the Licensee chooses to use in the manufacture or sale of any Licensed Product. The Licensee shall use its commercially reasonable efforts to avoid having to pay royalties, and to minimise the amount of any such royalties which it agrees to pay, to any Third Party. Where the Parties disagree as to the necessity of a Third Party Licence, and the Parties are not able to resolve such dispute within thirty (30) days following the dispute first arising, then such dispute shall be referred to an expert who shall be appointed in accordance with the provisions of Schedule 2 and whose decision shall be final and binding on the Parties.

22

4.10 Payment Frequency.

Royalties due under this Agreement shall be paid within thirty (30) days following the end of each calendar quarter ending on 31 March, 30 June, 30 September and 31 December in each year, in respect of sales of Licensed Products made and Net Receipts generated during such quarter and within thirty (30) days following the termination of this Agreement.

4.11 Payment terms.

All sums due under this Agreement:

4.11.1	are exclusive of Value Added Tax which where applicable will be paid by the Licensee to UCLB in addition;
4.11.2	shall be paid in US dollars in cash by transferring an amount in aggregate to the following account number: 47039033, sort code: 20-10-79, account name UCL Business Ltd., held with Barclays Bank plc, Leicester, Leicestershire, LE87 2BB, and in the case of income or amounts received by the Licensee or its Affiliates in a currency other than US dollars, the royalty shall be calculated in the other currency and then converted into equivalent US dollars at the relevant daily spot rate for that currency as quoted in the Financial Times newspaper on the last business day of the period in relation to which the royalties are payable;
4.11.3	will be made without any set-off, deduction or withholding except as may be required by law. If the Licensee is required by law to make any deduction or to withhold any part of any amount due to UCLB under this Agreement, the Licensee will give to UCLB proper evidence of the amount deducted or withheld and payment of that amount to the relevant taxation authority, and will do all things in its power to enable or assist UCLB to claim exemption from or, if that is not possible, to obtain a credit for the amount deducted or withheld under any applicable double taxation or similar agreement from time to time in force; and

23

4.11.4 shall be made by the due date, failing which UCLB may charge interest on any outstanding amount on a daily basis until such payment is made at a rate equivalent to 3% above the Barclays Bank plc base lending rate then in force in London.

4.12 Royalty Statements.

The Licensee shall send to UCLB at the same time as each royalty payment is made in accordance with Clauses 4.4 to 4.5 (inclusive) a statement setting out for the relevant calendar quarter the detail included at Schedule 5.

4.13 Records.

4.13.1	The Licensee shall keep at its normal place of business detailed and up to date records and accounts showing the quantity, description and invoiced price or non- cash consideration for all Licensed Products sold by it or its Affiliates or on its or its Affiliates’ behalf, and the amount of Net Receipts, broken down in each case on a country by country basis, and being sufficient to ascertain the payments due to UCLB under this Agreement.
4.13.2	The Licensee shall make such records and accounts available, on reasonable notice, for inspection during business hours by an independent chartered accountant nominated by UCLB for the purpose of verifying the accuracy of any statement or report given by the Licensee to UCLB under Clause 4.13.1. The Licensee shall co- operate reasonably with any such accountant, and shall promptly provide all information and assistance reasonably requested by such accountant. The accountant shall be required to keep confidential all information learnt during any such inspection, and to disclose to UCLB only such details as may be necessary to report on the accuracy of the Licensee’s statement or report. UCLB shall be responsible for the accountant’s charges unless the accountant certifies that there is an inaccuracy of more than 5% (five percent) in any royalty statement, in which case the Licensee shall pay his charges in respect of that inspection.
4.13.3	Such records and accounts, and the accountant’s reports, shall be deemed to be Confidential Information of the Licensee.
4.13.4	The Licensee shall ensure that UCLB has the same rights as those set out in this Clause 4.13 in respect of the Licensee’s Affiliates.

24

The Licensee shall co-operate with UCLB in good faith to resolve any discrepancies identified during any such inspection and shall pay any shortfall in the amounts paid to UCLB under this Agreement, together with interest on late payment as specified in Clause 4.11.4, within thirty (30) days following receipt of a copy of the independent chartered accountant’s report.

4.14 Accounting Standards.

Where this Agreement requires a financial calculation to be made or an action to be taken, such calculation or action will be made or taken in accordance with the generally accepted accounting principles (consistently applied) from time to time approved by the United Kingdom’s Accounting Standards Board, or any successor body, applicable as at the date on which such calculation or action is made or taken.

5. COMMERCIALISATION

5.1 General Diligence.

The Licensee shall use Diligent Efforts to develop and commercialise Licensed Products in the Territory (including obtaining regulatory approvals which may be required to market and sell the Licensed Products) and to maximise sales for the benefit of both Parties.

5.2 [reserved.]

5.3 Development Plan.

The Licensee’s initial plan for developing and commercialising Licensed Products is set out in Schedule 3 (the “Development Plan”). The Licensee shall provide to UCLB on each anniversary of the Commencement Date a written update to the Development Plan that shall:

5.3.1	report on all activities conducted under this Agreement by the Licensee and its Affiliates and Sub-licensees since the Commencement Date or the date of the previous update (as appropriate);
5.3.2	set out the milestone events achieved since the Commencement Date or the date of the previous update (as appropriate) and the Licensee’s best estimate of the dates for achieving any future milestone events;
5.3.3	set out the current and projected activities being taken or planned to be taken by the Licensee and its Affiliates and Sub-licensees to bring Licensed Products to market, and to maximise the sale of Licensed Products in the Territory and in the Field; and

25

5.3.4 set out the Licensee’s and its Affiliates’ and Sub-licensees’ projected sales of Licensed Products (based on the Licensee’s current forecasts) for each of the next three (3) years following the date of the report.

UCLB’s receipt or approval of any update to the Development Plan shall not be taken to waive or qualify the Licensee’s obligations under Clause 5.1. The Development Plan shall be deemed to be Confidential Information of the Licensee.

5.4 Annual Meeting.

The Licensee will on UCLB’s request meet with UCLB at least once per calendar year, following the submission of the update to the Development Plan pursuant to Clause 5.3, to discuss progress with regard to the development and commercialisation of the Licensed Technology and the Licensee’s efforts to maximise sales of Licensed Products in the Territory and in the Field.

5.5 Reporting of First Commercial Sale.

The Licensee will promptly notify UCLB in writing of the First Commercial Sale of each Licensed Product in each country within the Territory.

5.6 Reporting for Impact Purposes.

5.6.1

The Licensee acknowledges that part of UCLB’s purpose in licensing the Patents, the and the Know-how to the Licensee pursuant this Agreement is to ensure that the Patents and the Know-how are made available for use and commercial exploitation with the intention of benefitting society and the economy. In order to enable UCLB and UCL to monitor the benefit that they are providing, and to enable UCL to demonstrate the impact of its research activities, to society and the economy, the Licensee will provide to UCLB on each anniversary of the Commencement Date during the period of this Agreement and for a period of three (3) years thereafter a written report describing in reasonable detail how it has used the Patents and the Know-how and the societal and economic benefits generated therefrom.

5.6.2

Such reports shall be deemed to be Confidential Information of Licensee. The Licensee acknowledges that UCLB and UCL shall be entitled to make use of any written reports received from the Licensee (and the information contained therein) pursuant to Clause 5.6.1 in confidential applications for research or other grant related funding and in confidential submissions to Higher Education funding bodies such as HEFCE and/ or HEIF (or any replacements for either of those entities) and like entities, and to use the Licensee’s name and the fact that the Licensed Technology have been provided to the Licensee hereunder in their general publicity materials.

26

5.7 Quality.

The Licensee shall ensure that all of the Licensed Products marketed by it and its Affiliates are of satisfactory quality and comply with all applicable laws and regulations in each part of the Territory, and shall use commercially reasonable efforts to ensure that all of the Licensed Products marketed by its Sub-licensees are of satisfactory quality and comply with all applicable laws and regulations in each part of the Territory.

5.8 Marking of Licensed Products.

To the extent permitted under the laws of any country, the Licensee shall mark and cause its Affiliates and Sub-licensees to mark each Licensed Product with the number of each issued Patent in the applicable country which applies to the Licensed Product and a statement that such Licensed Products are sold under licence from UCL Business Ltd.

5.9 Disposals of Licensed Products for Free.

Notwithstanding the terms of Clause 5.1, the Licensee shall be entitled to supply a reasonable number of Licensed Products to third parties free of charge:

5.9.1	for use in clinical trials;
5.9.2	for use in an early access scheme, patient access scheme or market access scheme approved by regulatory authorities in the relevant territories;
5.9.3	as promotional items for the purpose of establishing a market for the Licensed Products in the relevant country or territory; and/or
5.9.4	for evaluation and testing purposes,

provided that in the case of sub-clause 5.9.3 and 5.9.4, the Licensee shall be entitled to supply Licensed Products free of charge for a maximum of eight (8) years following the grant of the first marketing authorisation for the Licensed Product and that the quantity of Licensed Products supplied for free in each country in each twelve (12) month period is no more than ten percent (10%) of the total sales volume of Licensed Products in such country during the same period, and in all cases, the quantity of Licensed Products supplied for free in each country or territory is not excessive and is in line with normal industry practice in such country or territory. Any Licensed Products disposed of to third parties free of charge in accordance with this Clause 5.9 shall not be taken into account for the purposes of calculating Net Sales Value. For the avoidance of doubt, Licensed Products disposed of to third parties free of charge, in each country, in excess of ten percent (10%) of the total sales volume for that country, in each twelve (12) month period, shall be taken into account for the purposes of calculating Net Sales Value.

27

5.10 Referral to Expert.

If UCLB considers at any time during the period of this Agreement that the Licensee has without legitimate reason failed to comply with its obligations under Clause 5.1, UCLB shall be entitled to refer to an independent expert the following questions:

5.10.1	whether the Licensee has complied with its obligations under Clause 5.1; and if not
5.10.2	what specific action the Licensee should have taken (“Specific Action”) in order to have so complied.

The independent expert shall be appointed in accordance with the provisions of Schedule 2 and his decision shall be final and binding on the Parties.

5.11 Consequences of Expert’s Decision.

If the expert determines that the Licensee has failed to comply with its obligations under Clause 5.1, and if the Licensee fails to take the Specific Action within six (6) months after the expert giving his decision in accordance with Schedule 2, UCLB shall be entitled, by giving, at any time within four (4) months after the end of that six (6) month period, not less than three (3) months’ notice, to terminate this Agreement.

6. ACCESS TO MEDICINES AND ETHICAL LICENSING

6.1 Acknowledgements

6.1.1	The Licensee acknowledges that UCLB and UCL are committed to implementing effective technology transfer strategies that promote the availability of health-related technologies in developing countries for essential medical care, as set out in UCL’s Statement of Principles and Strategies for the Equitable Dissemination of Medical Technologies.
6.1.2	UCLB recognises the early stage nature of the Licensed Technology and acknowledges that a substantial investment will be required by the Licensee to develop Licensed Products and to bring those Licensed Products to market in Developing Countries.

28

6.2 General Diligence.

The Licensee agrees to use Diligent Efforts to ensure effective and affordable access to Licensed Products in Developing Countries.

6.3 Supply to Developing Countries.

The Licensee shall use Diligent Efforts to supply or to procure the supply of the Licensed Products to customers in At-Cost Markets at a Cost-Based Price and to meet market demand for the Licensed Products in those markets. UCLB shall waive its entitlement to royalties on all Licensed Products sold in to customers in At-Cost Markets at a Cost-Based Price and such sales shall not count toward the $500M milestone.

6.4 Reporting and Consultation.

6.4.1	The Licensee shall keep UCLB regularly updated regarding the Licensee’s efforts to supply the Licensed Products in accordance with the requirements outlined in Clauses 6.2 and 6.3. Such updates shall be deemed to be Confidential Information of Licensee.
6.4.2	The Licensee shall consult with UCLB prior to filing any patent application which claims priority from or is based on any of the Patents or in relation to Licensed Products in any Developing Countries, and shall take into account any comments received from UCLB with respect to the potential effect of such patent applications on facilitating access to healthcare related technologies in such countries and territories. Where such patent applications are filed in Developing Countries, the Licensee shall reasonably consider any request from UCLB not to assert such patents and patent applications in such countries.
6.4.3	The Licensee shall consider in good faith all reasonable requests received from UCLB to negotiate and agree from time to time such amendments to this Agreement as UCLB, acting reasonably, may deem necessary or appropriate to ensure effective and affordable access to Licensed Products in Developing Countries.

6.5 Step In Rights.

6.5.1 If at any time UCLB acting reasonably considers that the Licensee is not meeting its obligations under Clauses 6.2 and 6.3., UCLB may by written notice require the Licensee:

(a) to seek one or more third parties to develop, commercialise and supply the Licensed Products to customers in At-Cost Markets; or

29

(b) to negotiate with UCLB in respect of reasonable global access terms.

6.5.2 If the Licensee following a written requirement from UCLB refuses to grant a sublicense to or is unable to identify a third party to develop, commercialise and supply the Licensed Products to customers in At-Cost Markets or the parties are unable to negotiate reasonable global access terms, then UCLB notwithstanding the rights granted to the Licensee under this Agreement shall have the right to seek a third party to, and/ or to grant to a third party a licence to, manufacture, have manufactured, use, sell, offer for sale and import the Licensed Products for supply in (but only in and for) the At-Cost Market on such terms as UCLB may in its sole discretion determine as being appropriate to ensure effective and affordable access to Licensed Products in Developing Countries.

7. COMPLIANCE WITH LAWS

7.1 General Compliance with Laws.

The Licensee will at all times comply (and will ensure its Affiliates comply) in all material respects with all legislation, rules, regulations and statutory requirements applying to and obtain any consents necessary for its use of the Patents and the Know-how, the development, manufacture, and sale of Licensed Products in any country or territory, and the Licensee will at all times use commercially reasonable efforts to ensure its Sub-licensees comply in all material respects with all legislation, rules, regulations and statutory requirements applying to and obtain any consents necessary for its use of the Patents and the Know-how, the development, manufacture, and sale of Licensed Products in any country or territory.

7.2 Bribery Act.

The Licensee shall (and shall procure that any persons associated with it engaged in the performance of this Agreement including its Affiliates shall), and the Licensee shall use commercially reasonable efforts to procure that its Sub-licensees shall:

7.2.1

comply with all applicable laws and codes of practice relating to anti-bribery and anti- corruption including the Bribery Act 2010 and without prejudice to the foregoing generality, shall not engage in any activity, practice or conduct which would constitute an offence under sections 1, 2 or 6 of the Bribery Act 2010 or do or omit to do any act that will cause or lead UCLB to be in breach of the Bribery Act 2010;

7.2.2

comply with UCLB’s ethics, anti-bribery and anti-corruption policies as available on UCL’s website from time to time and maintain in place and enforce throughout the term of this Agreement adequate procedures to ensure compliance with Clause 7.2.1; and

30

7.2.3 promptly report to UCLB any request or demand for any undue financial or other advantage of any kind received in connection with the performance of this Agreement.

For the purpose of this Clause 7.2, the meaning of adequate procedures and whether a person is associated with another person shall be determined in accordance with the Bribery Act 2010 (and any guidance issued under section 9 of that Act). Breach of this Clause 7.2 shall be deemed a material breach of this Agreement entitling UCLB to terminate under Clause 10.2.1.

7.3 Modern Slavery Act

The Licensee shall (and shall procure that any persons associated with it engaged in the performance of this Agreement including its Affiliates shall), and the Licensee shall use commercially reasonable efforts to procure that its Sub-licensees shall, comply with all applicable laws and codes of practice relating to anti-slavery including the Modern Slavery Act 2015. Such compliance shall include ensuring that all reasonable steps are taken to ensure that all parties associated with the development, manufacture and commercialisation of the Licensed Products comply with all applicable laws and codes of practice relating to anti-slavery including the Modern Slavery Act 2015.

7.4 Export Control Regulations.

The Licensee shall ensure that, in using the Patents or the Know-how and in selling Licensed Products, it and its Affiliates, employees, sub-contractors and Sub-licensees shall comply fully with any United Nations trade sanctions or UK legislation or regulation, from time to time in force (as applicable), which impose arms embargoes or control the export of goods, technology or software, including weapons of mass destruction and arms, military, paramilitary and security equipment and dual-use items (items designed for civil use but which can be used for military purposes – but excluding drugs) and certain drugs and chemicals.

7.5 Tobacco Companies and Restricted Enterprises

The Licensee shall notify UCLB immediately in writing if:

7.5.1 a Tobacco Company or an Affiliate of such a company or a Person involved as its primary business in arms dealing, gambling operations, or the promotion of violence or an Affiliate of such Person, or a Person regularly involved in child labour or an Affiliate of such Person, acquires ownership or Control of the Licensee; or

31

7.5.2 the Licensee acquires ownership or Control of a Tobacco Company or an Affiliate of such a company or a Person involved as its primary business in arms dealing, gambling operations, or the promotion of violence or an Affiliate of such Person, or a Person regularly involved in child labour or an Affiliate of such Person.

8.	INTELLECTUAL PROPERTY
8.1	Obtain and Maintain the Patents.

8.1.1	The Licensee shall be responsible for the drafting, filing, prosecution and maintenance of the Patents at its own cost and expense.
8.1.2	The Patents will be filed, prosecuted and maintained in the countries and territories set out in Schedule 4. The Licensee shall consult with UCLB in making any material decisions relating to the Patents such as which (if any) additional countries to file and maintain Patents in, and whether to elect to reject or submit to the competence of the Unitary Patent Court in respect of any Patent pursuant to Article 83(3) of the Agreement on a Unified Patent Court (2013/C 175/01) or to validate any of the Patents as a patent that has unitary effect by virtue of Regulation (EU) No 1257/2012, although the Licensee shall have the final decision.
8.1.3	The Licensee will obtain prior written approval of UCLB (which shall not be unreasonably withheld, conditioned or delayed) in relation to all changes to patent claims or specifications that would have the effect of reducing or limiting the extent of the patent coverage.
8.1.4	The Licensee will ensure that UCLB receives copies of all material correspondence to and from patent offices in respect of the Patents, including copies of all documents generated in or with such correspondence, and where practicable shall be given reasonable notice of and the opportunity to participate in any material conference calls or meetings with the Licensee’s patent attorneys in relation to the drafting, filing, prosecution and maintenance of the Patents, so that UCLB may be continuously informed of progress with the drafting, filing, prosecution and maintenance of the Patents.
8.1.5	The Licensee shall promptly notify UCLB of the grant of each patent comprised within the Patents.
8.1.6	If the Licensee wishes to abandon any application contained with the Patents or not to maintain any Patent, it shall give three (3) months’ prior written notice to UCLB and on the expiry of such notice period the licence of such Patent granted to the Licensee under this Agreement shall cease.

32

8.2 Infringement of the Patents and the Know-how.

8.2.1	Each Party shall inform the other Party promptly if it becomes aware of any infringement or potential infringement of any of the Patents in the Field or any unauthorised use of the Know-how or any challenge to the validity or ownership of the Patents or the Know-how and the Parties shall consult with each other to decide the best way to respond to such infringement, unauthorised use or challenge.
8.2.2	The Licensee shall have the primary right to take action against any third party alleged to be infringing the Patents or making unauthorised use of the Know-how in the Field and to defend the Patents against challenges to validity or ownership at its expense, provided that:

(a)	UCLB shall on the Licensee’s request cooperate with the Licensee in such action and the Licensee shall reimburse UCLB for any reasonable expenses incurred by UCLB in relation to such cooperation; and
(b)	subject to Clauses 8.2.3 and 8.2.5, the Licensee shall be solely responsible for the conduct of the action or for settlement thereof and shall be entitled to all damages received from such action, subject to Clause 8.2.4.

8.2.3	Before starting or defending or settling any legal action under Clause 8.2.2, the Licensee shall consult with UCLB as to the advisability of the action or defence or settlement, its effect on the good name of UCLB, the public interest, and how the action or defence should be conducted. If the alleged infringement or unauthorised use is both within and outside the Field or if there is a challenge to the validity or ownership of the Licensed Technology, the Parties shall also co-operate with UCLB’s other licensees (if any) in relation to any such action or defence.
8.2.4	The Licensee shall reimburse UCLB for any reasonable expenses incurred in assisting it in such action or defence. The Licensee shall pay to UCLB royalties, in accordance with Clause 4, on any damages received from such action as if the amount of such damages after deduction of both Parties’ reasonable expenses in relation to the action were Net Sales Value.
8.2.5	UCLB shall if reasonably requested by the Licensee agree to be joined in any suit to enforce such rights or take such action in its own name (subject to being indemnified and secured by the Licensee in a reasonable manner as to any costs (including internal costs), damages, expenses or other liability which may be incurred as a result of so doing) and shall have the right to be separately represented by its own counsel at its own expense, except where such separate counsel is necessary because Licensee’s counsel declines or is unable to act for or represent UCLB due to conflict of interest (such conflict to be determined by Licensee’s counsel acting reasonably) or any other reason, in which case Licensee shall pay the reasonable costs for UCLB to be separately represented.

33

8.2.6

Notwithstanding the foregoing, UCLB shall not be obliged to join any suit or to take any action in its own name if UCLB has reasonable grounds to believe that the action is inadvisable or is likely to damage the good name of UCLB, provided that where UCLB notifies the Licensee that it declines to join any suit or take any action in its own name on the foregoing grounds and the Licensee considers that it cannot effectively enforce such rights or obtain effective relief in the relevant jurisdiction without the joinder of UCLB, then the Parties will work together in good faith to try to identify a way for the Licensee to enforce such rights or obtain such relief in another manner.

8.2.7

If, within six (6) months of the Licensee first becoming aware of any potential infringement of the Patents, the Licensee is unsuccessful in persuading the alleged infringer to desist or fails to initiate an infringement action, UCLB shall have the right, at its sole discretion, to prosecute such infringement under its sole control and at its sole expense, and any damages or other payments recovered shall belong solely to UCLB.

8.3 Infringement of Third Party Rights.

8.3.1 If any warning letter or other notice of infringement is received by a Party, or legal suit or other action is brought against a Party, alleging infringement of third party rights in the manufacture, use or sale of any Licensed Product or use of any Patents and/or the Know-how, that Party shall promptly provide full details to the other Party, and the Parties shall discuss the best way to respond.

9.	WARRANTIES AND LIABILITY
9.1	Warranties by UCLB.

UCLB warrants and undertakes to the Licensee as follows:

9.1.1 it is the registered proprietor of, or applicant for, the Patents and Know-how and has caused all of UCL’s employees who are named as inventors on such Patents to execute such assignments of the Patents as may be necessary to pass all of their right, title and interest in and to the Patents to UCLB;

34

9.1.2	it has the full power and authority to grant the licences contained in this Agreement;
9.1.3	so far as it is aware (having made no enquiry of any third parties or conducted any freedom to operate searches), the use and exploitation of the Licensed Technology will not infringe the intellectual property rights of any third party.

9.2 Warranties by the Licensee.

The Licensee warrants and undertakes to UCLB that:

9.2.1	it has the right to enter into this Agreement;
9.2.2	is duly organised and existing under laws of Delaware (USA) and has all necessary authority, power and capacity to perform its obligations under this Agreement;
9.2.3	it is not, and each of its Affiliates and Sub-licensees is not, at the Commencement Date, a Tobacco Company or an Affiliate of such a company or a Person involved as its primary business in arms dealing, gambling operations, or the promotion of violence or an Affiliate of such Person, or a Person regularly involved in child labour or an Affiliate of such Person;
9.2.4	the Licensed Technology shall not at any time be used by the Licensee or its Affiliates or Sub-licensees in connection with any activities that are known by the Licensee to be privately funded for the purpose by a Tobacco Company or an Affiliate of such a company or a Person involved as its primary business in arms dealing, gambling operations, or the promotion of violence or an Affiliate of such Person, or a Person regularly involved in child labour or an Affiliate of such Person; and
9.2.5	so far as it is aware (having made no enquiry of any third parties or conducted any freedom to operate searches), use and exploitation of the Patents will not infringe the intellectual property rights of any third party.

9.3 Acknowledgements.

The Licensee acknowledges that:

9.3.1 the inventions claimed in the Patents and the Know-how are at an early stage of development. Accordingly, specific results cannot be guaranteed and any results, materials, information or other items (together “Delivered Items”) provided under this Agreement are provided “as is” and without any express or implied warranties, representations or undertakings. As examples, but without limiting the foregoing, UCLB does not give any warranty that Delivered Items are of merchantable or satisfactory quality, are fit for any particular purpose, comply with any sample or description, or are viable, uncontaminated, safe or non-toxic.

35

9.3.2 UCLB has not performed any searches or investigations into the existence of any third party rights that may affect any of the Patents or the Know-how or the use and exploitation of any of the Patents or the Know-how.

9.4 No Other Warranties.

9.4.1	Each of the Parties acknowledges that, in entering into this Agreement, it does not do so in reliance on any representation, warranty or other provision except as expressly provided in this Agreement, and any conditions, warranties or other terms implied by statute or common law are excluded from this Agreement to the fullest extent permitted by law.
9.4.2	Without limiting the scope of Clause 9.4.1, UCLB does not make any representation nor give any warranty or undertaking:

(a)	as to the efficacy or usefulness of the Patents or the Know-how; or
(b)	as to the scope of any of the Patents or that any of the Patents is or will be valid or (in the case of an application) will proceed to grant; or
(c)	that the use of any of the Patents or the Know-how, the manufacture, sale or use of the Licensed Products, or the exercise of any of the rights granted under this Agreement will not infringe any intellectual property or other rights of any other person; or
(d)	that the Know-how or any other information communicated by UCLB to the Licensee under or in connection with this Agreement will produce Licensed Products of satisfactory quality or fit for the purpose for which the Licensee intended or that any product will not have any defect, latent or otherwise, and whether or not discoverable by inspection; or
(e)	as imposing any obligation on UCLB to bring or prosecute actions or proceedings against third parties for infringement or to defend any action or proceedings for revocation of any of the Patents; or
(f)	as imposing any liability on UCLB in the event that any third party (which is not authorized by or under UCLB or UCL) supplies Licensed Products (i.e., products which would be Licensed Products if sold by the Licensee or its Affiliates) to customers located in the Territory; or
(g)	that there will be no similar or competitive products manufactured, used, sold or supplied by any third party in the Territory.

36

9.5 Responsibility for Development of Licensed Products.

The Licensee shall be exclusively responsible for its and its Affiliates’ and Sub-licensees’ use of the Patents and the Know-how, the technical and commercial development and manufacture of Licensed Products and for incorporating any modifications or developments thereto that may be necessary or desirable, for all Licensed Products sold or supplied, notwithstanding any consultancy services or other contributions that UCLB may provide in connection with such activities.

9.6 Indemnity.

The Licensee shall indemnify each of UCLB and UCL, and each of their respective officers, directors, Council members, employees and representatives, including the Principal Investigator (together, the “Indemnitees”) against all Claims that may be asserted against or suffered by any of the Indemnitees and which relate to:

9.6.1	the use by the Licensee or any of its Affiliates or Sub-licensees of any of the Patents or Know-how; or
9.6.2	the development, manufacture, use, marketing or sale of, or any other dealing in, any of the Licensed Products, by or on behalf of the Licensee or any of its Affiliates or Sub-licensees, or subsequently by any customer or any other person, including claims based on product liability laws.

The indemnity given by the Licensee to each Indemnitee under this Clause 9.6 will not apply to any Claim to the extent that it is attributable to the negligent act or omission, reckless misconduct or intentional misconduct of UCLB or UCL or of that Indemnitee.

9.7 Limitations of Liability.

9.7.1	To the extent that any Indemnitee has any liability to the Licensee or its Affiliates in contract, tort, or otherwise under or in connection with this Agreement, including any liability for breach of warranty, their liability shall be limited in accordance with the following provisions of this Clause 9.7.
9.7.2	The aggregate liability of the Indemnitees shall be limited to one hundred thousand pounds (£100,000) sterling.
9.7.3	In no circumstances shall either Party or any Indemnitee be liable for:

(a) any loss of profits (whether direct or indirect);

37

(b)

any loss of revenue (other than revenue due under this Agreement), business opportunity or goodwill; or

(c)

any loss, damage, cost or expense of any nature that is of an indirect, special or consequential nature, in each case, which arises directly or indirectly from that Party’s breach or non- performance of this Agreement, or negligence in the performance of this Agreement or from any liability arising in any other way out of the subject matter of this Agreement even if the Party bringing the claim has advised the other Party or the relevant Indemnitee of the possibility of those losses arising, or if such losses were within the contemplation of the Parties or the Indemnitee.

9.7.4

The relevant Indemnitee shall provide prompt written notice to the Licensee of the initiation of any action or proceeding that may reasonably lead to a claim for indemnification. Upon such notice and subject to confirming that the indemnity will apply, the Licensee shall have the right to assume the defence and settlement of such action or proceeding, provided that it shall not settle any action or proceeding without the Indemnitee’s written consent (which shall not be unreasonably withheld, conditioned or delayed) unless (a) there is no finding or admission of any violation of applicable law or any violation of the rights of any Person by an Indemnitee, no requirement that the Indemnitee admit fault or culpability, and no adverse effect on any other claims that may be made by or against the Indemnitee and (B) the sole relief provided is monetary damages that are paid in full by the Licensee and such settlement does not require the Indemnitee to take (or refrain from taking) any action. The Indemnitee shall co-operate with the Licensee in the defence of such claim.

9.7.5

Nothing in this Agreement excludes either Party’s liability to the extent that it may not be so excluded under applicable law, including any such liability for death or personal injury caused by that Party’s negligence, or liability for fraud or fraudulent misrepresentation.

9.8 Insurance.

9.8.1 The Licensee shall take out with a reputable insurance company and maintain at all times during the term of this Agreement and for a further six (6) years after the end of the term of this Agreement, public and product liability and professional indemnity insurance including against all loss of and damage to property (whether real, personal or intellectual) and injury to persons including death arising out of or in connection with this Agreement and the Licensee’s and its Affiliates’ and Sub-licensees’ use of the Patents or the Know-how and use, sale of or any other dealing in any of the Licensed Products. Such insurances may be limited in respect of one claim provided that such limit must be at least:

(a) one million pounds (£1,000,000) in respect of any one claim and in aggregate at all times before commencement of clinical trials for any Licensed Product;

38

(b)	three million pounds (£3,000,000) in respect of any one claim and in aggregate at all times following the commencement of the first clinical trial for any Licensed Product; and
(c)	five million pounds (£5,000,000) in respect of any one claim and in aggregate at all times following the first commercial sale of the first Licensed Product.

9.8.2 The Licensee will produce to UCLB at all times upon demand proof that the insurance cover required pursuant to Clause 9.8.1 is in force and evidence that all premiums have been paid up to date. If UCLB becomes aware that the Licensee has failed to maintain the insurance required pursuant to Clause 9.8.1 UCLB may effect such insurance and the Licensee will reimburse UCLB for the reasonable cost of effecting and maintaining such insurance on demand.

10.	DURATION AND TERMINATION
10.1	Commencement and Termination by Expiry.

This Agreement, and the licences granted hereunder, shall come into effect on the Commencement Date and, unless terminated earlier in accordance with this Clause 10 or Clause 11.1.2, the licences granted hereunder shall continue in force on a country by country basis until the later of:

10.1.1	the date on which all the Patents have been abandoned or allowed to lapse or expired or been rejected or revoked without a right of further appeal in the relevant country or territory or been held invalid or unenforceable by a court of competent jurisdiction in a final and non-appealable judgment; and
10.1.2	the tenth (10th) anniversary of the First Commercial Sale of Licensed Products in the relevant country;

upon which the licences granted hereunder shall terminate automatically by expiry in such country or territory.

39

This Agreement shall terminate when all of the licences granted hereunder have terminated in all countries and territories within the Territory.

10.2 Early Termination.

10.2.1

Each Party may terminate this Agreement at any time by notice in writing to the other Party (“Other Party”), such notice to take effect as specified in the notice, if the Other Party is in material breach of this Agreement and, in the case of a breach capable of remedy within thirty (30) days, the breach is not remedied within thirty (30) days of the Other Party receiving notice specifying the breach and requiring its remedy, or where the breach relates to non-payment of a sum due under this Agreement, the sum is not paid in full within fourteen (14) days following the Other Party receiving notice specifying the non-payment and requiring payment in full.

10.2.2

UCLB may terminate this Agreement by giving written notice to the Licensee, such termination to take effect forthwith or as otherwise stated in the notice:

(a)	in accordance with the provisions of Clause 2.3; or
(b)	in accordance with the provisions of Clause 5.11; or
(c)	if UCLB receives notification from the Licensee pursuant to Clause 7.5, or is otherwise made aware that there has been an acquisition of the type referred to in Clause 7.5;
(d)	if UCLB is made aware that the Licensee has breached either of the warranties in Clause 9.2.3 or Clause 9.2.4, or
(e)	the Licensee is in persistent breach of this Agreement and where the Parties have failed to agree a mechanism to remedy the persistent nature of such breaches within a reasonable period following UCLB notifying the Licensee of the persistent breach and requesting that the Licensee enters into discussions with UCLB as to mechanisms for remedying the persistent breaches or if the Parties have agreed a mechanism to remedy the persistent breach but that mechanism if not fully complied with by the Licensee; or
(f)	if the Licensee suffers an Insolvency Event.

10.2.3 The Licensee may terminate this Agreement at any time by giving written notice to UCLB, such termination to take effect within 45 (forty-five) days of the receipt of the notice by UCLB.

40

10.2.4 A Party’s right of termination under this Agreement, and the exercise of any such right, shall be without prejudice to any other right or remedy (including any right to claim damages) that such Party may have in the event of a breach of contract or other default by the other Party.

10.3 Consequences of Termination.

10.3.1

Upon expiry of the term of this Agreement in accordance with Clause 10.1, and subject to all royalties and any other sums due to UCLB under this Agreement having been duly paid, the Licensee shall have a fully paid up licence to the Patents and the Know-how of the same scope as set forth in Clause 2.1.1 and 2.1.2 without any further obligation to pay any further sums to UCLB under Clause 4. Notwithstanding the foregoing the Licensee acknowledges that once each Patent expires or is abandoned or withdrawn or allowed to lapse in any country or territory, third parties in that country or territory will be entitled to use the inventions claimed in the Patent and that accordingly the licence granted to the Licensee under Clause 2.1 will no longer be exclusive in that country or territory.

10.3.2

Upon termination of this Agreement for any reason other than as set forth in Clause 10.1:

(a)	the Licensee and its Affiliates and Sub-licensees shall be entitled to sell, use or otherwise dispose of (subject to payment of royalties under Clause 4) any unsold or unused stocks of the Licensed Products for a period of six (6) months following the date of termination;
(b)	subject to paragraph (a) above, any licence that has not become fully paid- up in accordance with Clause 10.3.1 shall terminate and the Licensee and its Affiliates (and subject to Clause 2.3.6, its Sub-licensees) shall no longer be licensed to use or otherwise exploit the Patents and/or the Know-how, in so far and for as long as any of the Patents remain in force and the Know-how remains confidential;
(c)	the Licensee shall consent to the cancellation of any formal licence granted to it, or of any registration of it in any register, in relation to any of the Patents;
(d)	the Licensee will, promptly on UCLB’s request, provide (and will ensure that its patent agents provide) to UCLB all information, documentation and assistance (including executing documents) which UCLB may reasonably require to enable it to take over with the drafting, filing, prosecution and maintenance of the Patents;

41

(e)	except as set out in Clause 2.3.6, all sub-licences of the Patents and/ or the Know-how granted by the Licensee pursuant to this Agreement will automatically terminate;
(f)	each Party shall upon the written request of the other Party, return or destroy any documents or other materials that are in its or its Affiliates or (where applicable) its Sub-licensees’ possession or under its or their control and that contain the other Party’s Confidential Information;
(g)	in order that UCLB may have the opportunity to exercise an option to continue either itself or through an appropriate third party to develop, manufacture and commercialise Licensed Products:

(i) the Licensee shall promptly on UCLB’s request:

(A)	deliver to UCLB (as the Licensee’s Confidential Information and solely for the purpose of evaluation by UCLB) a copy of all technical and clinical data relating to Licensed Products generated by it or its Affiliates and/or Sub-licensees; and
(B)	disclose to UCLB (as the Licensee’s Confidential Information and solely for the purpose of evaluation by UCLB) full details of all and any improvements, modifications, adaptations and new uses of the Licensed Technology generated by it or its Affiliates and Sub-licensees; and
(C)	to the extent possible, and subject to the prior execution and delivery of the agreement contemplated by Clause 10.3.2(ii) below) take all action necessary to have its right, title and interest in and to any clinical trial authorisations, product licences, marketing authorisations, pricing and/ or reimbursement approvals (and any applications for any of the foregoing) which relate to Licensed Products transferred into the name of UCLB or its nominee;

(ii) UCLB shall have the option to acquire an exclusive, worldwide licence, with the rights to grant sub-licences, to use and commercialise any technical and clinical data, and any Licensee Improvements relating, and any product names and trademarks which have been applied, to Licensed Products which are owned or controlled by the Licensee or its Affiliates or Sub-licensees for the purpose of developing, manufacturing and commercialising Licensed Products on terms to be negotiated between the parties acting reasonably;

42

(iii) subject to the prior execution and delivery of the agreement contemplated by Clause 10.3.2(ii) above, the Licensee hereby appoints (and will ensure that each of its Affiliates and Sub-licensees appoints) UCLB as its attorney to execute such documents and do such things in its name as may be necessary to effect the transfer to UCLB or UCLB’s nominee of its right, title and interest in and to all regulatory approvals, and in the case of applications for regulatory approvals the status of applicant under such applications, for Licensed Products obtained or submitted by the Licensee or its Affiliates or Sub-licensees if the Licensee or any of its Affiliates or Sub-licensees (as the case may be) does not execute such documents and/ or do such acts within a period of seven (7) days following UCLB’s written request pursuant to this paragraph, provided however that all of the foregoing obligations will only apply in relation to Sub-licensees whose rights are terminating under paragraph (e) above.

10.3.3 Upon termination of this Agreement for any reason the provisions of Clauses 1, 2.3.8, 2.5, 3.2 to 3.5, 4 (in respect of amounts paid and payable to UCLB in respect of the period up to and including the date of termination), 5.6, 7, 9.6, 9.7, 9.8, 10.3 and 11 shall remain in force.

11.	GENERAL
11.1	Force Majeure.

11.1.1 Any delays in or failure of performance by either Party under this Agreement will not be considered a breach of this Agreement if and to the extent that such delay or failure is caused by occurrences beyond the reasonable control of that Party and could not have been avoided or mitigated by contingency planning including acts of God; acts, regulations and laws of any government; strikes or other concerted acts of workers; epidemics; fire; floods; explosions; riots; wars; rebellion; and sabotage; and any time for performance hereunder will be extended by the actual time of delay caused by any such occurrence.

43

11.1.2 If either Party is prevented from carrying out its obligations under this Agreement for a continuous period of six (6) months the other Party may terminate this Agreement on giving thirty (30) days’ prior written notice provided always that at the date upon which termination becomes effective the Party which was prevented from carrying out its obligations under this Agreement remains so prevented.

11.2 Amendment.

This Agreement may only be amended in writing signed by duly authorised representatives of UCLB and the Licensee.

11.3 Assignment and Third Party Rights.

11.3.1

Subject to Clause 11.3.2, neither Party shall assign, mortgage, charge or otherwise transfer or deal with any rights or obligations under this Agreement, nor any of the Patents or the Know-how, without the prior written consent of the other Party.

11.3.2

Each Party may, subject to obtaining the consent of the other Party which shall not be unreasonably withheld, delayed or conditioned, transfer all its rights and obligations under this Agreement together with its rights in the Patents and the Know- how to any company to which it transfers all or substantially all of its assets or business in the Field, provided that the assignee undertakes to the other Party to be bound by and perform the obligations of the assignor under this Agreement. However a Party shall not have such a right to transfer this Agreement if it is insolvent or any other circumstance described in Clause 10.2.2(f) applies to it or if the proposed assignee is a Tobacco Company or an Affiliate of such a company or a Person involved as its primary business in arms dealing, gambling operations, or the promotion of violence or an Affiliate of such Person, or if the proposed assignee is a Person regularly involved in child labour or an Affiliate of such Person.

11.4 Waiver.

Any waiver given under or in relation to this Agreement shall be in writing and signed by or on behalf of the relevant Party. No failure or delay on the part of either Party to exercise any right or remedy under this Agreement shall be construed or operate as a waiver thereof or of any other provision hereof, nor shall any single or partial exercise of any right or remedy preclude the further exercise of such right or remedy or of any other right or remedy.

11.5 Invalid Clauses.

If any provision or part of this Agreement is held to be invalid, amendments to this Agreement may be made (by the mutual agreement of the parties if possible, but if not then by a court or arbitrator who shall be appointed with mutual consent of the Parties) by the addition or deletion of wording as appropriate to remove the invalid part or provision but otherwise retain the provision and the other provisions of this Agreement to the maximum extent permissible under applicable law.

44

11.6 No Agency.

Neither Party shall act or describe itself as the agent of the other, nor shall it make or represent that it has authority to make any commitments on the other’s behalf.

11.7 Interpretation.

In this Agreement:

11.7.1	the headings are used for convenience only and shall not affect its interpretation;
11.7.2	references to persons shall include incorporated and unincorporated persons; references to the singular include the plural and vice versa; and references to the masculine include the feminine;
11.7.3	references to Clauses and Schedules mean clauses of, and schedules to, this Agreement;
11.7.4	references in this Agreement to termination shall include termination by expiry;
11.7.5	where the word “including” is used it shall be understood as meaning “including without limitation”;
11.7.6	any reference to any English law term for any action, remedy, method or judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than England be deemed to include what most nearly approximates in that jurisdiction to the English law term;
11.7.7	time shall be of the essence in relation to the performance of the Licensee’s obligations under this Agreement; and
11.7.8	any reference to the sale of a Licensed Product by the Licensee or its Affiliates or Sub-licensees will be taken to include any supply or other disposal of Licensed Products, and the term sold shall be construed accordingly.

45

11.8 Notices; Addresses for Service.

11.8.1 Any notice to be given under this Agreement shall be in English, in writing and shall be delivered by Royal Mail signed for first class mail (if sent to an inland address) or by international courier, or by email (confirmed by Royal Mail signed for first class mail or international courier, as appropriate) to the address of the relevant Party set out at the head of this Agreement or to the address of the Licensee specified for service within the jurisdiction of the courts of England and Wales, or to the relevant email address set out below, or such other address or email address as that Party may from time to time notify to the other Party in accordance with this Clause 11.8. The email addresses of the Parties are as follows:

UCLB – legal@uclb.com

Licensee – mpoirier@qualigeninc.com

11.8.2

Notices sent as above shall be deemed to have been received three (3) working days after the day of posting in the case of delivery inland by Royal Mail signed for first class mail, or three (3) working days after the date of collection by the international courier, or in the case of email notifications, at the time the email is sent provided that, within twenty-four (24) hours of sending the email, a hard copy of the email and any attachments thereto are sent by Royal Mail signed for first class mail or international courier, as appropriate, or delivered by hand, to the address of the relevant Party set out at the head of this Agreement.

11.8.3

Either Party may, by notice given pursuant to this Cause 11.8, change its address- for-notice.

11.9 Dispute Resolution

11.9.1	If a dispute (a “Dispute”) arises out of or in connection with this Agreement (including in relation to any non-contractual obligations) each Party may during the term of this Agreement serve a written notice (a “Referral Notice”) on the other Party. Each Party will procure that its representatives referred to in Clauses 11.9.2 and 11.9.3 will comply with the provisions of this Clause 11.9.
11.9.2	Following service of a Referral Notice in relation to a Dispute, that Dispute will be referred for resolution to the Chief Executive Officer for the time being on behalf of UCLB and the Chief Executive Officer or other senior manager for the time being on behalf of the Licensee. Those representatives will meet at the earliest convenient time and in any event within forty-five (45) days of the date of service of the relevant Referral Notice and will attempt to resolve the Dispute.
11.9.3	Subject to Clause 11.9.4, the procedures set out in Clauses 11.9.1 to 11.9.3 (inclusive) will be followed prior to the commencement of any proceedings by each party in relation to a Dispute. However, if a Dispute is not resolved within forty-five (45) days of the meeting of the representatives in accordance with Clause 11.9.2 each Party may commence proceedings in accordance with Clause 11.10.

46

11.9.4 Nothing in this Clause 11.9 will prevent or delay either party from:

(a)	seeking orders for specific performance, interim or final injunctive relief;
(b)	exercising any rights it has to terminate this Agreement; and/or
(c)	commencing any proceedings where this is necessary to avoid any loss of a claim due to the rules on limitation of actions.

11.10 Law and Jurisdiction.

The validity, construction and performance of this Agreement, and any contractual and non- contractual claims arising hereunder, shall be governed by English law and shall be subject to the exclusive jurisdiction of the English courts to which the parties hereby submit.

11.11 Entire Agreement.

This Agreement, including its Schedules, sets out the entire agreement between the Parties relating to its subject matter and supersedes all prior oral or written agreements, arrangements or understandings between them relating to such subject matter; provided that any prior written nondisclosure/non-use provisions are not superseded and shall remain in force. Subject to Clause 9.7.5, the Parties acknowledge that they are not relying on any representation, agreement, term or condition which is not set out in this Agreement.

11.12 Third Parties.

Except for the rights of UCL as provided in Clause 2.4, all rights expressly provided herein to Affiliates of a Party, the rights of the Indemnitees as provided in Clause 9.6 and the limitations of liability afforded to the Indemnitees pursuant to Clause 9.7, who may in their own right enforce and rely on the provisions of those Clauses, this Agreement does not create any right enforceable by any person who is not a party to it (“Third Party”) under the Contracts (Rights of Third Parties) Act 1999, but this Clause does not affect any right or remedy of a Third Party which exists or is available apart from that Act. The Parties may amend, renew, terminate or otherwise vary all or any of the provisions of this Agreement, including Clauses 2.4, 9.6 and 9.7, without the consent of UCL and/ or the Indemnitees and/or any such Affiliate.

11.13 Non-use of Names; Announcements.

11.13.1

The Licensee shall not use, and shall ensure that its Affiliates and Sub-licensees do not use, the name, any adaptation of the name, any logo, trademark or other device of UCLB, nor of the inventors named on the Patents nor the Principal Investigator, in any advertising, promotional or sales materials without prior, express written consent obtained from UCLB in each case, except that the Licensee may state that it is licensed by UCLB under the Patents.

11.13.2

Except as permitted under Clause 5.6 or Clause 11.3.1, neither Party shall make any press or other public announcement concerning any aspect of this Agreement, or make any use of the name or trademarks of the other Party in connection with or in consequence of this Agreement, without the prior, express written consent of the other Party (which shall not be unreasonably refused, if required by applicable law).

47

SCHEDULE 1

LICENSED TECHNOLOGY

Part A: The Patents

Patent Application No.	Priority Date	Description
US 8,796,456 B2	29/11/2007	Naphthalene Diimide Compounds
US 9,493,460 B2	13/03/2013	Diimide Compounds
PCT/GB2020/051195	16/05/2019	Substituted naphthalene diimides and their use

Part B: The Know-how

The description of the Know-how is as follows:

Data asset number	Experiment description and notes
1	84 compounds structures and synthesis
2	Basic properties of CM03 and SOP1812
	Mol wt
	clogP
	Fluorescence excitation and emission max, in nm
	Formulation of free base, for cellular and in vivo studies, up to MTD
	Salt and aqueous solubility
	Stability in saline at 0° C
	t1/2 mouse microsomal stability, min
	Plasma protein binding % in vitro
	In vitro blood/plasma partitioning
	FRET ΔTm, °C with GQ
	KD (nM)
	Duplex DNA binding
3	Cell growth inhibition data:
	Pancreatic cancer lines:
	MIAPaCa-2
	PANC-1
	CAPAN-1
	Bx-PC3
	MIAPaCa-2gemR
	Prostate cancer lines:
	PC-3
	DU145
	LNCaP
	VCaP
	22RV1

48

4	Cellular synergy studies on with MIAPaCa-2 and MIAPaCa-2gemR:
	Suberanilohydroxamic acid (SAHA)
	Gemcitabine
	Panobinostat
	Romidepsin
5	Confocal microscopy study on BG4 (GQ-specific) antibody staining in PANC-1 cells following short-term treatment with CM03 and SOP1812.
6	RNA-seq of MIAPaCa-2 (UCL) and PANC-1 (Cambridge) treated with CM03, SOP1812 and gemcitabine and number of putative GQs per gene
7	Pharmacokinetics:
	Pharmacokinetic data in vivo with female athymic nude mice with single doses
	Pharmacokinetics in tumour (MIAPaCa-2) bearing mice with SOP1812 and CM03
	Pharmacokinetics in female Sprague Dawley rats with SOP1812 and CM03
8	Tolerability (Maximum Tolerated Dose) and efficacy studies using the MIAPaCa-2 xenograft model for SOP1812 and CM03 with following data:
	Animal bodyweight, behaviour and appearance daily
	Blood sampling at Tmax after first dose and final dose to confirm plasma exposure of compound
	Animal heart rate monitored in vivo
	Complete blood counts and blood biochemistry at terminal sampling
	Tumour size and T/C value (treated to control value)
9	Kaplan–Meier plots (and other data) for KPC genetic model for pancreatic cancer with SOP1812, CM03 and gemcitabine
10	Kaplan–Meier plot, hLINE-1 circulating tumour DNA qPCR, bodyweight, final pancreas weight and blood analysis for orthotopically implanted pancreatic Bx-PC3 cells in female athymic nude mice with SOP1812 and gemcitabine
11	in vivo xenograft study with MIAPaCa-2gemR cells inoculated into nude mice with CM03 and gemcitabine
12	Comparative transcriptome analysis on MIAPaCa-2 cell line +/- CM03 and on the MIAPaCa-2gemR cell line +/- CM03
13	Receptor binding assays screened in vitro against a CEREP Safety Panel for CM03
14	ELISA on plasma samples to quantify receptor and enzyme levels for CM03 and SOP1812
15	Effect of CM03 and SOP1812 on murine heart rates in vivo
16	Blood and tumour concentration of CM03 and SOP1812 in female athymic nude mice bearing MIAPaCa-2 tumours
17	Histopathology studies on kidney, heart and brain from xenograft animals treated with CM03, SOP1812 or gemcitabine (including new data from Champion)
18	Western blots and qPCR analysis of proteins encoded by GQ-containing genes from tumour of MIAPaCa-2 xenograft animals treated with CM03, SOP1812 or gemcitabine
20	PDX xenograft mouse models with CM03, SOP1812 and gemcitabine (if all available):
	a. All relevant data for the below PDX xenografts, including Tumour status, Diagnosis, Disease stage, gender any RNA-Seq (see point 19.) and any data collected from the experiments as outline in point 8.
	CTG-1128
	CTG-2184
	CTG-0851
	CTG-1462
	CTG-0952
	CTG-0492
	b. Correlations with disease staging and GQ gene expression in these PDX models (from slide 74 of CRUK presentation).
21	Evaluation of CM03 and SOP1812 in the NCI 60 cell line panel.
22	Dosing with SOP1812 using the PC-3 prostate xenograft model (head-to-head with Abiraterone).
23	Oral bioavailability data (preliminary)
24	Liver histopathology data on CM03
25	Salt preparation and formulation on CM03

The above Know-how is stored in the following documents/places: https://www.dropbox.com/home/UCLTF%20data%20201 (acces to be granted upon signing this licence agreement).

49

SCHEDULE 2

APPOINTMENT OF EXPERT

If either Party wishes to appoint an independent expert (the “Expert”) to determine any matter pursuant to any Clause of this Agreement, the following procedures will apply:

1.	The Party wishing to appoint the Expert (“the Appointing Party”) will serve a written notice on the other Party (“the Responding Party”). The written notice will specify the Clause pursuant to which the appointment is to be made and will contain reasonable details of the matter(s) which the Appointing Party wishes to refer to the Expert for determination.
2.	The Parties shall within thirty (30) days following the date of the Appointing Party’s written notice use all reasonable efforts to agree who is to be appointed as the Expert to determine the relevant matter(s). If the Parties are unable to agree upon the identity of the Expert within that timescale, the Expert shall be appointed by the President (for the time being) of the Licensing Executives Society Britain and Ireland upon written request of either Party.
3.	Each Party will within thirty (30) days following appointment of the Expert, prepare and submit to the Expert and the other Party a detailed written statement setting out its position on the matter(s) in question and including any proposals which it may wish to make for settlement or resolution of the relevant matter.
4.	Each Party will have fourteen (14) days following receipt of the other Party’s written statement to respond in writing thereto. Any such response will be submitted to the other Party and the Expert.
5.	The Expert will if he/ she deems appropriate be entitled to seek clarification from the Parties as to any of the statements or proposals made by either Party in their written statement or responses. Each Party will on request make available all information in its possession and shall give such assistance to the Expert as may be reasonably necessary to permit the Expert to make his/ her determination.
6.	The Expert will issue his/ her decision on the matter(s) referred to him/ her in writing as soon as reasonably possible, but at latest within three (3) months following the date of his/ her appointment. The Expert’s decision shall (except in the case of manifest error) be final and binding on the Parties.
7.	The Expert will at all times act as an independent and impartial expert and not as an arbitrator.
8.	Each Party shall bear its own costs in relation to the appointment of the Expert.

50

SCHEDULE 3

DEVELOPMENT PLAN

2022	Q1	Pilot API (200g) In vivo efficacy - PDAC
	Q2	Pilot API (200g) Formulation Development DMPK, including CYP and metabolite ID (as needed) In vivo efficacy - PDAC
	Q3	Formulation Development DMPK, including CYP and metabolite ID (as needed) Exploratory Toxicology, rats
	Q4	GMP API (1kg) GLP Toxicology, monkeys IND Preparation
2023	Q1	GMP API (1kg) GMP Drug Product GLP Toxicology, hERG Pre-IND
	Q2	GMP Drug Product Site selection IND Submission
	Q3	Phase 1a for PDAC initiated
	Q4	Phase 1a patient recruitment complete
2024	H1	Phase 1a on-going
	H2	Phase 1b initiated
2025	H1	Phase 1b complete Phase 2a for PDAC initiated
	H2	Phase 2a recruitment complete
2026	H1	Phase 2a on-going
	H2	Phase 2a complete Phase 2b initiated
2027	H1	Phase 2b complete
	H2	Phase 3 initiated (with partner)
2028	H1	Phase 3 on-going (with partner)
	H2	Phase 3 complete (with partner)

51

SCHEDULE 4

LIST OF COUNTRIES AND TERRITORIES FOR PATENTS

● NA: US, Canada

● EU: Germany, UK, Italy, France, Spain, Switzerland, Netherlands, Russia

● Asia/Pac: Greater China (includes Mainland China, Hong Kong, Macau), Japan, South Korea, India, Australia

52

SCHEDULE 5

ROYALTY STATEMENT

The Royalty Statement shall include the following information, in each case expressed both in local currency and pounds sterling and showing the conversion rates used, during the period to which the royalty payment relates.

1. In respect of each territory or region in which Licensed Products are sold:

1.1	the types of Licensed Product sold (including details of any Combination Products sold);
1.2	the quantity of each type of Licensed Product sold (including details of any Combination Products sold);
1.3	the total invoiced price for each type of Licensed Product sold (including details of any Combination Products sold);
1.4	confirmation for each type of Licensed Product sold (including details of any Combination Products sold) as to whether that Licensed Product falls within a Valid Claim and details of the relevant royalty rate which applies to the Net Sales Value for such Licensed Product pursuant to Clause 4.4;
1.5	where relevant, details of any Licensed Products that have been sold other than on arm’s length terms for a cash consideration, including the relevant open market price or (if not available) the reasonable price attributed thereto;
1.6	the amounts deducted from the Net Sales Value as referred to in paragraph (i) to (iv) of that definition (broken down on a product by product and category by category basis); and
1.7	the aggregate royalties on Net Sales Value due to UCLB.

2.	A breakdown of all Net Receipts, including where relevant, details of any tangible non-cash consideration received by or due to the Licensee or its Affiliates in relation to the development or sub-licensing (including the grant of any option over a sub-licence) of any of the Licensed Technology, or the grant of any right (including an option to acquire a licence) to develop, manufacture, market, or sell Licensed Products, and including the relevant open market price or the reasonable price attributed thereto, and including specifically details of any payments of the type referred to in a) to g) of the definition of Net Receipts.
3.	Details of the cumulative sales of Licensed Products by the Licensee, its Affiliates and Sub- licensees.
4.	A breakdown of all royalties paid to third parties in the current royalty period and details of any reductions for the relevant royalty period pursuant to Clause 4.9.
5.	Details of the Minimum Royalty for the current year, and the amount (if any) due to UCLB pursuant to Clause 4.8.
6.	A breakdown of all Licensed Products supplied by the Licensee or its Affiliates to third parties free of charge during the royalty period (except in the context of or subject to Clause 5.9 and except for marketing samples provided in the ordinary course of business without violation of applicable law).

53

EXECUTED AND DELIVERED on the date set out at the head of this Licence Agreement.

For and on behalf of	For and on behalf of
UCL Business Limited	Qualigen Therapeutics, Inc.
signed	signed
Dr Anne Lane	Michael Poirier
print name	print name
CEO	CEO
title	title
13/1/2022	13/1/2022
date	date

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF THE REGISTRANT

Qualigen, Inc. – a Delaware corporation.

EX-23.1

Exhibit 23.1

CONSENT OF BAKER TILLY US, LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements Nos. 333-228501 and 333-232978 on Form S-3, and in the Registration Statements Nos. 333-207709, 333-212062, 333-218636, 333-220907, 333-249280, 333-249281 and 333-262090 on Form S-8 of Qualigen Therapeutics, Inc. of our report dated March 31, 2022, relating to the Consolidated financial statements of Qualigen Therapeutics, Inc. appearing in this report on Form 10-K of Qualigen Therapeutics, Inc. as of December 31, 2020 and March 31, 2020 and for the nine months ended December 31, 2020 and for the year ended March 31, 2020.

/s/ BAKER TILLY US, LLP

San Diego, CA

March 31, 2022

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael S. Poirier, certify that:

● I have reviewed this quarterly report on Form 10-K of Qualigen Therapeutics, Inc., a Delaware corporation;

● Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

● Based on my knowledge, the condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

● The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of condensed consolidated financial statements for external purposes with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 31, 2022	By:	/s/ Michael S. Poirier
	Name:	Michael S. Poirier
	Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher L. Lotz, certify that:

● I have reviewed this quarterly report on Form 10-K of Qualigen Therapeutics, Inc., a Delaware corporation;

● Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

● Based on my knowledge, the condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

● The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of condensed consolidated financial statements for external purposes with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 31, 2022	By:	/s/ Christopher L. Lotz
	Name:	Christopher L. Lotz
	Title:	Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned, Michael S. Poirier, Chief Executive Officer of Qualigen Therapeutics, Inc., a Delaware corporation (the “Company”), and Christopher L. Lotz, Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge (1) the transition report on Form 10-K of the Company for the twelve months ended December 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 31, 2022

By:	/s/ Michael S. Poirier
Name:	Michael S. Poirier
Title:	Chief Executive Officer (Principal Executive Officer)

March 31, 2022

By:	/s/ Christopher L. Lotz
Name:	Christopher L. Lotz
Title:	Chief Financial Officer (Principal Financial Officer)

These certifications accompanying and being “furnished” with this Report, shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing.

XML

Cover - USD ($)	12 Months Ended
	Dec. 31, 2021	Mar. 25, 2022	Jun. 30, 2021
Cover [Abstract]
Document Type	10-K
Amendment Flag	false
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2021
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2021
Current Fiscal Year End Date	--12-31
Entity File Number	001-37428
Entity Registrant Name	Qualigen Therapeutics, Inc.
Entity Central Index Key	0001460702
Entity Tax Identification Number	26-3474527
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	2042 Corte Del Nogal
Entity Address, City or Town	Carlsbad
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92011
City Area Code	(760)
Local Phone Number	918-9165
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	QLGN
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 57,063,765
Entity Common Stock, Shares Outstanding		35,295,541
Documents Incorporated by Reference [Text Block]	Portions of the registrant’s definitive Proxy Statement for the 2022 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the period covered by this Annual Report on Form 10-K, are incorporated by reference in Part III, Items 10 to 14 of this Annual Report on Form 10-K. Except for the portions of the Proxy Statement specifically incorporated by reference in this Form 10-K, the Proxy Statement shall not be deemed to be filed as part hereof.
ICFR Auditor Attestation Flag	false
Auditor Name	BAKER TILLY US, LLP
Auditor Location	San Diego, California
Auditor Firm ID	23

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Current assets
Cash	$ 17,538,272	$ 23,976,570
Accounts receivable, net	822,351	615,757
Inventory, net	1,055,878	953,458
Prepaid expenses and other current assets	1,379,896	2,678,894
Total current assets	20,796,397	28,224,679
Right-of-use assets	1,645,568	430,795
Property and equipment, net	203,920	247,323
Equipment held for lease, net	296	17,947
Intangible assets, net	171,190	187,694
Other assets	18,334	18,334
Total Assets	22,835,705	29,126,772
Current liabilities
Accounts payable	886,224	500,768
Accrued expenses and other current liabilities	1,793,901	746,738
Notes payable, current portion		131,766
Deferred revenue, current portion	135,063	486,031
Operating lease liability, current portion	134,091	254,739
Warrant liabilities	1,686,200	8,310,100
Total current liabilities	4,635,479	10,430,142
Notes payable, net of current portion		6,973
Operating lease liability, net of current portion	1,542,564	236,826
Deferred revenue, net of current portion	92,928	158,271
Total liabilities	6,270,971	10,832,212
Commitments and contingencies (Note 9)
Stockholders’ equity
Series Alpha convertible preferred stock, $0.001 par value; 7,000 shares authorized; 0 and 180 shares issued and outstanding as of December 31, 2021 and December 31, 2020		1
Common stock, $0.001 par value; 225,000,000 shares authorized; 35,290,178 and 27,296,061 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively	35,290	27,296
Additional paid-in capital	101,274,073	85,114,755
Accumulated deficit	(84,744,629)	(66,847,492)
Total stockholders’ equity	16,564,734	18,294,560
Total Liabilities & Stockholders’ Equity	$ 22,835,705	$ 29,126,772

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Series Alpha convertible preferred stock, par value	$ 0.001	$ 0.001
Series Alpha convertible preferred stock, shares authorized	7,000	7,000
Series Alpha convertible preferred stock, shares issued	0	180
Series Alpha convertible preferred stock, shares outstanding	0	180
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	225,000,000	225,000,000
Common stock, shares issued	35,290,178	27,296,061
Common stock, shares outstanding	35,290,178	27,296,061

XML

Consolidated Statements of Operations - USD ($)	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021
REVENUES
Total revenues	$ 2,849,561	$ 5,653,725
EXPENSES
Cost of product sales	2,640,148	4,332,485
General and administrative	7,105,337	11,724,964
Research and development	3,316,099	11,716,718
Sales and marketing	307,903	542,594
Impairment loss on construction in progress	1,376,000
Total expenses	14,745,487	28,316,761
LOSS FROM OPERATIONS	(11,895,926)	(22,663,036)
OTHER (INCOME) EXPENSE, NET
(Gain) loss on change in fair value of warrant liabilities	8,310,100	(4,723,187)
Gain on loan extinguishment	(451,345)
Interest (income) expense, net	48,039	(42,693)
Other income, net	(256,354)	(5,446)
Total other (income) expense, net	7,650,440	(4,771,326)
LOSS BEFORE PROVISION FOR INCOME TAXES	(19,546,366)	(17,891,710)
PROVISION FOR INCOME TAXES		5,427
NET LOSS	$ (19,546,366)	$ (17,897,137)
Net loss per common share, basic and diluted	$ (1.12)	$ (0.61)
Weighted—average number of shares outstanding, basic and diluted	17,431,714	29,334,865
Net Product Sales [Member]
REVENUES
Total revenues	$ 2,849,561	$ 5,021,721
License Revenue [Member]
REVENUES
Total revenues		$ 632,004

XML

Consolidated Statements of Changes in Stockholders' Equity - USD ($)	Series A Convertible Preferred Stock [Member] Preferred Stock [Member]	Series B Convertible Preferred Stock [Member] Preferred Stock [Member]	Series C Convertible Preferred Stock [Member] Preferred Stock [Member]	Series D Convertible Preferred Stock [Member] Preferred Stock [Member]	Series D-1 Convertible Preferred Stock [Member] Preferred Stock [Member]	Series Alpha Convertible Preferred Stock [Member] Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Mar. 31, 2020	$ 24,129	$ 77,077	$ 33,007	$ 15,083	$ 6,435		$ 56,026	$ 45,161,599	$ (47,301,126)	$ (1,927,770)
Beginning balance, shares at Mar. 31, 2020	2,412,887	7,707,736	3,300,715	1,508,305	643,511		5,602,214
Issuance of Series Alpha preferred shares upon closing of private placement						$ 5		4,009,995		4,010,000
Issuance of Series Alpha preferred shares upon closing of private placement, shares						5,010
Issuance of Series Alpha preferred stock for conversion of notes payable								350,000		350,000
Issuance of Series Alpha preferred stock for conversion of notes payable, shares						350
Issuance of common stock for conversion of preferred stock	$ (24,129)	$ (77,077)	$ (33,007)	$ (15,083)	$ (6,435)	$ (4)	$ 13,046	142,690
Issuance of common stock for conversion of preferred stock, shares	(2,412,887)	(7,707,736)	(3,300,715)	(1,508,305)	(643,511)	(5,180)	13,046,931
Issuance of common stock for conversion of notes payable and accrued interest							$ 1,775	1,582,633		1,584,408
Issuance of common stock for conversion of notes payable and accrued interest, shares							1,775,096
Effect of reverse recapitalization							$ (52,519)	863,405		810,886
Effect of reverse recapitalization, shares							(2,095,826)
Shares and warrants issued to advisor upon closing of private placement							$ 1,217	1,103,891		1,105,108
Shares and warrants issued to advisor upon closing of private placement, shares							1,217,147
Fair value of shares issued to advisor upon closing of private placement								(902,250)		(902,250)
Fair value of warrants issued to advisor upon closing of private placement								(202,858)		(202,858)
Shares and warrants issued pursuant to Securities Purchase Agreements							$ 6,009	29,994,771		30,000,781
Shares and warrants issued pursuant to Securities Purchase Agreements, shares							6,008,660
Commission and offering costs of Securities Purchase Agreements								(1,360,800)		(1,360,800)
Stock issued for professional services							$ 47	239,953		240,000
Stock issued for professional services, shares							46,967
Warrants exercised							$ 1,695	1,330,875		1,332,570
Warrants exercised, shares							1,694,872
Stock-based compensation								2,800,851		2,800,851
Net Loss									(19,546,366)	(19,546,366)
Ending balance, value at Dec. 31, 2020						$ 1	$ 27,296	85,114,755	(66,847,492)	18,294,560
Ending balance, shares at Dec. 31, 2020						180	27,296,061
Stock issued upon cash-exercise of warrants							$ 1,619	2,358,570		2,360,189
Stock issued upon cash-exercise of warrants, shares							1,618,297
Stock issued upon net-exercise of warrants							$ 227	(227)
Stock issued upon net-exercise of warrants, shares							227,404
Issuance of common stock for conversion of preferred stock						$ (1)	$ 243	(243)		(1)
Issuance of common stock for conversion of preferred stock, shares						(180)	243,416
Fair value of warrants issued for professional services								298,651		298,651
Shares issued pursuant to Securities Purchase Agreements							$ 5,880	8,814,120		8,820,000
Shares issued pursuant to Securities Purchase Agreements, shares							5,880,000
Commission and offering costs of Securities Purchase Agreements								(2,960,465)		(2,960,465)
Fair value of warrant modifications pursuant to Securities Purchase Agreements								2,253,536		2,253,536
Stock issued for professional services							$ 25	101,725		101,750
Stock issued for professional services, shares							25,000
Stock-based compensation								5,293,651		5,293,651
Net Loss									(17,897,137)	(17,897,137)
Ending balance, value at Dec. 31, 2021							$ 35,290	$ 101,274,073	$ (84,744,629)	$ 16,564,734
Ending balance, shares at Dec. 31, 2021							35,290,178

XML

Consolidated Statements of Cash Flows - USD ($)	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (19,546,366)	$ (17,897,137)	$ (20,421,979)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	88,383	113,218
Amortization of right-of-use assets	154,717	225,059
Impairment loss on construction in progress	1,376,000
Gain on CARES Act loan extinguishment	(449,050)
Accounts receivable reserves and allowances	(12,669)	(247,845)
Inventory reserves	10,060	(108,138)
Common stock issued for professional services		101,750
Warrants issued for professional services		298,651
Stock-based compensation	2,800,851	5,293,651
(Gain) loss on change in fair value of warrant liabilities	8,310,100	(4,723,187)
Write off of patents and licenses	374,618
Changes in operating assets and liabilities:
Accounts receivable	104,214	41,250
Inventory and equipment held for lease	(297,637)	111,422
Prepaid expenses and other assets	(1,531,056)	1,298,998
Accounts payable	(378,496)	385,455
Accrued expenses and other current liabilities	(333,665)	1,047,163
Due to related party	(926,385)
Operating lease liability	(171,545)	(254,740)
Deferred revenue	264,991	(416,312)
Net cash used in operating activities	(10,162,935)	(14,730,742)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(208,464)	(134,471)
Payments for patents and licenses	(6,455)	(6,893)
Cash and cash equivalents acquired in reverse recapitalization	149,825
Net cash used in investing activities	(65,094)	(141,364)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Series Alpha preferred shares upon closing of private placement	4,010,000
Net proceeds from warrant exercises	1,332,570	459,476
Net proceeds from the issuance of notes payable	1,392,463
Proceeds from issuance of shares and warrants pursuant to Securities Purchase Agreements	30,000,781	8,820,000
Offering costs of Securities Purchase Agreements	(1,360,800)	(706,929)
Principal payments on notes payable	(1,323,536)	(138,739)
Net cash provided by financing activities	34,051,478	8,433,808
Net change in cash	23,823,449	(6,438,298)
CASH - beginning of period	153,121	23,976,570
CASH - end of period	23,976,570	17,538,272	$ 23,976,570
Cash paid during the year for:
Interest	32,692	1,233
Taxes	4,774	5,133
NONCASH FINANCING AND INVESTING ACTIVITIES:
Issuance of common stock for professional services	240,000
Issuance of common stock for conversion of debt and accrued interest	1,584,408
Issuance of common stock for conversion of preferred stock before closing of reverse recapitalization	148,690
Issuance of preferred stock for conversion of debt	350,000
Fair value of shares issued to advisor upon closing of private placement	902,250
Fair value of warrants issued to advisor upon closing of private placement	202,858
Effect of reverse recapitalization	810,886
Issuance of common stock for conversion of preferred stock after closing of reverse recapitalization	6,000	243
Right-of-use assets obtained in exchange for operating lease liabilities	663,110	1,439,830
CARES Act loan interest forgiven	2,295
Fair value of shares issued for cashless warrant exercises	101,187	764,657
Net transfers to inventory from equipment held for lease	5,743	1,304
Warrant modifications pursuant to Securities Purchase Agreements		2,253,536
Fair value of warrant liabilities on date of exercise		$ 1,900,713

XML

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

Organization

Qualigen, Inc., now a subsidiary of Qualigen Therapeutics, Inc., was incorporated in Minnesota in 1996 to design, develop, manufacture and sell point-of-care quantitative immunoassay diagnostic products for use in physician offices and other point-of-care settings worldwide, and was reincorporated in Delaware in 1999. Qualigen Therapeutics, Inc. (the “Company”) operates in one business segment. In May 2020, Qualigen, Inc. completed a reverse recapitalization transaction with Ritter Pharmaceuticals, Inc. (“Ritter”) and Ritter was renamed Qualigen Therapeutics, Inc., recognized as a reverse recapitalization. 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 26, 2020.

Qualigen, Inc. was determined to be the accounting acquirer in a reverse recapitalization based upon the terms of the merger and other factors. All references to financial figures of the Company presented in the accompanying consolidated financial statements and in these Notes through May 22, 2020 are to those of Qualigen, Inc. All references to financial figures after May 22, 2020 are to those of Qualigen Therapeutics, Inc. and Qualigen, Inc.

Basis of Presentation

The accompanying consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), Regulation S-X and rules and regulations of the Securities and Exchange Commission (“SEC”).

Accounting Periods

During 2020, the Company changed its fiscal year end from March 31st to December 31st. In this annual report we show the twelve-month year ended December 31, 2021 (“Fiscal 2021”) and nine months ended December 31, 2020 (the “Transition Period”). All references in this report to the Transition Period are to the nine months ended December 31, 2020; and references to Fiscal 2021 are to the calendar 12-month fiscal year ending December 31, 2021.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. 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. GAAP. The Company views its operations and manages its business in one operating segment. All long-lived assets of the Company reside in the US.

Accounting Estimates

Management uses estimates and assumptions in preparing its consolidated financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The most significant estimates relate to the estimated fair value of warrant liabilities, stock-based compensation, write-off of patents and licenses, amortization and depreciation, inventory reserves, allowances for doubtful accounts and returns, and warranty costs. Actual results could vary from the estimates that were used.

Cash

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

The Company maintains its cash in bank deposits which exceed federally insured limits and could potentially be subject to significant concentrations of credit risk on cash. The Company reviews the financial stability of its depository institutions on a regular basis, and has not experienced any losses in such accounts

Inventory, Net

Inventory 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.

Long-Lived Assets

The Company assesses potential impairments to its long-lived assets when there is evidence that events or changes in circumstances indicate that assets may not be recoverable. An impairment loss would be recognized when the sum of the expected future undiscounted cash flows is less than the carrying amount of the assets. The amount of impairment loss, if any, will generally be measured as the difference between the net book value of the assets and their estimated fair values. During the nine months ended December 31, 2020, the Company recognized $1.4 million of such impairment losses on the construction-in-progress on a FastPack pouch filling machine project. During the year ended December 31, 2021, no such impairment losses were recorded.

Accounts Receivable, Net

The 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.

The Company records an allowance for doubtful accounts and returns equal to the estimated uncollectible amounts or expected returns. The Company’s estimates are based on historical collections and returns and a review of the current status of trade accounts receivable.

Accounts receivable is comprised of the following at:

	December 31, 2021			December 31, 2020
Accounts Receivable	$	958,448		$	629,630
Less Allowances		(136,097	)		(13,873	)
	$	822,351		$	615,757

Research and Development

The Company expenses research and development costs as incurred including therapeutics license costs.

Shipping and Handling Costs

The 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 $113,000 and $84,000, respectively, for the year ended December 31, 2021 and nine months ended December 31, 2020. Other shipping and handling costs included in general and administrative, research and development, and sales and marketing expenses totaled approximately $12,000 and $9,000 for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively.

Revenue from Contracts with Customers

We apply the following five-step model in accordance with ASC 606, Revenue from Contracts with Customers, in order to determine the revenue: (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; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

Product Sales

The 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 PSA, testosterone, thyroid disorders, pregnancy, and Vitamin D.

The 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. The delivery 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.

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

The 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.

The 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 contracts.

License Revenue

The Company enters into out-license agreements with counterparties to develop and/or commercialize its products in exchange for nonrefundable upfront license fees and/or sales-based royalties.

If 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 the year ended December 31, 2021 and the nine months ended December 30, 2020, the Company recognized license revenue of approximately $632,004 and $0, respectively.

Contract Asset and Liability Balances

The timing of the Company’s revenue recognition may differ from the timing of payment by the Company’s customers. The Company records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied.

Multiple element arrangements included contracts that combined both the Company’s analyzer and a customer’s future reagent purchases under a single contract. In some sales contracts, the Company provided analyzers at no charge to customers. Title to the analyzer was maintained by the Company and the analyzer was returned by the customer to the Company at the end of the purchase agreement.

During the year ended December 31, 2021 and nine months ended December 31, 2020, product sales are stated net of an allowance for estimated returns of approximately $150,000 and $18,300, respectively.

Deferred Revenue

Payments 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.

Research and Development

The Company expenses research and development costs as incurred.

Operating Leases

Effective April 1, 2020, the Company adopted Accounting Standard Update (“ASU”) No. 2018-11, Leases (Topic 842) Targeted Improvements (“Topic 842”). The Company determines if a contract contains a lease at inception. The Company’s material operating lease consists of a single office/manufacturing/warehouse/laboratory space. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the Company’s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company used the incremental secured borrowing rate for an existing secured loan corresponding to the maturities of the leases.

The Company’s leases typically contain rent escalations over the lease term. The Company recognizes rent expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when received and reduce the Company’s right-of-use (“ROU”) asset related to the lease. These are amortized through the ROU asset as reductions of expense over the lease term. The Company’s office/manufacturing/warehouse/laboratory lease agreement does not contain any material residual value guarantees or material restrictive covenants.

Related to the adoption of Topic 842, the Company’s policy elections were as follows:

● The Company has used the practical expedients under U.S. GAAP which allow it to not reassess whether any expired or existing contracts are considered a lease, along with grandfathering lease classifications, and treatment of indirect costs;

● The Company has elected to exclude short-term leases having initial terms of 12 months or less;

● The Company has elected not to separate non-lease components from its leases to account for them separately;

● The Company has elected not to avail itself of the practical expedient of using hindsight to determine the lease term; and

● The Company has elected the alternative transition option, by recognizing a cumulative effect adjustment to the opening balance of accumulated deficit in the period of adoption (as of April 1, 2020, the adoption of Topic 842 did not have a material effect on retained earnings).

Property and Equipment, Net

Property 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:

Machinery and equipment	5 years
Computer equipment	3 years
Molds and tooling	5 years
Furniture and fixtures	5 years

Leasehold 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.

The 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.

Intangible Assets, Net

Intangibles consist of patent-related costs and costs for license agreements. Management reviews the carrying value of 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 recovered.

If the Company determines that the carrying value of 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.

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

The carrying value of the patents of approximately $159,000 and $169,000 at December 31, 2021 and December 31, 2020, respectively, are stated net of accumulated amortization of approximately $320,000 and $303,000, respectively. Amortization of patents charged to operations for the year ended December 31, 2021 and the nine months ended December 31, 2020 were approximately $17,000 and $10,000, respectively. Total future estimated amortization of patent costs for the five succeeding years is approximately $19,000 for the year ending December 31, 2022, approximately $18,000 for the year ending December 31, 2023, approximately $15,000 for year 2024, approximately $14,000 for years 2025 and 2026, and approximately $79,000 thereafter.

The carrying value of the licenses of approximately $12,000 and $19,000 at December 31, 2021 and December 31, 2020 are stated net of accumulated amortization of approximately $407,000 and $400,000, respectively. Amortization of licenses charged to operations for the year ended December 31, 2021 and nine months ended December 31, 2020 was approximately $7,000 and $5,000, respectively. Total future estimated amortization of license costs for the five succeeding years is approximately $7,000 for the year ending December 31, 2022 and $5,000 for the year 2023.

Derivative Financial Instruments and Warrant Liabilities

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the Consolidated Statements of Operations. Depending on the features of the derivative financial instrument, the Company uses either the Black-Scholes option-pricing model or a Monte-Carlo simulation to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period (See Note 7).

Fair value measurements

The Company determines the fair value measurements of applicable assets and liabilities based on a three-tier fair value hierarchy established by accounting guidance and prioritizes the inputs used in measuring fair value. The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:

● Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date;

● Level 2 - Inputs other than quoted prices that are observable for the assets or liabilities either directly or indirectly, including inputs in markets that are not considered to be active; and

● Level 3 - Inputs that are unobservable.

Fair Value of Financial Instruments

Cash, accounts receivable, accounts payable, accrued liabilities, and debt are carried at amortized cost, which management believes approximates fair value due to the short-term nature of these instruments.

Stock-Based Compensation

Stock-based compensation cost for equity awards granted to employees and non-employees is measured at the grant date based on the calculated fair value of the award using the Black-Scholes option-pricing model, and is recognized as an expense, under the straight-line method, over the requisite service period (generally the vesting period of the equity grant). If the Company determines that other methods are more reasonable, or other methods for calculating these assumptions are prescribed by regulators, the fair value calculated for the Company’s stock options could change significantly. Higher volatility, lower risk free interest rates, and longer expected lives would result in an increase to stock-based compensation expense to employees and non-employees determined at the date of grant.

Income Taxes

Deferred income taxes are recognized for temporary differences in the basis of assets and liabilities for financial statement and income tax reporting that arise due to net operating loss carry forwards, research and development credit carry forwards and from using different methods and periods to calculate depreciation and amortization, allowance for doubtful accounts, accrued vacation, research and development expenses, and state taxes. A provision has been made for income taxes due on taxable income and for the deferred taxes on the temporary differences.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Realization of the deferred income tax asset is dependent on generating sufficient taxable income in future years.

Sales and Excise Taxes

Sales 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 balance Consolidated Balance Sheet as cash is collected from customers and remitted to the tax authority.

Warranty Costs

The 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.

Accrued warranty liabilities were approximately $60,000 and $25,000, respectively, at December 31, 2021 and December 31, 2020 and are included in accrued expenses and other current liabilities on the Consolidated Balance Sheets. Warranty costs were approximately $57,000 and $54,000 for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively, and are included in cost of product sales in the Consolidated Statements of Operations.

Recent Accounting Pronouncements

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), “Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)”: Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force), which contains amendments that clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The amendments set forth in this ASU are effective for all entities for annual periods beginning after December 15, 2021. Early application of the amendments in this ASU is permitted for all entities. The amendments in this ASU should be applied prospectively. The Company early adopted ASU No. 2021-04 on January 1, 2021.

In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020 and adoption must be as of the beginning of the Company’s annual fiscal year. The Company early adopted ASU No. 2020-06 on January 1, 2021.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” an amendment to the accounting guidance on fair value measurements. The guidance modifies the disclosure requirements on fair value measurements, including the removal of disclosures of the amount of and reasons for transfers between Level 1 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. The guidance also adds certain disclosure requirements related to Level 3 fair value measurements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted ASU No. 2018-13 on April 1, 2020 and the adoption of this guidance did not have a material impact on its financial statements.

In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842) Targeted Improvements (“Topic 842”), which provides for an alternative transition method by allowing companies to continue to use the legacy guidance in Topic 840, Leases, including its disclosure requirements, in the comparative periods presented in the year of adoption of the new leases standard and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than the earliest period presented. The Company adopted the standard as of April 1, 2020 and the most significant impact was the recognition of a ROU asset and lease liability for the Company’s sole operating lease—the Company had no finance leases. Adoption of the Topic 842 did not require the Company to restate previously reported results as it elected to apply a modified retrospective approach at the beginning of the period of adoption rather than at the beginning of the earliest comparative period presented.

In 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 incurred. 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 extends 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 has not completed its review of the impact of this standard on its consolidated financial statements. However, based on the Company’s history of immaterial credit losses from trade receivables, management does not expect that the adoption of this standard will have a material effect on the Company’s consolidated financial statements.

Impact of the COVID-19 Pandemic

Events surrounding the SARS-CoV-2 virus that emerged in late 2019 and the ensuing global pandemic has had a dramatic impact on businesses globally and our business as well. The severity and duration of the pandemic and economic repercussions of the virus and government actions taken in response to the pandemic remain uncertain and will ultimately depend on many factors, including the speed of global dissemination and effectiveness of the vaccination and containment efforts throughout the world, the duration and spread of the virus, as well as seasonality, variants or new outbreaks.

In the United States, federal, state, and local government directives and policies have been put in place to manage public health concerns and address the economic impacts, including reduced business activity and overall uncertainty presented by this new healthcare challenge. Similar actions have been taken by governments around the world. Our facilities could be required to temporarily curtail production levels or temporarily cease operations based on government mandates or as a result of the pandemic. To mitigate risks, we continue to evaluate the extent to which COVID-19 may impact our business and operations and adjust risk mitigation planning and business continuity activities as needed.

Other accounting standard updates are either not applicable to the Company or are not expected to have a material impact on the Company’s consolidated financial statements.

XML

LIQUIDITY

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

LIQUIDITY

NOTE 2 — LIQUIDITY

The Company has incurred recurring losses from operations and has an accumulated deficit at December 31, 2021. The Company expects to continue to incur losses subsequent to the Consolidated Balance Sheet date of December 31, 2021. The Company’s reverse recapitalization transaction with Ritter closed in May 2020 together with an associated new equity capital raise of approximately $4.0 million, and approximately $1.9 million in convertible notes payable were converted into shares of the Company’s capital stock. In July, August and December 2020, the Company raised an additional $30.0 million through three Securities Purchase Agreements with a single institutional investor, and in December 2021, the Company raised an additional $8.82 million through a Securities Purchase Agreement with several institutional investors (see Note 11). Based on the Company’s current cash position, and assuming currently planned expenditures and level of operations, the Company believes it has sufficient capital to fund operations for the 12-month period subsequent to the issuance of the accompanying consolidated financial statements. However, there is no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. Also, beyond such 12-month period, planned research and development activities, capital expenditures, clinical and pre-clinical testing, and commercialization activities of the Company’s products are expected to require significant additional financing. Additional financing may not be available on acceptable terms or at all.

XML

INVENTORY, NET

12 Months Ended

Dec. 31, 2021

Inventory Disclosure [Abstract]

INVENTORY, NET

NOTE 3 — INVENTORY, NET

Inventory, net consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021		December 31, 2020
Raw materials	$	823,315	$	579,765
Work in process		188,135		309,826
Finished goods		44,428		63,867
	$	1,055,878	$	953,458

XML

PREPAID EXPENSES

12 Months Ended

Dec. 31, 2021

Prepaid Expenses

PREPAID EXPENSES

NOTE 4 — PREPAID EXPENSES

Prepaid expenses consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021		December 31, 2020
Prepaid insurance	$	1,197,726	$	1,307,864
Prepaid manufacturing expenses		67,410		1,181,029
Prepaid investor relations expenses		—		150,000
Other prepaid expenses		114,760		40,001
	$	1,379,896	$	2,678,894

XML

PROPERTY AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

NOTE 5 — PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021			December 31, 2020
Machinery and equipment	$	2,482,841		$	2,401,470
Construction in progress–equipment		—			104,400
Computer equipment		345,117			443,865
Leasehold improvements		333,271			321,033
Molds and tooling		260,002			260,002
Furniture and fixtures		143,013			138,699
		3,564,244			3,669,469
Less Accumulated depreciation		(3,360,324	)		(3,422,146	)
	$	203,920		$	247,323

Depreciation expense relating to property and equipment was approximately $73,000 and $33,000 for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively.

XML

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

12 Months Ended

Dec. 31, 2021

Payables and Accruals [Abstract]

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

NOTE 6 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021		December 31, 2020
Board compensation	$	17,500	$	15,091
Franchise, sales and use taxes		14,090		30,353
Income taxes		3,620		3,326
Patent and license fees		—		7,204
Payroll		682,036		4,566
Professional fees		225,308		58,261
Research and development		232,712		237,504
Royalties		10,152		491
Vacation		282,910		230,457
Warranty liability		60,281		24,871
Other		265,292		134,614
	$	1,793,901	$	746,738

XML

WARRANT LIABILITIES

12 Months Ended

Dec. 31, 2021

Warrant Liabilities

WARRANT LIABILITIES

NOTE 7 – WARRANT LIABILITIES

In 2004, the Company issued warrants to various investors and brokers for the purchase of Series C preferred stock in connection with a private placement (the “Series C Warrants”). The Series C Warrants were subsequently extended and, upon closing of the reverse recapitalization transaction with Ritter, exchanged for warrants to purchase common stock of the Company, pursuant to the Series C Warrant terms as adjusted.

In exchange for the Series C Warrants, upon closing of the merger with Ritter, the holders received warrants to purchase an aggregate of 4,713,490 shares of the Company’s common stock at $0.72 per share, subject to adjustment. As of December 31, 2021, the warrants received in exchange for the Series C Warrants have remaining terms ranging from 1.9 to 2.5 years. 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 issuances.

The following table summarizes the activity in the Common Stock Warrants received in exchange for the Series C Warrants for the year ended December 31, 2021:

	Common Stock Warrants (received in exchange for the Series C Warrants)
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		3,378,596		$	0.72
Series C preferred stock warrants exchanged for common stock warrants upon reverse recapitalization		—			—
Exercised		(807,311	)		0.72
Forfeited		(89,671	)		0.72
Expired		—			—
Granted		—			—
Total outstanding – December 31, 2021		2,481,614		$	0.72
Exercisable		2,481,614		$	0.72	$	0.72		2.00
Non-Exercisable		—		$	—	$	—		—

The following table presents the Company’s fair value hierarchy for its Common Stock Warrant liabilities (all of which arise under the warrants received in exchange for the Series C Warrants) measured at fair value on a recurring basis as of December 31, 2021:

	Quoted
	Market		Significant
	Prices for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
Common Stock Warrant liabilities	(Level 1)		(Level 2)		(Level 3)			Total
Balance as of December 31, 2020	$	—	$	—	$	8,310,100		$	8,310,100
Exercises		—		—		(1,900,713	)		(1,900,713	)
Gain on change in fair value of warrant liabilities		—		—		(4,723,187	)		(4,723,187	)
Balance as of December 31, 2021	$	—	$	—	$	1,686,200		$	1,686,200

There were no transfers of financial assets or liabilities between category levels for the year ended December 31, 2021.

The value of the warrant liabilities was based on a valuation received from an independent valuation firm determined using a Monte-Carlo simulation. For volatility, the Company considers comparable public companies as a basis for its expected volatility to calculate the fair value of common stock warrants and transitions to its own volatility as the Company develops sufficient appropriate history as a public company. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected term of the common stock warrant. The Company uses an expected dividend yield of zero based on the fact that the Company has never paid cash dividends and does not expect to pay cash dividends in the foreseeable future. Any significant changes in the inputs may result in significantly higher or lower fair value measurements.

The following are the weighted average and the range of assumptions used in estimating the fair value of warrant liabilities (weighted average calculated based on the number of outstanding warrants on each issuance) as of December 31, 2021:

	December 31, 2021
	Range			Weighted Average
Risk-free interest rate		0.69% — 0.84	%		0.72	%
Expected volatility (peer group)		84% — 87	%		84.6	%
Term of warrants (in years)		1.9 — 2.5			2.01
Expected dividend yield		0.00	%		0.00	%

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

XML

EARNINGS (LOSS) PER SHARE

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

NOTE 8 — EARNINGS (LOSS) PER SHARE

Basic 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.

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

	For the Year Ended December 31,			For the Nine Months Ended December 31,
	2021			2020
Net loss used for basic earnings per share	$	(17,897,137	)	$	(19,546,366	)
Basic weighted-average common shares outstanding		29,334,865			17,431,714
Dilutive potential shares issuable from stock options and warrants		—			—
Diluted weighted-average common shares outstanding		29,334,865			17,431,714

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

XML

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 9 — COMMITMENTS AND CONTINGENCIES

Leases

The Company leases its facilities under a long-term operating lease agreement. On December 15, 2021, our wholly-owned subsidiary Qualigen, Inc. entered into a Second Amendment to Lease with Bond Ranch LP. This Amendment extended the Company’s triple-net leasehold on 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. will total $1,950,710; however, the base rent for the first 12 months of the 61-month period will be only $335,966. Additionally, under the Second Amendment to Lease Qualigen, Inc. is entitled to a $339,360 tenant improvement allowance.

The tables below show the operating lease right-of-use assets and operating lease liabilities as of initial measurement at April 1, 2020 and the balances as of December 31, 2021, including the changes during the periods:

	Operating lease right-of-use assets
Net right-of-use assets at December 31, 2020	$	430,795
Additional operating lease right-of-use assets at December 31, 2021		1,439,830
Less amortization of operating lease right-of-use assets		(225,057	)
Operating lease right-of-use assets at December 31, 2021	$	1,645,568

	Operating lease liabilities
Lease liabilities arising from obtaining right-of-use assets at April 1, 2020:	$	491,565
Additional operating lease liabilities at December 31, 2021		1,439,830
Less principal payments on operating lease liabilities		(254,740	)
Lease liabilities at December 31, 2021		1,676,655
Less non-current portion		(1,542,564	)
Current portion at December 31, 2021	$	134,091

As of December 31, 2021, the Company’s operating leases have a weighted-average remaining lease term of 5.8 years and a weighted-average discount rate of 8.8%.

As of December 31, 2021, the maturities of operating lease liabilities are as follows:

Year Ending December 31,	Amount
2022	$	277,192
2023		368,341
2024		379,392
2025		390,773
2026		402,497
2027		379,165
Total		2,197,360
Less present value discount		(520,705	)
Operating lease liabilities	$	1,676,655

Total lease expense was approximately $342,000 and $259,000, respectively, for the year ended December 31, 2021 and nine months ended December 31, 2020. Lease expense was recorded in cost of product sales, general and administrative expenses, research and development and sales and marketing expenses.

Litigation and Other Legal Proceedings

On November 9th, 2021, the Company was named as a defendant in an action brought by Mediant Communications Inc. (“Mediant”) in the U.S. District Court for the Southern District of New York. The complaint alleges that Qualigen entered into an implied contract with Mediant, whereby Qualigen retained Mediant to distribute proxy materials and subsequently conduct shareholder vote tabulations. The Company believes that the claims from Mediant are without merit and intends to vigorously defend the case. The Company filed a Motion to Dismiss with the District Court and on March 14, 2022 a hearing was held during which the presiding judge ruled in favor of the Motion to Dismiss. The Company and Mediant are currently conducting settlement negotiations.

XML

RESEARCH AND LICENSE AGREEMENTS

12 Months Ended

Dec. 31, 2021

Research And License Agreements

RESEARCH AND LICENSE AGREEMENTS

NOTE 10 — RESEARCH AND LICENSE AGREEMENTS

The University of Louisville Research Foundation

Between 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 will take 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 $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 would also pay another $500,000 milestone payment for any additional regulatory marketing approval for each additional therapeutic (or diagnostic) indication. 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 $10,000 to $50,000) for such year.

Sponsored research expenses related to these agreements for the year ended December 31, 2021 and nine months ended December 31, 2020 were approximately $325,000 and $14,000, respectively, and these amounts are recorded in research and development expenses in the Consolidated Statements of Operations. Minimum annual royalties of $0 and $10,000 related to these agreements are included in research and development expenses in the Consolidated Statements of Operations for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively. License costs were approximately $118,000 and $470,000 related to these agreements the year ended December 31, 2021 and nine months ended December 31, 2020, respectively, and are included in research and development expenses in the Consolidated Statements of Operations.

In 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 will reimburse ULRF for sponsored research expenses of up to $693,000 for this program. In February 2021, the Company extended the term of this agreement for an additional 18 months (expires July 2022) and increased the amount that the Company will reimburse ULRF for sponsored research expenses from $693,000 to approximately $1.8 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 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 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. 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.

Sponsored research expenses related to these agreements for the year ended December 31, 2021 and nine months ended December 31, 2020 were approximately $646,000 and $283,000, respectively, and are recorded in research and development expenses in the Consolidated Statements of Operations. License costs related to these agreements for the year ended December 31, 2021 and nine months ended December 31, 2020 were approximately $60,000 and $160,000, respectively, and are included in research and development expenses in the Consolidated Statements of Operations.

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 will take 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.

In addition, the Company has agreed to pay ULRF (i) royalties, on patent-covered net sales associated with the commercialization of QN-165 as a treatment for COVID-19, 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 patents, 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 June 2020, and (iv) payments ranging from $50,000 to $5,000,000 upon the achievement of certain regulatory and commercial milestones. Milestone payments 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. 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 $5,000 to $50,000) for such year.

Sponsored research expenses related to these agreements for the year ended December 31, 2021 and nine months ended December 31, 2020 were approximately $243,000 and $14,000, respectively, and are recorded in research and development expenses in the statements of operations. License costs related to these agreements for the year ended December 31, 2021 and nine months ended December 31, 2020 were approximately $28,000 and $24,000, respectively, and are included in research and development expenses in the statements of operations.

Advanced Cancer Therapeutics

In 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. In addition, 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 year ended December 31, 2021 and the nine months ended December 31, 2020, there were approximately $2,000 and $285,000, respectively in costs related to this agreement which are included in research and development expenses in the Consolidated Statements of Operations.

Prediction Biosciences

In November 2015, the Company entered into a long-term development and supply agreement with Prediction Biosciences SAS to develop and manufacture diagnostic tests for use in the stroke point-of-care market. The Company recognizes development revenue and product sales over the performance period of the contract. For both the year ended December 31, 2021 and nine months ended December 31, 2020, there was no collaborative research revenue related to this agreement.

Sekisui Diagnostics

In March 2018, the Company extended a strategic partnership entered into in May 2016 with Sekisui Diagnostics, LLC (“Sekisui”). The Company appointed Sekisui as its diagnostics commercial partner and exclusive worldwide distributor with the exception of certain customer accounts retained by Qualigen; Sekisui’s distribution arrangement is currently set to expire on March 31, 2022. The agreement contains a right of first refusal for Sekisui against any potential acquisition of the Company; the right of first refusal is currently set to expire on March 31, 2022.

There were product sales to Sekisui of approximately $3.5 million and $1.6 million, respectively, for the year ended December 31, 2021 and nine months ended December 31, 2020, related to this agreement.

Yi Xin

In October 2020, the Company 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 China.

Under the Technology Transfer Agreement, we received net cash payments of $250,000 in the final quarter of the Transition Period classified as deferred revenue as of the Consolidated Balance Sheet date of December 31, 2020, and $420,000 in the first quarter of 2021. The Company will also receive low- to mid-single-digit royalties on any future new-generations and current-generations product sales by Yi Xin. Of these amounts, the Company recognized approximately $38,000 in product sales and $632,000 in license revenue included in the statement of operations for the year ended December 31, 2021. 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 the Company has not otherwise entered – both for Yi Xin’s new generations of FastPack-based products and for Yi Xin-manufactured versions of the Company’s existing FastPack product lines. Yi Xin will also have the right to sell its new generations of FastPack-based diagnostic test systems throughout the world (but not to or toward current customers of the Company’s existing generations of FastPack products); any such non-China sales would, until March 31, 2022, need to be through Sekisui. In addition, after March 31, 2022, Yi Xin will have 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-U.S. customers of those products). Also, after March 31, 2022, Yi Xin will have the right to buy Company-manufactured FastPack 1.0, IP and PRO products from the Company at distributor prices for resale in and for the United States (but not to or toward current U.S. customers of those products); the Company did not license Yi Xin to sell in the United States market any Yi Xin-manufactured versions of those legacy FastPack 1.0, IP and PRO product lines, even after March 31, 2022. In the Technology Transfer Agreement, the Company confirmed that it would not, after March 31, 2022, seek new FastPack customers outside the United States. All of the March 31, 2022 dates in this paragraph are as established by an August 2021 amendment of the Technology Transfer Agreement.

STA Pharmaceutical

In 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 twelve months ended December 31, 2021.

Research and development expenses related to this agreement for the year ended December 31, 2021 and the nine months ended 2020 were approximately $3.2 million and $0, respectively, and are recorded in research and development expenses in the Consolidated Statements of Operations.

XML

STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 11 — STOCKHOLDERS’ EQUITY

As of December 31, 2021, and 2020 the Company had two classes of capital stock: common stock and Series Alpha convertible preferred stock. As of April 1, 2020 the Company had two classes of capital stock with one being divided into five series: common stock and preferred stock (Series A convertible preferred stock, Series B convertible preferred stock, Series C convertible preferred stock, Series D convertible preferred stock and Series D-1 convertible preferred stock).

Common Stock

Holders of common stock generally vote as a class with the holders of the preferred stock and are entitled to one vote for each share held. Subject to the rights of the holders of the preferred stock to receive preferential dividends, the holders of common stock are entitled to receive dividends when and if declared by the Board of Directors. Following payment of the liquidation preference of the preferred stock, as of March 31, 2020 any remaining assets would be distributed ratably among the holders of the common stock and, on an as-if-converted basis, the holders of Series C convertible preferred stock, Series D convertible preferred stock and Series D-1 convertible preferred stock) upon liquidation, dissolution or winding up of the affairs of the Company. Following payment of the liquidation preference of the preferred stock, as of December 31, 2021 any remaining assets would be distributed ratably among the holders of the common stock and, on an as-if-converted basis, the holders of Series Alpha convertible preferred stock upon liquidation, dissolution or winding up of the affairs of the Company. The holders of common stock have no preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions.

On December 1, 2021, the Company closed a Securities Purchase Agreement (dated November 29, 2021) with several institutional investors for the purchase and sale of 5,880,000 shares of Company common stock to purchase shares of Company common stock for an exercise price of $1.50 per share, for aggregate gross proceeds of $8.82 million.

At December 31, 2021, the Company has reserved 14,663,251 shares of authorized but unissued common stock for possible future issuance. At December 31, 2021, 14,663,251 shares were reserved as follows:

Exercise of issued and future grants of stock options	4,841,856
Exercise of stock warrants	9,821,395
Total	14,663,251

Series A, B, C, D, D-1, Alpha Convertible Preferred Stock

At December 31, 2021 and 2020, there were no shares of Series A, B, C, D, D-1 convertible 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.

At December 31, 2021, there were no shares of Series Alpha convertible preferred stock outstanding. During 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. In the nine months ended December 31, 2020, the holder of Series Alpha convertible preferred stock converted 5,180 of its shares of Series Alpha convertible preferred stock into an aggregate of 7,004,983 shares of the Company’s common stock, and there were 180 shares of Series Alpha convertible preferred stock outstanding at December 31, 2020.

Alpha Securities Purchase Agreements

On July 10, 2020, the Company closed a Securities Purchase Agreement (dated July 8, 2020) with a single institutional investor for the purchase and sale for $8.0 million of (i) 1,140,570 shares of Company common stock, (ii) 780,198 pre-funded warrants (i.e., warrants to purchase shares of Company common stock, for which the exercise price is almost entirely prepaid) and (iii) 1,920,768 two-year warrants to purchase shares of Company common stock for an exercise price of $5.25 per share. Both sets of warrants included a 9.99% beneficial-ownership blocker provision. The 780,198 pre-funded warrants were then exercised on July 21 and 22, 2020.

On August 4, 2020, the Company closed a Securities Purchase Agreement (dated August 2, 2020) with a single institutional investor for the purchase and sale for $10.0 million of (i) 1,717,106 shares of Company common stock, and (ii) 1,287,829 two-year warrants to purchase shares of Company common stock for an exercise price of $6.00 per share. The warrants included a 9.99% beneficial-ownership blocker provision.

On December 18, 2020, the Company closed a Securities Purchase Agreement (dated December 16, 2020) with a single institutional investor for the purchase and sale for $12.0 million of (i) 2,370,786 shares of Company common stock, (ii) 1,000,000 pre-funded warrants (i.e., warrants to purchase shares of Company common stock, for which the exercise price is almost entirely prepaid), (iii) 1,348,314 two-year warrants to purchase shares of Company common stock for an exercise price of $4.07 per share, and (iv) 842,696 warrants (first exercisable 6 months after issuance, and with an expiration date 30 months after issuance) to purchase shares of Company common stock for an exercise price of $4.07 per share. The warrants included a 9.99% beneficial-ownership blocker provision.

Stock Options and Equity Classified Warrants

Stock Options

The Company recognizes all compensatory stock-based payments as compensation expense over the service period, which is generally the vesting period.

In April 2020, the Company adopted the 2020 Stock Incentive Plan (the “2020 Plan”) which provides for the granting of incentive or non-statutory common stock options to qualified employees, officers, directors, consultants and other service providers. At December 31, 2021 and December 31, 2020 there were 4,748,000 and 3,917,500 outstanding options, respectively, under the 2020 Plan and there were 2,809,157 and 139,657 of Plan shares available, respectively, for future grant. The shares available for future grant at December 31, 2021 reflect a 2020 Plan amendment approved by the Company’s stockholders on August 9, 2021 where the number of shares of common stock available for issuance under the 2020 Plan was increased by 3,500,000 shares.

The following represents a summary of the options granted to employees and non-employee service providers that were outstanding at December 31, 2021, and changes during the twelve months then ended:

	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		4,011,356		$	7.05		$3.52—1,465.75		9.29
Granted		835,000			1.37		$1.24 — $3.29		9.79
Expired		—			—		—
Forfeited		(4,500	)		3.68		$3.52 — $4.97
Total outstanding – December 31, 2021		4,841,856		$	6.07		$1.24 — $1,465.75		8.52
Exercisable (vested)		1,408,195		$	10.88		$3.52— $1,465.75		7.94
Non-Exercisable (non-vested)		3,433,661		$	4.10		$1.24 — $5.13		8.81

The 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 30, 2020, and changes during the nine-month period then ended:

	Shares		Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – March 31, 2020		—	$	—	$	—
Legacy Ritter options		95,124		92.80		$5.75 — $1,465.75		1.39
Granted		3,917,500		4.97		$3.52 — $5.13		9.46
Expired		(1,268)		35		$15.00 — $562.50
Forfeited		—		—
Total outstanding – December 31, 2020		4,011,356	$	7.05	$	3.52 — $1,465.75		9.29
Exercisable (vested)		108,856	$	81.38	$	3.52 — $1,465.75		2.50
Non-Exercisable (non-vested)		3,902,500	$	4.97	$	3.52 — $5.13		9.47

There was approximately $5.3 million and $2.8 million of compensation costs related to outstanding options for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively. As of December 31, 2021, there was approximately $8.2 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 1.58 years.

No stock options were exercised during the year ended December 31, 2021 or nine months ended December 31, 2020.

The exercise price for an option issued under the 2020 Plan is determined by the Board of Directors, but will be (i) in the case of an incentive stock option (A) granted to an employee who, at the time of grant of such option, is a 10% stockholder, for no less than 110% of the fair market value per share on the date of grant; or (B) granted to any other employee, for no less than 100% of the fair market value per share on the date of grant; and (ii) in the case of a non-statutory stock option, for no less than 100% of the fair market value per share on the date of grant. The options awarded under the 2020 Plan will vest as determined by the Board of Directors but will not exceed a 10-year period. The weighted average grant date fair value per share of the shares underlying options granted during the year ended December 31, 2021 was $1.10 and during the nine months ended December 31, 2020 was $4.97.

Fair Value of Equity Awards

The Company utilizes the Black-Scholes option pricing model to value awards under the 2020 Plan, and for equity classified compensatory warrants. Key valuation assumptions include:

● Expected dividend yield. The expected dividend is assumed to be zero, as the Company has never paid dividends and has no current plans to pay any dividends on the Company’s common stock.

● Expected stock-price volatility. The Company’s expected volatility is derived from the average historical volatilities of publicly traded companies within the Company’s industry that the Company considers to be comparable to the Company’s business over a period approximately equal to the expected term.

● Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected term.

● Expected term. The expected term represents the period that the stock-based awards are expected to be outstanding. The Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data. Therefore, the Company estimates the expected term by using the simplified method provided by the SEC. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the options.

The material factors incorporated in the Black-Scholes model in estimating the fair value of the options granted for the periods presented were as follows:

	For the Year Ended December 31, 2021
Expected dividend yield		0.00	%
Expected stock-price volatility		102	%
Risk-free interest rate		0.84% — 1.51	%
Expected average term of options (in years)		6.27
Stock price		1.24 — 3.29

The Company recorded stock-based compensation expense and classified it in the Consolidated Statements of Operations as follows:

	For the Year Ended December 31, 2021		For the Nine Months Ended December 31, 2020
General and administrative	$	4,465,911	$	2,388,380
Research and development		827,740		412,471
Total	$	5,293,651	$	2,800,851

Equity Classified Compensatory Warrants

During the year ended December 31, 2021, the Company issued equity classified compensatory warrants to a service provider for the purchase of 600,000 shares of Company common stock at an exercise price of $1.32 per share. The fair value issuance cost of approximately $0.3 million 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.

During the nine months ended December 31, 2020, in 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 811,431 shares of the Company’s common stock at an exercise price of $1.11 per share. The issuance cost of these warrants was charged to additional paid-in capital, and did not result in expense on the Company’s Consolidated Statements of Operations.

In 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 shares 514,451 of Company common stock at a weighted average exercise price of $2.30 per share. These are to be differentiated from the Series C Warrants described in Note 7 and there was no recognized or unrecognized compensation cost relating to these outstanding warrants for the year ended December 31, 2021 and nine months ended December 31, 2020.

The following table summarizes the equity classified compensatory warrant activity for the year ended December 31, 2021:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		1,294,217		$	1.67
Granted to advisor and its designees		600,000			1.32
Exercised		(38,390	)		2.09
Expired		—			—
Forfeited		(65,179	)		2.07
Total outstanding – December 31, 2021		1,790,648			1.52		1.11 — 2.54		2.64
Exercisable		1,790,648			1.52		1.11 — 2.54		2.64
Non-Exercisable		—		$	—	$	—		—

The following table summarizes the compensatory warrant activity for nine months ended December 31, 2020:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – March 31, 2020		—		$	—
Series C preferred stock compensatory warrants exchanged for common stock warrants upon reverse recapitalization		668,024			2.25
Granted to advisor and its designees		811,431			1.11
Exercised		(159,978	)		1.26
Expired		—			—
Forfeited		(25,260	)		2.07
Total outstanding – December 31, 2020		1,294,217		$	1.6670
Exercisable		1,290,621		$	1.66	$	1.11 — $2.54		4.17
Non-Exercisable		3,596		$	2.54	$	2.54		5.72

There was a total of approximately $0.3 million of compensation costs related to outstanding warrants for the year ended December 31, 2021 and $0 for the nine months ended December 31, 2020. As of December 31, 2021 and December 31, 2020, there was no unrecognized compensation cost related to nonvested warrants.

Noncompensatory Equity Classified Warrants

No new noncompensatory equity classified warrants were issued during the twelve months ended December 31, 2021.

During the nine months ended December 31, 2020, as a commitment fee, the Company issued noncompensatory equity classified warrants to an investor for the purchase of 270,478 shares of Company common stock at an exercise price of $1.11 per share. In addition, in July 2020 the Company issued noncompensatory equity classified warrants to an investor for the purchase of 2,700,966 shares of Company common stock at an exercise price of $5.25 per share, and in August 2020 the Company issued noncompensatory equity classified warrants to such investor for the purchase of 1,287,829 shares of Company common stock at an exercise price of $6.00 per share. Lastly, in December 2020, the Company issued noncompensatory equity classified warrants to such investor for the purchase of 1,000,000 shares of Company common stock at an exercise price of $0.01 per share and 2,191,000 shares of Company common stock at an exercise price of $4.07 per share. Warrants to purchase1,000,000 shares of Company common stock at an exercise price of $0.01 per share were exercised in February 2021.

During the year ended December 31, 2021, with the exception of the warrants to purchase 270,478 shares of the Company’s common stock at an exercise price of $1.11 per share, the exercise prices of all outstanding warrants to purchase a total of 5,399,517 shares of the Company’s common stock were all modified to an exercise price of $2.00 per share on November 29, 2021 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.

The following table summarizes the noncompensatory equity classified warrant activity for the year ended December 31, 2021:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		6,549,777		$	4.36
Legacy Ritter warrants		—			—
Granted		—			—
Exercised		(1,000,000	)		0.01
Expired		(640	)		2,325
Forfeited		—			—
Total outstanding – December 31, 2021		5,549,137			2.01
Exercisable		5,549,137			2.01		1.11 — 3.77		1.32
Non-Exercisable		—		$	—	$	—		—

The following table summarizes the noncompensatory equity classified warrant activity for the nine months ended December 31, 2020:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – March 31, 2020		—		$	—
Legacy Ritter warrants		81,455			21.94
Granted		7,450,193			4.18
Exercised		(980,198	)		1.11
Expired		(1,673	)		1,562.50
Forfeited		—			—
Total outstanding – December 31, 2020		6,549,777			4.36
Exercisable		5,707,081			4.40		0.01 — $2,325.00		1.43
Non-Exercisable		842,696		$	4.07	$	4.07	$	3.00

XML

INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 12 — INCOME TAXES

A reconciliation of the statutory income tax rates and the Company’s effective tax rate is as follows:

	December 31, 2021			December 31, 2020
Statutory federal income tax rate		21.00	%		21.0	%
State taxes, net of federal tax benefit		6.63	%		2.5	%
Non-deductible expenses		(1.19	)%		(0.5	)%
NOL Expiration		(2.71	)%		0.0	%
Tax Credit		0.86	%		(2.8	)%
Change in fair value of warrant liability		5.54	%		(8.9	)%
True-up		(2.72	)%		(1.1	)%
Change in valuation allowance		(27.44	)%		(10.3	)%
Income taxes provision		(0.03	)%		(0.1	)%

Income tax expense for the year ended December 31, 2021 and nine months ended December 31, 2020 consisted of the following:

	December 31, 2021			December 31, 2020
Current
Federal	$	—		$	—
State		5,000			1,000
Total current provision		5,000			1,000
Deferred
Federal		(1,268,000	)		(1,634,000	)
State		(3,641,000	)		(384,000	)
Total deferred benefit		(4,909,000	)		(2,018,000	)
Change in valuation allowance		4,909,000			2,017,000
Total provision for income taxes	$	5,000		$	—

The components of deferred tax assets and liabilities are as follows:

	December 31, 2021			December 31, 2020
Deferred tax assets:
Net operating loss	$	33,362,000		$	28,914,000
Research and development credits		6,185,000			5,464,000
Accrued expenses		757,000			292,000
Patent		262,000			422,000
Impairment loss		—			361,000
Stock compensation		2,747,000			2,654,000
Other		—			84,000
Fixed assets		282,000			44,000
Total deferred income tax assets		43,595,000			38,235,000
Deferred tax liabilities:
Intangible assets		(34,000	)		(18,000	)
Right-of-use asset		(436,000	)		—
Total deferred income tax liabilities		(470,000	)		(18,000	)
Net deferred income tax assets		43,125,000			38,217,000
Valuation allowance		(43,125,000	)		(38,217,000	)
Deferred tax asset, net of allowance	$	—		$	—

Based on the available objective evidence, including the Company’s history of cumulative losses, management believes it is likely that the net deferred tax assets will not be realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2021 and December 31, 2020.

At December 31, 2021, the Company has federal and state net operating loss carryforwards of approximately $126,225,000 and $100,290,000, respectively, which are available to offset future taxable income. Federal and State carryovers began to expire in 2020. As a result of the May 2020 reverse recapitalization an ownership change has occurred. The Company has not completed an Internal Revenue Code Section 382 analysis. As a result, there could be substantial limitations on the Company’s ability to utilize its pre-ownership change net operating loss and tax credit carryforwards. These substantial limitations may result in both a permanent loss of certain tax benefits related to net operating loss carryforwards and federal research and development credits, and an annual utilization limitation. Due to the full valuation allowance already in place, the Company does not anticipate any change in the Company’s effective tax rate.

The Company also has research and development credit carryforwards for federal and state tax purposes of approximately $4,508,000 and $1,677,000, respectively. The research and development credit carryforwards began to expire in 2020 for federal tax purposes and have an indefinite life for state tax purposes.

The Company files income tax returns in the U.S. federal jurisdiction and in various states. The Company’s federal income tax returns for the years 2016 and beyond remain subject to examination by the Internal Revenue Service. The Company’s California income tax returns for the years 2015 and beyond remain subject to examination by the California Franchise Tax Board. In addition, all of the net operating losses, research and development credit and other tax credit carryforwards that may be used in future years are still subject to adjustment.

Generally accepted accounting principles clarify the accounting for uncertainty in income taxes recognized in the Company’s financial statements and prescribe thresholds for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provide guidance on de-recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company adopted these provisions effective April 1, 2009.

The Company did not have any unrecognized tax benefits as of December 31, 2021 and December 31, 2020 and does not expect this to change significantly over the next 12 months. In accordance with generally accepted accounting principles, the Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of December 31, 2021, the Company has not accrued any interest or penalties related to uncertain tax positions.

XML

TRANSITION PERIOD COMPARATIVE DATA

12 Months Ended

Dec. 31, 2021

Transition Period Comparative Data

TRANSITION PERIOD COMPARATIVE DATA

NOTE 13 — TRANSITION PERIOD COMPARATIVE DATA

The following table presents certain comparative transition period financial information for the year ended December 31, 2021 and the twelve months ended December 31, 2020, respectively.

	For the Twelve Months Ended December 31, 2021			For the Twelve Months Ended December 31, 2020 (unaudited)
Revenues	$	5,653,725		$	4,306,316
Gross profit on product sales	$	689,236		$	629,517
Net loss before income taxes	$	(17,891,710	)	$	(20,419,561	)
Net loss	$	(17,897,137	)	$	(20,421,979	)
Net loss per share – basic and fully diluted	$	(0.61	)	$	(1.17	)
Weighted average shares used in computing basic and diluted net loss per share		29,334,865			17,431,714

XML

QUARTERLY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Dec. 31, 2021

Quarterly Financial Information Disclosure [Abstract]

QUARTERLY FINANCIAL DATA (UNAUDITED)

NOTE 14 - QUARTERLY FINANCIAL DATA (UNAUDITED)

In connection with our year-end financial close process and related preparation of our 2021 Annual Report on Form 10-K, our management identified an error in the previously issued March 31, 2021, June 30, 2021, and September 30, 2021 unaudited interim condensed consolidated financial statements in which the fair value of its exercised liability classified warrants had been inadvertently excluded from reclassification into shareholders’ equity. This error resulted in a $1.9 million overstatement of the gain on change in fair value of warrant liabilities included on the condensed Consolidated Statement of Operations. We assessed the materiality of this error in accordance with SEC Staff Accounting Bulletin: No. 108 – Financial Statement Misstatement and concluded to correct the misstatement in the accompanying condensed Consolidated Statement of Operations as of December 31, 2021. All financial information contained in the accompanying notes to these condensed consolidated financial statements has been revised to reflect the correction of this error.

	For the Quarter Ended March 31, 2021
	As reported			Corrected
Gain on change in fair value of warrant liabilities	$	(2,122,900	)	$	(552,808	)
Net loss	$	(3,672,627	)	$	(5,242,719	)
Net loss per common share	$	(0.13	)	$	(0.19	)

	For the Quarter Ended June 30, 2021						For the Six Months Ended June 30, 2021
	As reported			Corrected			As reported			Corrected
Gain on change in fair value of warrant liabilities	$	(2,075,100	)	$	(1,982,256	)	$	(4,198,000	)	$	(2,535,064	)
Net loss	$	(5,305,233	)	$	(5,398,077	)	$	(8,977,860	)	$	(10,640,796	)
Net loss per common share	$	(0.18	)	$	(0.19	)	$	(0.31	)	$	(0.37	)

	For the Quarter Ended September 30, 2021						For the Nine Months Ended September 30, 2021
	As reported			Corrected			As reported			Corrected
Gain on change in fair value of warrant liabilities	$	(1,942,900	)	$	(1,763,936	)	$	(6,140,900	)	$	(4,299,000	)
Net loss	$	(2,858,518	)	$	(3,037,482	)	$	(11,836,378	)	$	(13,678,278	)
Net loss per common share	$	(0.10	)	$	(0.10	)	$	(0.41	)	$	(0.48	)

XML

SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2021

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 15 — SUBSEQUENT EVENTS

On January 13, 2022, we entered into a License Agreement with UCL Business Limited to obtain an exclusive worldwide in-license of a genomic quadruplex (G4)-selective transcription inhibitor drug development program which had been developed at University College London, including lead and back-up compounds, preclinical data and a patent estate. (UCL Business Limited is the commercialization company for University College London.) The program’s lead compound will be further developed at Qualigen under the name QN-302 as a candidate for treatment for pancreatic ductal adenocarcinoma (PDAC), which represents the vast majority of pancreatic cancers. The Agreement requires 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.

On March 4, 2022, the Company received a letter (the “Notice”) from The Nasdaq Stock Market notifying the Company that, because the closing bid price for its common stock has been below $1.00 per share for 30 consecutive business days, it no longer complies with the minimum bid price requirement for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”), and Listing Rule 5810(c)(3)(A) provides that a failure to meet the Minimum Bid Price Requirement exists if the deficiency continues for a period of 30 consecutive business days.

The Notice has no immediate effect on the listing of the Company’s common stock on The Nasdaq Capital Market. Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has been provided an initial compliance period of 180 calendar days, or until August 31, 2022 to regain compliance with the Minimum Bid Price Requirement. During the compliance period, the Company’s shares of common stock will continue to be listed and traded on The Nasdaq Capital Market. To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days during the 180 calendar day grace period.

In the event the Company is not in compliance with the Minimum Bid Price Requirement by August 31, 2022, the Company may be afforded a second 180 calendar day grace period. To qualify, the Company would be required to meet the continued listing requirements for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement. In addition, the Company would be required to provide written notice of its intention to cure the minimum bid price deficiency during this second 180-day compliance period by effecting a reverse stock split, if necessary.

The Company intends to actively monitor the bid price for its common stock between now and August 31, 2022 and will consider available options to regain compliance with the Minimum Bid Price Requirement.

On March 7, 2022, the Company extended an amendment to its sponsored research agreement with ULRF for development of several small-molecule RAS interaction inhibitor drug candidates and increased the amount that the Company will reimburse ULRF for sponsored research expenses from $1.8 million to approximately $2.7 million (see Note 10).

XML

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (Policies)

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Qualigen, Inc., now a subsidiary of Qualigen Therapeutics, Inc., was incorporated in Minnesota in 1996 to design, develop, manufacture and sell point-of-care quantitative immunoassay diagnostic products for use in physician offices and other point-of-care settings worldwide, and was reincorporated in Delaware in 1999. Qualigen Therapeutics, Inc. (the “Company”) operates in one business segment. In May 2020, Qualigen, Inc. completed a reverse recapitalization transaction with Ritter Pharmaceuticals, Inc. (“Ritter”) and Ritter was renamed Qualigen Therapeutics, Inc., recognized as a reverse recapitalization. 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 26, 2020.

Qualigen, Inc. was determined to be the accounting acquirer in a reverse recapitalization based upon the terms of the merger and other factors. All references to financial figures of the Company presented in the accompanying consolidated financial statements and in these Notes through May 22, 2020 are to those of Qualigen, Inc. All references to financial figures after May 22, 2020 are to those of Qualigen Therapeutics, Inc. and Qualigen, Inc.

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), Regulation S-X and rules and regulations of the Securities and Exchange Commission (“SEC”).

Accounting Periods

Accounting Periods

During 2020, the Company changed its fiscal year end from March 31st to December 31st. In this annual report we show the twelve-month year ended December 31, 2021 (“Fiscal 2021”) and nine months ended December 31, 2020 (the “Transition Period”). All references in this report to the Transition Period are to the nine months ended December 31, 2020; and references to Fiscal 2021 are to the calendar 12-month fiscal year ending December 31, 2021.

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. 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. GAAP. The Company views its operations and manages its business in one operating segment. All long-lived assets of the Company reside in the US.

Accounting Estimates

Accounting Estimates

Management uses estimates and assumptions in preparing its consolidated financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The most significant estimates relate to the estimated fair value of warrant liabilities, stock-based compensation, write-off of patents and licenses, amortization and depreciation, inventory reserves, allowances for doubtful accounts and returns, and warranty costs. Actual results could vary from the estimates that were used.

Cash

Cash

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

The Company maintains its cash in bank deposits which exceed federally insured limits and could potentially be subject to significant concentrations of credit risk on cash. The Company reviews the financial stability of its depository institutions on a regular basis, and has not experienced any losses in such accounts

Inventory, Net

Inventory, Net

Inventory 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.

Long-Lived Assets

Long-Lived Assets

The Company assesses potential impairments to its long-lived assets when there is evidence that events or changes in circumstances indicate that assets may not be recoverable. An impairment loss would be recognized when the sum of the expected future undiscounted cash flows is less than the carrying amount of the assets. The amount of impairment loss, if any, will generally be measured as the difference between the net book value of the assets and their estimated fair values. During the nine months ended December 31, 2020, the Company recognized $1.4 million of such impairment losses on the construction-in-progress on a FastPack pouch filling machine project. During the year ended December 31, 2021, no such impairment losses were recorded.

Accounts Receivable, Net

Accounts Receivable, Net

The 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.

The Company records an allowance for doubtful accounts and returns equal to the estimated uncollectible amounts or expected returns. The Company’s estimates are based on historical collections and returns and a review of the current status of trade accounts receivable.

Accounts receivable is comprised of the following at:

	December 31, 2021			December 31, 2020
Accounts Receivable	$	958,448		$	629,630
Less Allowances		(136,097	)		(13,873	)
	$	822,351		$	615,757

Research and Development

Research and Development

The Company expenses research and development costs as incurred including therapeutics license costs.

Shipping and Handling Costs

Shipping and Handling Costs

The 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 $113,000 and $84,000, respectively, for the year ended December 31, 2021 and nine months ended December 31, 2020. Other shipping and handling costs included in general and administrative, research and development, and sales and marketing expenses totaled approximately $12,000 and $9,000 for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively.

Revenue from Contracts with Customers

Revenue from Contracts with Customers

We apply the following five-step model in accordance with ASC 606, Revenue from Contracts with Customers, in order to determine the revenue: (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; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

Product Sales

The 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 PSA, testosterone, thyroid disorders, pregnancy, and Vitamin D.

The 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. The delivery 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.

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

The 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.

The 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 contracts.

License Revenue

The Company enters into out-license agreements with counterparties to develop and/or commercialize its products in exchange for nonrefundable upfront license fees and/or sales-based royalties.

If 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 the year ended December 31, 2021 and the nine months ended December 30, 2020, the Company recognized license revenue of approximately $632,004 and $0, respectively.

Contract Asset and Liability Balances

The timing of the Company’s revenue recognition may differ from the timing of payment by the Company’s customers. The Company records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied.

Multiple element arrangements included contracts that combined both the Company’s analyzer and a customer’s future reagent purchases under a single contract. In some sales contracts, the Company provided analyzers at no charge to customers. Title to the analyzer was maintained by the Company and the analyzer was returned by the customer to the Company at the end of the purchase agreement.

During the year ended December 31, 2021 and nine months ended December 31, 2020, product sales are stated net of an allowance for estimated returns of approximately $150,000 and $18,300, respectively.

Deferred Revenue

Payments 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.

Research and Development

The Company expenses research and development costs as incurred.

Operating Leases

Operating Leases

Effective April 1, 2020, the Company adopted Accounting Standard Update (“ASU”) No. 2018-11, Leases (Topic 842) Targeted Improvements (“Topic 842”). The Company determines if a contract contains a lease at inception. The Company’s material operating lease consists of a single office/manufacturing/warehouse/laboratory space. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the Company’s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company used the incremental secured borrowing rate for an existing secured loan corresponding to the maturities of the leases.

The Company’s leases typically contain rent escalations over the lease term. The Company recognizes rent expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when received and reduce the Company’s right-of-use (“ROU”) asset related to the lease. These are amortized through the ROU asset as reductions of expense over the lease term. The Company’s office/manufacturing/warehouse/laboratory lease agreement does not contain any material residual value guarantees or material restrictive covenants.

Related to the adoption of Topic 842, the Company’s policy elections were as follows:

● The Company has used the practical expedients under U.S. GAAP which allow it to not reassess whether any expired or existing contracts are considered a lease, along with grandfathering lease classifications, and treatment of indirect costs;

● The Company has elected to exclude short-term leases having initial terms of 12 months or less;

● The Company has elected not to separate non-lease components from its leases to account for them separately;

● The Company has elected not to avail itself of the practical expedient of using hindsight to determine the lease term; and

● The Company has elected the alternative transition option, by recognizing a cumulative effect adjustment to the opening balance of accumulated deficit in the period of adoption (as of April 1, 2020, the adoption of Topic 842 did not have a material effect on retained earnings).

Property and Equipment, Net

Property and Equipment, Net

Property 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:

Machinery and equipment	5 years
Computer equipment	3 years
Molds and tooling	5 years
Furniture and fixtures	5 years

Leasehold 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.

The 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.

Intangible Assets, Net

Intangible Assets, Net

Intangibles consist of patent-related costs and costs for license agreements. Management reviews the carrying value of 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 recovered.

If the Company determines that the carrying value of 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.

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

The carrying value of the patents of approximately $159,000 and $169,000 at December 31, 2021 and December 31, 2020, respectively, are stated net of accumulated amortization of approximately $320,000 and $303,000, respectively. Amortization of patents charged to operations for the year ended December 31, 2021 and the nine months ended December 31, 2020 were approximately $17,000 and $10,000, respectively. Total future estimated amortization of patent costs for the five succeeding years is approximately $19,000 for the year ending December 31, 2022, approximately $18,000 for the year ending December 31, 2023, approximately $15,000 for year 2024, approximately $14,000 for years 2025 and 2026, and approximately $79,000 thereafter.

The carrying value of the licenses of approximately $12,000 and $19,000 at December 31, 2021 and December 31, 2020 are stated net of accumulated amortization of approximately $407,000 and $400,000, respectively. Amortization of licenses charged to operations for the year ended December 31, 2021 and nine months ended December 31, 2020 was approximately $7,000 and $5,000, respectively. Total future estimated amortization of license costs for the five succeeding years is approximately $7,000 for the year ending December 31, 2022 and $5,000 for the year 2023.

Derivative Financial Instruments and Warrant Liabilities

Derivative Financial Instruments and Warrant Liabilities

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the Consolidated Statements of Operations. Depending on the features of the derivative financial instrument, the Company uses either the Black-Scholes option-pricing model or a Monte-Carlo simulation to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period (See Note 7).

Fair value measurements

Fair value measurements

The Company determines the fair value measurements of applicable assets and liabilities based on a three-tier fair value hierarchy established by accounting guidance and prioritizes the inputs used in measuring fair value. The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:

● Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date;

● Level 2 - Inputs other than quoted prices that are observable for the assets or liabilities either directly or indirectly, including inputs in markets that are not considered to be active; and

● Level 3 - Inputs that are unobservable.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Cash, accounts receivable, accounts payable, accrued liabilities, and debt are carried at amortized cost, which management believes approximates fair value due to the short-term nature of these instruments.

Stock-Based Compensation

Stock-Based Compensation

Stock-based compensation cost for equity awards granted to employees and non-employees is measured at the grant date based on the calculated fair value of the award using the Black-Scholes option-pricing model, and is recognized as an expense, under the straight-line method, over the requisite service period (generally the vesting period of the equity grant). If the Company determines that other methods are more reasonable, or other methods for calculating these assumptions are prescribed by regulators, the fair value calculated for the Company’s stock options could change significantly. Higher volatility, lower risk free interest rates, and longer expected lives would result in an increase to stock-based compensation expense to employees and non-employees determined at the date of grant.

Income Taxes

Income Taxes

Deferred income taxes are recognized for temporary differences in the basis of assets and liabilities for financial statement and income tax reporting that arise due to net operating loss carry forwards, research and development credit carry forwards and from using different methods and periods to calculate depreciation and amortization, allowance for doubtful accounts, accrued vacation, research and development expenses, and state taxes. A provision has been made for income taxes due on taxable income and for the deferred taxes on the temporary differences.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Realization of the deferred income tax asset is dependent on generating sufficient taxable income in future years.

Sales and Excise Taxes

Sales and Excise Taxes

Sales 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 balance Consolidated Balance Sheet as cash is collected from customers and remitted to the tax authority.

Warranty Costs

Warranty Costs

The 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.

Accrued warranty liabilities were approximately $60,000 and $25,000, respectively, at December 31, 2021 and December 31, 2020 and are included in accrued expenses and other current liabilities on the Consolidated Balance Sheets. Warranty costs were approximately $57,000 and $54,000 for the year ended December 31, 2021 and nine months ended December 31, 2020, respectively, and are included in cost of product sales in the Consolidated Statements of Operations.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), “Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)”: Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force), which contains amendments that clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The amendments set forth in this ASU are effective for all entities for annual periods beginning after December 15, 2021. Early application of the amendments in this ASU is permitted for all entities. The amendments in this ASU should be applied prospectively. The Company early adopted ASU No. 2021-04 on January 1, 2021.

In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020 and adoption must be as of the beginning of the Company’s annual fiscal year. The Company early adopted ASU No. 2020-06 on January 1, 2021.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” an amendment to the accounting guidance on fair value measurements. The guidance modifies the disclosure requirements on fair value measurements, including the removal of disclosures of the amount of and reasons for transfers between Level 1 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. The guidance also adds certain disclosure requirements related to Level 3 fair value measurements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted ASU No. 2018-13 on April 1, 2020 and the adoption of this guidance did not have a material impact on its financial statements.

In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842) Targeted Improvements (“Topic 842”), which provides for an alternative transition method by allowing companies to continue to use the legacy guidance in Topic 840, Leases, including its disclosure requirements, in the comparative periods presented in the year of adoption of the new leases standard and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than the earliest period presented. The Company adopted the standard as of April 1, 2020 and the most significant impact was the recognition of a ROU asset and lease liability for the Company’s sole operating lease—the Company had no finance leases. Adoption of the Topic 842 did not require the Company to restate previously reported results as it elected to apply a modified retrospective approach at the beginning of the period of adoption rather than at the beginning of the earliest comparative period presented.

In 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 incurred. 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 extends 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 has not completed its review of the impact of this standard on its consolidated financial statements. However, based on the Company’s history of immaterial credit losses from trade receivables, management does not expect that the adoption of this standard will have a material effect on the Company’s consolidated financial statements.

Impact of the COVID-19 Pandemic

Impact of the COVID-19 Pandemic

Events surrounding the SARS-CoV-2 virus that emerged in late 2019 and the ensuing global pandemic has had a dramatic impact on businesses globally and our business as well. The severity and duration of the pandemic and economic repercussions of the virus and government actions taken in response to the pandemic remain uncertain and will ultimately depend on many factors, including the speed of global dissemination and effectiveness of the vaccination and containment efforts throughout the world, the duration and spread of the virus, as well as seasonality, variants or new outbreaks.

In the United States, federal, state, and local government directives and policies have been put in place to manage public health concerns and address the economic impacts, including reduced business activity and overall uncertainty presented by this new healthcare challenge. Similar actions have been taken by governments around the world. Our facilities could be required to temporarily curtail production levels or temporarily cease operations based on government mandates or as a result of the pandemic. To mitigate risks, we continue to evaluate the extent to which COVID-19 may impact our business and operations and adjust risk mitigation planning and business continuity activities as needed.

Other accounting standard updates are either not applicable to the Company or are not expected to have a material impact on the Company’s consolidated financial statements.

XML

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (Tables)

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SCHEDULE OF ACCOUNTS RECEIVABLE

Accounts receivable is comprised of the following at:

	December 31, 2021			December 31, 2020
Accounts Receivable	$	958,448		$	629,630
Less Allowances		(136,097	)		(13,873	)
	$	822,351		$	615,757

SCHEDULE OF USEFUL LIVES OF PROPERTY AND EQUIPMENT

Property 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:

Machinery and equipment	5 years
Computer equipment	3 years
Molds and tooling	5 years
Furniture and fixtures	5 years

XML

INVENTORY, NET (Tables)

12 Months Ended

Dec. 31, 2021

Inventory Disclosure [Abstract]

SCHEDULE OF INVENTORY

Inventory, net consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021		December 31, 2020
Raw materials	$	823,315	$	579,765
Work in process		188,135		309,826
Finished goods		44,428		63,867
	$	1,055,878	$	953,458

XML

PREPAID EXPENSES (Tables)

12 Months Ended

Dec. 31, 2021

Prepaid Expenses

SCHEDULE OF PREPAID EXPENSES

Prepaid expenses consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021		December 31, 2020
Prepaid insurance	$	1,197,726	$	1,307,864
Prepaid manufacturing expenses		67,410		1,181,029
Prepaid investor relations expenses		—		150,000
Other prepaid expenses		114,760		40,001
	$	1,379,896	$	2,678,894

XML

PROPERTY AND EQUIPMENT, NET (Tables)

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

SCHEDULE OF PROPERTY AND EQUIPMENT

Property and equipment, net consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021			December 31, 2020
Machinery and equipment	$	2,482,841		$	2,401,470
Construction in progress–equipment		—			104,400
Computer equipment		345,117			443,865
Leasehold improvements		333,271			321,033
Molds and tooling		260,002			260,002
Furniture and fixtures		143,013			138,699
		3,564,244			3,669,469
Less Accumulated depreciation		(3,360,324	)		(3,422,146	)
	$	203,920		$	247,323

XML

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2021

Payables and Accruals [Abstract]

SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following at December 31, 2021 and December 31, 2020:

	December 31, 2021		December 31, 2020
Board compensation	$	17,500	$	15,091
Franchise, sales and use taxes		14,090		30,353
Income taxes		3,620		3,326
Patent and license fees		—		7,204
Payroll		682,036		4,566
Professional fees		225,308		58,261
Research and development		232,712		237,504
Royalties		10,152		491
Vacation		282,910		230,457
Warranty liability		60,281		24,871
Other		265,292		134,614
	$	1,793,901	$	746,738

XML

WARRANT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2021

Warrant Liabilities

SCHEDULE OF WARRANTS ACTIVITY

The following table summarizes the activity in the Common Stock Warrants received in exchange for the Series C Warrants for the year ended December 31, 2021:

	Common Stock Warrants (received in exchange for the Series C Warrants)
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		3,378,596		$	0.72
Series C preferred stock warrants exchanged for common stock warrants upon reverse recapitalization		—			—
Exercised		(807,311	)		0.72
Forfeited		(89,671	)		0.72
Expired		—			—
Granted		—			—
Total outstanding – December 31, 2021		2,481,614		$	0.72
Exercisable		2,481,614		$	0.72	$	0.72		2.00
Non-Exercisable		—		$	—	$	—		—

SCHEDULE OF FAIR VALUE HIERARCHY FOR WARRANT LIABILITIES

The following table presents the Company’s fair value hierarchy for its Common Stock Warrant liabilities (all of which arise under the warrants received in exchange for the Series C Warrants) measured at fair value on a recurring basis as of December 31, 2021:

	Quoted
	Market		Significant
	Prices for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
Common Stock Warrant liabilities	(Level 1)		(Level 2)		(Level 3)			Total
Balance as of December 31, 2020	$	—	$	—	$	8,310,100		$	8,310,100
Exercises		—		—		(1,900,713	)		(1,900,713	)
Gain on change in fair value of warrant liabilities		—		—		(4,723,187	)		(4,723,187	)
Balance as of December 31, 2021	$	—	$	—	$	1,686,200		$	1,686,200

SCHEDULE OF ASSUMPTIONS OF WARRANT LIABILITIES

The following are the weighted average and the range of assumptions used in estimating the fair value of warrant liabilities (weighted average calculated based on the number of outstanding warrants on each issuance) as of December 31, 2021:

	December 31, 2021
	Range			Weighted Average
Risk-free interest rate		0.69% — 0.84	%		0.72	%
Expected volatility (peer group)		84% — 87	%		84.6	%
Term of warrants (in years)		1.9 — 2.5			2.01
Expected dividend yield		0.00	%		0.00	%

XML

EARNINGS (LOSS) PER SHARE (Tables)

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

SCHEDULE OF EARNINGS PER SHARE BASIC AND DILUTED

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

	For the Year Ended December 31,			For the Nine Months Ended December 31,
	2021			2020
Net loss used for basic earnings per share	$	(17,897,137	)	$	(19,546,366	)
Basic weighted-average common shares outstanding		29,334,865			17,431,714
Dilutive potential shares issuable from stock options and warrants		—			—
Diluted weighted-average common shares outstanding		29,334,865			17,431,714

XML

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

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, 2020	$	430,795
Additional operating lease right-of-use assets at December 31, 2021		1,439,830
Less amortization of operating lease right-of-use assets		(225,057	)
Operating lease right-of-use assets at December 31, 2021	$	1,645,568

	Operating lease liabilities
Lease liabilities arising from obtaining right-of-use assets at April 1, 2020:	$	491,565
Additional operating lease liabilities at December 31, 2021		1,439,830
Less principal payments on operating lease liabilities		(254,740	)
Lease liabilities at December 31, 2021		1,676,655
Less non-current portion		(1,542,564	)
Current portion at December 31, 2021	$	134,091

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

As of December 31, 2021, the maturities of operating lease liabilities are as follows:

Year Ending December 31,	Amount
2022	$	277,192
2023		368,341
2024		379,392
2025		390,773
2026		402,497
2027		379,165
Total		2,197,360
Less present value discount		(520,705	)
Operating lease liabilities	$	1,676,655

XML

STOCKHOLDERS’ EQUITY (Tables)

12 Months Ended

Dec. 31, 2021

Accumulated Other Comprehensive Income (Loss) [Line Items]

SCHEDULE OF RESERVED SHARES

Exercise of issued and future grants of stock options	4,841,856
Exercise of stock warrants	9,821,395
Total	14,663,251

SCHEDULE OF STOCK OPTION ACTIVITY

The following represents a summary of the options granted to employees and non-employee service providers that were outstanding at December 31, 2021, and changes during the twelve months then ended:

	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		4,011,356		$	7.05		$3.52—1,465.75		9.29
Granted		835,000			1.37		$1.24 — $3.29		9.79
Expired		—			—		—
Forfeited		(4,500	)		3.68		$3.52 — $4.97
Total outstanding – December 31, 2021		4,841,856		$	6.07		$1.24 — $1,465.75		8.52
Exercisable (vested)		1,408,195		$	10.88		$3.52— $1,465.75		7.94
Non-Exercisable (non-vested)		3,433,661		$	4.10		$1.24 — $5.13		8.81

The 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 30, 2020, and changes during the nine-month period then ended:

	Shares		Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – March 31, 2020		—	$	—	$	—
Legacy Ritter options		95,124		92.80		$5.75 — $1,465.75		1.39
Granted		3,917,500		4.97		$3.52 — $5.13		9.46
Expired		(1,268)		35		$15.00 — $562.50
Forfeited		—		—
Total outstanding – December 31, 2020		4,011,356	$	7.05	$	3.52 — $1,465.75		9.29
Exercisable (vested)		108,856	$	81.38	$	3.52 — $1,465.75		2.50
Non-Exercisable (non-vested)		3,902,500	$	4.97	$	3.52 — $5.13		9.47

SCHEDULE OF ASSUMPTIONS USED IN BLACK-SCHOLES OPTION-PRICING METHOD

The material factors incorporated in the Black-Scholes model in estimating the fair value of the options granted for the periods presented were as follows:

	For the Year Ended December 31, 2021
Expected dividend yield		0.00	%
Expected stock-price volatility		102	%
Risk-free interest rate		0.84% — 1.51	%
Expected average term of options (in years)		6.27
Stock price		1.24 — 3.29

SCHEDULE OF SHARE-BASED COMPENSATION EXPENSE

The Company recorded stock-based compensation expense and classified it in the Consolidated Statements of Operations as follows:

	For the Year Ended December 31, 2021		For the Nine Months Ended December 31, 2020
General and administrative	$	4,465,911	$	2,388,380
Research and development		827,740		412,471
Total	$	5,293,651	$	2,800,851

SCHEDULE OF WARRANT ACTIVITY

The following table summarizes the noncompensatory equity classified warrant activity for the year ended December 31, 2021:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		6,549,777		$	4.36
Legacy Ritter warrants		—			—
Granted		—			—
Exercised		(1,000,000	)		0.01
Expired		(640	)		2,325
Forfeited		—			—
Total outstanding – December 31, 2021		5,549,137			2.01
Exercisable		5,549,137			2.01		1.11 — 3.77		1.32
Non-Exercisable		—		$	—	$	—		—

The following table summarizes the noncompensatory equity classified warrant activity for the nine months ended December 31, 2020:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – March 31, 2020		—		$	—
Legacy Ritter warrants		81,455			21.94
Granted		7,450,193			4.18
Exercised		(980,198	)		1.11
Expired		(1,673	)		1,562.50
Forfeited		—			—
Total outstanding – December 31, 2020		6,549,777			4.36
Exercisable		5,707,081			4.40		0.01 — $2,325.00		1.43
Non-Exercisable		842,696		$	4.07	$	4.07	$	3.00

Compensatory Warrant Activity [Member]

Accumulated Other Comprehensive Income (Loss) [Line Items]

SCHEDULE OF WARRANT ACTIVITY

The following table summarizes the equity classified compensatory warrant activity for the year ended December 31, 2021:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		1,294,217		$	1.67
Granted to advisor and its designees		600,000			1.32
Exercised		(38,390	)		2.09
Expired		—			—
Forfeited		(65,179	)		2.07
Total outstanding – December 31, 2021		1,790,648			1.52		1.11 — 2.54		2.64
Exercisable		1,790,648			1.52		1.11 — 2.54		2.64
Non-Exercisable		—		$	—	$	—		—

The following table summarizes the compensatory warrant activity for nine months ended December 31, 2020:

	Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – March 31, 2020		—		$	—
Series C preferred stock compensatory warrants exchanged for common stock warrants upon reverse recapitalization		668,024			2.25
Granted to advisor and its designees		811,431			1.11
Exercised		(159,978	)		1.26
Expired		—			—
Forfeited		(25,260	)		2.07
Total outstanding – December 31, 2020		1,294,217		$	1.6670
Exercisable		1,290,621		$	1.66	$	1.11 — $2.54		4.17
Non-Exercisable		3,596		$	2.54	$	2.54		5.72

XML

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

SCHEDULE OF RECONCILIATION OF STATUTORY INCOME TAX RATE

A reconciliation of the statutory income tax rates and the Company’s effective tax rate is as follows:

	December 31, 2021			December 31, 2020
Statutory federal income tax rate		21.00	%		21.0	%
State taxes, net of federal tax benefit		6.63	%		2.5	%
Non-deductible expenses		(1.19	)%		(0.5	)%
NOL Expiration		(2.71	)%		0.0	%
Tax Credit		0.86	%		(2.8	)%
Change in fair value of warrant liability		5.54	%		(8.9	)%
True-up		(2.72	)%		(1.1	)%
Change in valuation allowance		(27.44	)%		(10.3	)%
Income taxes provision		(0.03	)%		(0.1	)%

SCHEDULE OF PROVISION FOR INCOME TAXES

Income tax expense for the year ended December 31, 2021 and nine months ended December 31, 2020 consisted of the following:

	December 31, 2021			December 31, 2020
Current
Federal	$	—		$	—
State		5,000			1,000
Total current provision		5,000			1,000
Deferred
Federal		(1,268,000	)		(1,634,000	)
State		(3,641,000	)		(384,000	)
Total deferred benefit		(4,909,000	)		(2,018,000	)
Change in valuation allowance		4,909,000			2,017,000
Total provision for income taxes	$	5,000		$	—

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

The components of deferred tax assets and liabilities are as follows:

	December 31, 2021			December 31, 2020
Deferred tax assets:
Net operating loss	$	33,362,000		$	28,914,000
Research and development credits		6,185,000			5,464,000
Accrued expenses		757,000			292,000
Patent		262,000			422,000
Impairment loss		—			361,000
Stock compensation		2,747,000			2,654,000
Other		—			84,000
Fixed assets		282,000			44,000
Total deferred income tax assets		43,595,000			38,235,000
Deferred tax liabilities:
Intangible assets		(34,000	)		(18,000	)
Right-of-use asset		(436,000	)		—
Total deferred income tax liabilities		(470,000	)		(18,000	)
Net deferred income tax assets		43,125,000			38,217,000
Valuation allowance		(43,125,000	)		(38,217,000	)
Deferred tax asset, net of allowance	$	—		$	—

XML

TRANSITION PERIOD COMPARATIVE DATA (Tables)

12 Months Ended

Dec. 31, 2021

Transition Period Comparative Data

TRANSITION PERIOD COMPARATIVE DATA

The following table presents certain comparative transition period financial information for the year ended December 31, 2021 and the twelve months ended December 31, 2020, respectively.

	For the Twelve Months Ended December 31, 2021			For the Twelve Months Ended December 31, 2020 (unaudited)
Revenues	$	5,653,725		$	4,306,316
Gross profit on product sales	$	689,236		$	629,517
Net loss before income taxes	$	(17,891,710	)	$	(20,419,561	)
Net loss	$	(17,897,137	)	$	(20,421,979	)
Net loss per share – basic and fully diluted	$	(0.61	)	$	(1.17	)
Weighted average shares used in computing basic and diluted net loss per share		29,334,865			17,431,714

XML

QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables)

12 Months Ended

Dec. 31, 2021

Quarterly Financial Information Disclosure [Abstract]

SCHEDULE OF ERROR CORRECTIONS AND PRIOR PERIOD ADJUSTMENTS

	For the Quarter Ended March 31, 2021
	As reported			Corrected
Gain on change in fair value of warrant liabilities	$	(2,122,900	)	$	(552,808	)
Net loss	$	(3,672,627	)	$	(5,242,719	)
Net loss per common share	$	(0.13	)	$	(0.19	)

	For the Quarter Ended June 30, 2021						For the Six Months Ended June 30, 2021
	As reported			Corrected			As reported			Corrected
Gain on change in fair value of warrant liabilities	$	(2,075,100	)	$	(1,982,256	)	$	(4,198,000	)	$	(2,535,064	)
Net loss	$	(5,305,233	)	$	(5,398,077	)	$	(8,977,860	)	$	(10,640,796	)
Net loss per common share	$	(0.18	)	$	(0.19	)	$	(0.31	)	$	(0.37	)

	For the Quarter Ended September 30, 2021						For the Nine Months Ended September 30, 2021
	As reported			Corrected			As reported			Corrected
Gain on change in fair value of warrant liabilities	$	(1,942,900	)	$	(1,763,936	)	$	(6,140,900	)	$	(4,299,000	)
Net loss	$	(2,858,518	)	$	(3,037,482	)	$	(11,836,378	)	$	(13,678,278	)
Net loss per common share	$	(0.10	)	$	(0.10	)	$	(0.41	)	$	(0.48	)

XML

SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accounts Receivable	$ 958,448	$ 629,630
Less Allowances	(136,097)	(13,873)
Accounts receivable, net	$ 822,351	$ 615,757

XML

SCHEDULE OF USEFUL LIVES OF PROPERTY AND EQUIPMENT (Details)	12 Months Ended
	Dec. 31, 2021
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	3 years
Molds and Tooling [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years

XML

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (Details Narrative) - USD ($)	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Impairment losses on construction-in-progress	$ 1,400,000	$ 0
Other shipping and handling costs	84,000	113,000
Revenue from Contract with Customer, Excluding Assessed Tax	2,849,561	5,653,725	$ 4,306,316
Allowance for estimated returns	18,300	150,000
Amortization of intangible assets	10,000	17,000
Accrued warranty liabilities	24,871	60,281	24,871
Accrued warranty liabilities	746,738	1,793,901	746,738
Warranty costs	54,000	57,000
Warrant [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Accrued warranty liabilities		60,000
Accrued warranty liabilities	25,000		25,000
Patents [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Carrying value	169,000	159,000	169,000
Accumulated amortization	303,000	320,000	303,000
Future estimated amortization, December 31, 2022		19,000
Future estimated amortization, December 31, 2023		18,000
Future estimated amortization, December 31, 2024		15,000
Future estimated amortization, December 31, 2024 and 2025		14,000
Future estimated amortization, Thereafter		79,000
License [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Carrying value	19,000	12,000	19,000
Accumulated amortization	400,000	407,000	$ 400,000
Amortization of intangible assets	5,000	7,000
Future estimated amortization, December 31, 2022		7,000
Future estimated amortization, December 31, 2023		$ 5,000
Minimum [Member] | Patents and Licenses [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Estimated useful lives		5 years
Maximum [Member] | Patents and Licenses [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Estimated useful lives		17 years
License Revenue [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax		$ 632,004
General Administrative Research and Development Expenses [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Other shipping and handling costs	$ 9,000	$ 12,000

XML

LIQUIDITY (Details Narrative) - USD ($) $ in Thousands	1 Months Ended				12 Months Ended
	Dec. 31, 2020	Aug. 31, 2020	Jul. 31, 2020	May 31, 2020	Dec. 31, 2021
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Converted notes payable, amount				$ 1,900
Investor [Member] | Securities Purchase Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from sale of equity	$ 30,000	$ 30,000	$ 30,000		$ 8,820
Ritter Pharmaceuticals Inc [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from sale of equity				$ 4,000

XML

SCHEDULE OF INVENTORY (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Inventory Disclosure [Abstract]
Raw materials	$ 823,315	$ 579,765
Work in process	188,135	309,826
Finished goods	44,428	63,867
Total inventory	$ 1,055,878	$ 953,458

XML

SCHEDULE OF PREPAID EXPENSES (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Prepaid Expenses
Prepaid insurance	$ 1,197,726	$ 1,307,864
Prepaid manufacturing expenses	67,410	1,181,029
Prepaid investor relations expenses		150,000
Other prepaid expenses	114,760	40,001
Prepaid expenses	$ 1,379,896	$ 2,678,894

XML

SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 3,564,244	$ 3,669,469
Less Accumulated depreciation	(3,360,324)	(3,422,146)
Property and equipment, net	203,920	247,323
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,482,841	2,401,470
Construction In Progress Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross		104,400
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	345,117	443,865
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	333,271	321,033
Molds and Tooling [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	260,002	260,002
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 143,013	$ 138,699

XML

PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($)	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 33,000	$ 73,000

XML

SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Payables and Accruals [Abstract]
Board compensation	$ 17,500	$ 15,091
Franchise, sales and use taxes	14,090	30,353
Income taxes	3,620	3,326
Patent and license fees		7,204
Payroll	682,036	4,566
Professional fees	225,308	58,261
Research and development	232,712	237,504
Royalties	10,152	491
Vacation	282,910	230,457
Warranty liability	60,281	24,871
Other	265,292	134,614
Accrued liabilities	$ 1,793,901	$ 746,738

XML

SCHEDULE OF WARRANTS ACTIVITY (Details) - Series C Warrants [Member] - Common Stock Warrants [Member]	12 Months Ended
	Dec. 31, 2021 $ / shares shares
Number of Shares, Warrants Outstanding Beginning | shares	3,378,596
Weighted Average Exercise Price Per Share Warrants Outstanding Beginning	$ 0.72
Common stock warrants reverse recapitalization, shares | shares
Weighted Average common stock warrants reverse recapitalization
Number of Shares, Warrants Exercised | shares	(807,311)
Weighted Average Exercise Price Per Share Warrants Exercised	$ 0.72
Number of Shares, Warrants Forfeited | shares	(89,671)
Weighted Average Exercise Price Per Share Warrants Forfeited	$ 0.72
Number of Shares, Warrants Expired | shares
Weighted Average Exercise Price Per Share Warrants Expired
Number of Shares, Warrants Granted | shares
Weighted Average Exercise Price Per Share Warrants Granted
Number of Shares, Warrants Outstanding Ending | shares	2,481,614
Weighted Average Exercise Price Per Share Warrants Outstanding Ending	$ 0.72
Number of Shares, Warrants Exercisable | shares	2,481,614
Weighted Average Exercise Price Per Share Exercisable	$ 0.72
Range of Exercise Price, Exercisable	$ 0.72
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingExercisableWeightedAveragRemainingContractualTerm1]	2 years
Number of Shares, Warrants Non Exercisable | shares
Weighted Average Exercise Price Per Share Non Exercisable
Range of Exercise Price, Non Exercisable
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNonExercisableWeightedAverageRemainingContractualTerm1]

XML

SCHEDULE OF FAIR VALUE HIERARCHY FOR WARRANT LIABILITIES (Details) - USD ($)	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021
Defined Benefit Plan Disclosure [Line Items]
Fair value for warrant liabilities		$ 8,310,100
Common Stock Warrant liabilities, Exercises		1,900,713
[custom:FairValueOfWarrantLiabilitiesOnDateOfExercise]		(1,900,713)
Change in fair value of warrant liabilities		(4,723,187)
Fair value for warrant liabilities	8,310,100	1,686,200
Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value for warrant liabilities
Change in fair value of warrant liabilities
Fair value for warrant liabilities
Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value for warrant liabilities
Change in fair value of warrant liabilities
Fair value for warrant liabilities
Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value for warrant liabilities		8,310,100
Common Stock Warrant liabilities, Exercises		(1,900,713)
[custom:FairValueOfWarrantLiabilitiesOnDateOfExercise]		1,900,713
Change in fair value of warrant liabilities		(4,723,187)
Fair value for warrant liabilities	$ 8,310,100	$ 1,686,200

XML

SCHEDULE OF ASSUMPTIONS OF WARRANT LIABILITIES (Details)	Dec. 31, 2021
Measurement Input, Expected Dividend Rate [Member]
Fair value assumptions, measurement input, percentages	0.0000
Minimum [Member] | Measurement Input, Risk Free Interest Rate [Member]
Fair value assumptions, measurement input, percentages	0.69
Minimum [Member] | Measurement Input, Price Volatility [Member]
Fair value assumptions, measurement input, percentages	84
Minimum [Member] | Measurement Input, Expected Term [Member]
Fair value assumptions, measurement input, term	1 year 10 months 24 days
Maximum [Member] | Measurement Input, Risk Free Interest Rate [Member]
Fair value assumptions, measurement input, percentages	0.84
Maximum [Member] | Measurement Input, Price Volatility [Member]
Fair value assumptions, measurement input, percentages	87
Maximum [Member] | Measurement Input, Expected Term [Member]
Fair value assumptions, measurement input, term	2 years 6 months
Weighted Average [Member] | Measurement Input, Risk Free Interest Rate [Member]
Fair value assumptions, measurement input, percentages	0.72
Weighted Average [Member] | Measurement Input, Price Volatility [Member]
Fair value assumptions, measurement input, percentages	84.6
Weighted Average [Member] | Measurement Input, Expected Term [Member]
Fair value assumptions, measurement input, term	2 years 3 days
Weighted Average [Member] | Measurement Input, Expected Dividend Rate [Member]
Fair value assumptions, measurement input, percentages	0.0000

XML

WARRANT LIABILITIES (Details Narrative) - Series C Warrants [Member]	Dec. 31, 2021 $ / shares shares
Number of securities called by Each warrant or right | shares	4,713,490
Class of warrant or right, exercise price of warrants or rights | $ / shares	$ 0.72
Minimum [Member]
Warrants and rights outstanding, term	1 year 10 months 24 days
Maximum [Member]
Warrants and rights outstanding, term	2 years 6 months

XML

SCHEDULE OF EARNINGS PER SHARE BASIC AND DILUTED (Details) - $ / shares	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021
Earnings Per Share [Abstract]
Net loss used for basic earnings per share	$ (19,546,366)	$ (17,897,137)
Basic weighted-average common shares outstanding	17,431,714	29,334,865
Dilutive potential shares issuable from stock options and warrants
Diluted weighted-average common shares outstanding	17,431,714	29,334,865

XML

SCHEDULE OF OPERATING LEASE RIGHT OF USE ASSETS AND OPERATING LEASE LIABILITIES (Details) - USD ($)	9 Months Ended	12 Months Ended	21 Months Ended
	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2021
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Operating lease right-of-use assets		$ 430,795
Less amortization of operating lease right-of-use assets	$ (154,717)	(225,059)
Operating lease right-of-use assets	430,795	1,645,568	$ 1,645,568
Operating lease liabilities, ending balance		1,676,655	1,676,655
Less non-current portion	(236,826)	(1,542,564)	(1,542,564)
Current portion at December 31, 2021	254,739	134,091	134,091
Long term Operating Lease Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Operating lease right-of-use assets		430,795
Additional operating lease right of use assets		1,439,830
Less amortization of operating lease right-of-use assets		(225,057)
Operating lease right-of-use assets	430,795	1,645,568	1,645,568
Operating lease liabilities, beginning balance	$ 491,565		491,565
Additional operating lease liabilities			1,439,830
Less principal payments on operating lease liabilities			(254,740)
Operating lease liabilities, ending balance		1,676,655	1,676,655
Less non-current portion		(1,542,564)	(1,542,564)
Current portion at December 31, 2021		$ 134,091	$ 134,091

XML

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES (Details)	Dec. 31, 2021 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2022	$ 277,192
2023	368,341
2024	379,392
2025	390,773
2026	402,497
2027	379,165
Total	2,197,360
Less present value discount	(520,705)
Operating lease liabilities	$ 1,676,655

XML

COMMITMENTS AND CONTINGENCIES (Details Narrative)		9 Months Ended	12 Months Ended
	Dec. 15, 2021 USD ($) ft²	Dec. 31, 2020 USD ($)	Dec. 31, 2021 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Area of Land | ft²	22,624
Lessee, Operating Lease, Term of Contract	61 months
Lessee, Operating Lease, Description	November 1, 2022 to November 30, 2027
Payments for Rent	$ 1,950,710
[custom:TenantImprovementAllowance]	339,360
Weighted-average remaining lease term			5 years 9 months 18 days
Discount rate operating lease			8.80%
Lease expense		$ 259,000	$ 342,000
First Twelve Months [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payments for Rent	$ 335,966

XML

RESEARCH AND LICENSE AGREEMENTS (Details Narrative) - USD ($)	1 Months Ended								9 Months Ended	12 Months Ended
	Feb. 28, 2021	Nov. 30, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2019	Feb. 28, 2019	Dec. 31, 2018	Jun. 30, 2018	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2021
Research and development									$ 3,316,099	$ 11,716,718
License cost									160,000	60,000
Product sales									2,849,561	5,653,725	$ 4,306,316
License Revenue [Member]
Product sales										632,004
University of Louisville Research Foundation [Member]
Research and development									14,000	243,000
Prediction Biosciences SAS [Member] | Collaborative Research Revenue [Member]
Product sales									0	0
Sekisui Diagnostics, LLC [Member]
Product sales									1,600,000	3,500,000
Yi Xin Zhen Duan Jishu Ltd [Member]
Product sales										38,000
Deferred revenue									250,000		250,000	$ 420,000
Yi Xin Zhen Duan Jishu Ltd [Member] | License Revenue [Member]
Product sales										632,000
STA Pharmaceutical Co Ltd [Member]
Research and development									0	3,200,000
Upfront deposit									1,100,000		$ 1,100,000
License and Sponsored Research Agreements [Member] | University of Louisville Research Foundation [Member]
Proceeds from convertible debt			$ 50,000
Reimbursement of research expenses			805,000
Patent costs			$ 200,000
Agreement term payment, description			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
Regulatory marketing approval, expenses								$ 500,000
Cumulative sales				$ 5,000,000
Research and development									283,000	646,000
License cost									24,000	28,000
Licensed product net sale				500,000,000
License and Sponsored Research Agreements [Member] | University of Louisville Research Foundation [Member] | Licensed Product Sales [Member]
Regulatory marketing approval, expenses								5,000,000
Cumulative sales					$ 5,000,000
Regulatory marketing approval, expenses								500,000
License and Sponsored Research Agreements [Member] | University of Louisville Research Foundation [Member] | Phase 1 Clinical Trial [Member]
Milestone payment				50,000	50,000			100,000
License and Sponsored Research Agreements [Member] | University of Louisville Research Foundation [Member] | Phase 2 Clinical Trial [Member]
Milestone payment				100,000	100,000			200,000
License and Sponsored Research Agreements [Member] | University of Louisville Research Foundation [Member] | Phase 3 Clinical Trial [Member]
Milestone payment				150,000	150,000			350,000
License and Sponsored Research Agreements [Member] | University of Louisville Research Foundation [Member] | Regulatory Marketing Approval [Member]
Licensed product net sale				300,000
License and Sponsored Research Agreements [Member] | University of Louisville Research Foundation [Member] | Minimum [Member]
Milestone payment				50,000	50,000			100,000
Shortfall payments			$ 10,000	5,000
License and Sponsored Research Agreements [Member] | University of Louisville Research Foundation [Member] | Maximum [Member]
Milestone payment				5,000,000	5,000,000			5,000,000
Shortfall payments			$ 50,000	$ 50,000
Sponsored Research and License Agreement [Member]
Research and development									14,000	325,000
Minimum annual royalties									10,000	0
License cost									470,000	118,000
Sponsored Research and License Agreement [Member] | University of Louisville Research Foundation [Member]
Reimbursement of research expenses	$ 1,800,000				$ 693,000	$ 693,000
Agreement term payment, description				In addition, the Company has agreed to pay ULRF (i) royalties, on patent-covered net sales associated with the commercialization of QN-165 as a treatment for COVID-19, 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 patents, 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 June 2020, and (iv) payments ranging from $50,000 to $5,000,000 upon the achievement of certain regulatory and commercial milestones	In July 2020, the Company entered into an exclusive license agreement with ULRF for RAS interaction inhibitor drug candidates. Under the 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 to $5,000,000 upon the achievement of certain regulatory and commercial milestones
Regulatory marketing approval, expenses					$ 300,000
Cumulative sales								$ 500,000,000
Licensed product net sale					500,000,000
License Agreement [Member] | University of Louisville Research Foundation [Member]
Upfront license fee				$ 24,000
License Agreement [Member] | University of Louisville Research Foundation [Member] | Minimum [Member]
Upfront license fee					20,000
License Agreement [Member] | University of Louisville Research Foundation [Member] | Maximum [Member]
Research and development		$ 430,000		$ 250,000
Upfront license fee					$ 100,000
License Agreement [Member] | Advanced Cancer Therapeutics, LLC [Member]
Proceeds from convertible debt							$ 25,000
Cumulative sales							3,000,000
License cost									$ 285,000	$ 2,000
Licensed product net sale							$ 2,000,000
Agreement description							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
Milestone payment for cumulative marketing expenses							$ 100,000
License Agreement [Member] | Advanced Cancer Therapeutics, LLC [Member] | CE Mark [Member]
Cumulative sales							500,000
Licensed product net sale							3,000,000
Milestone method revenue recognized							$ 100,000

XML

SCHEDULE OF RESERVED SHARES (Details)	Dec. 31, 2021 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	14,663,251
Equity Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	4,841,856
Warrant [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	9,821,395

XML

SCHEDULE OF STOCK OPTION ACTIVITY (Details) - Employees and Non-employee Service Provider [Member] - $ / shares	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Number of shares, options outstanding, beginning		4,011,356
Range of exercise price, options outstanding		$ 7.05
Weighted- average remaining contractual life (in Years), outstanding at ending	9 years 3 months 14 days	8 years 6 months 7 days
Number of shares, options legacy ritter	95,124
Weighted average exercise price, options legacy ritter	$ 92.80
Weighted- average remaining contractual life (in Years), option legacy ritter	1 year 4 months 20 days
Number of shares, options granted	3,917,500	835,000
Weighted average exercise price, options granted	$ 4.97	$ 1.37
Weighted- average remaining contractual life (in Years), options granted	9 years 5 months 15 days	9 years 9 months 14 days
Number of shares, options expired	(1,268)
Range of exercise price, options expired	$ 35
Number of shares, options forfeited		(4,500)
Weighted average exercise price, options forfeited		$ 3.68
Number of shares, options outstanding at ending	4,011,356	4,841,856
Range of exercise price, options outstanding	$ 7.05	$ 6.07
Number of shares, options exercisable (vested)	108,856	1,408,195
Range of exercise price, options exercisable (vested)	$ 81.38	$ 10.88
Weighted- average remaining contractual life (in Years), options exercisable (vested)	2 years 6 months	7 years 11 months 8 days
Number of shares, options non-exercisable (non-vested)	3,902,500	3,433,661
Weighted average exercise price, options non-exercisable (non-vested)	$ 4.97	$ 4.10
Weighted- average remaining contractual life (in Years), options Non-exercisable (non-vested)	9 years 5 months 19 days	8 years 9 months 21 days
Minimum [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Range of exercise price, options outstanding		$ 3.52
Range of exercise price, options legacy ritter	$ 5.75
Range of exercise price, options granted	3.52	1.24
Range of exercise price, options expired	15.00
Range of Exercise price, Options Forfeited		3.52
Range of exercise price, options outstanding	3.52	1.24
Range of exercise price, options exercisable (vested)	3.52	3.52
Range of exercise price, options non-exercisable (non-vested)	3.52	1.24
Maximum [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Range of exercise price, options outstanding		1,465.75
Range of exercise price, options legacy ritter	1,465.75
Range of exercise price, options granted	5.13	3.29
Range of exercise price, options expired	562.50
Range of Exercise price, Options Forfeited		4.97
Range of exercise price, options outstanding	1,465.75	1,465.75
Range of exercise price, options exercisable (vested)	1,465.75	1,465.75
Range of exercise price, options non-exercisable (non-vested)	$ 5.13	$ 5.13

XML

SCHEDULE OF ASSUMPTIONS USED IN BLACK-SCHOLES OPTION-PRICING METHOD (Details) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Expected dividend yield	0.00%
Expected stock-price volatility	102.00%
Risk-free interest rate, minimum	0.84%
Risk-free interest rate, maximum	1.51%
Expected average term of options (in years)	6 years 3 months 7 days
Share price		$ 4.07
Minimum [Member]
Share price	$ 1.24
Maximum [Member]
Share price	$ 3.29

XML

SCHEDULE OF SHARE-BASED COMPENSATION EXPENSE (Details) - USD ($)	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021
Total	$ 2,800,851	$ 5,293,651
General and Administrative Expense [Member]
Total	2,388,380	4,465,911
Research and Development Expense [Member]
Total	$ 412,471	$ 827,740

XML

SCHEDULE OF WARRANT ACTIVITY (Details) - $ / shares	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021
Compensatory Warrant Activity [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Warrants Outstanding Beginning		1,294,217
Weighted Average Exercise Price Per Share Warrants Outstanding Beginning		$ 1.67
Number of shares, warrants series C preferred stock compensatory warrants exchanged for common stock warrants upon reverse recapitalization	668,024
Weighted average exercise price per share compensatory warrants series C preferred stock warrant exchanged for common stock warrant upon reverse recapitalization	$ 2.25
Number of shares, warrants granted	811,431	600,000
Weighted average exercise price per share warrants granted	$ 1.11	$ 1.32
Number of shares, warrants exercised	(159,978)	(38,390)
Weighted average exercise price per share warrants exercised	$ 1.26	$ 2.09
Number of shares, warrants expired
Weighted average exercise price per share warrants expired
Number of shares, warrants forfeited	(25,260)	(65,179)
Weighted average exercise price per share warrants forfeited	$ 2.07	$ 2.07
Number of Shares, Warrants Outstanding Ending	1,294,217	1,790,648
Weighted Average Exercise Price Per Share Warrants Outstanding Ending	$ 1.67	$ 1.52
Weighted average remaining life (Years), Outstanding		2 years 7 months 20 days
Number of shares, warrants exercisable	1,290,621	1,790,648
Weighted average exercise price per share exercisable		$ 1.52
Weighted average remaining life (Years) exercisable	4 years 2 months 1 day	2 years 7 months 20 days
Number of shares, warrants non-exercisable	3,596
Weighted average exercise price per share non-exercisable	$ 2.54
Exercisable non- vested per share	$ 2.54
Weighted average remaining life (Years) non-exercisable	5 years 8 months 19 days
Weighted average exercise price per share warrants outstanding ending	$ 1.6670
Number of Shares, Warrants Exercisable	1,290,621	1,790,648
Weighted average exercise price per share exercisable	$ 1.66
Number of shares, warrants non-exercisable	3,596
Weighted average exercise price per share non-exercisable	$ 2.54
Compensatory Warrant Activity [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of exercise price, outstanding		1.11
Exercisable vested per share	1.11	1.11
Compensatory Warrant Activity [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of exercise price, outstanding		2.54
Exercisable vested per share	$ 2.54	$ 2.54
Non Compensatory Warrant Activity [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Warrants Outstanding Beginning		6,549,777
Weighted Average Exercise Price Per Share Warrants Outstanding Beginning		$ 4.36
Share based compensation arrangement by share based payment award non option equity instruments legacy ritter	81,455
Share based compensation arrangement by share based payment award non option equity instruments legacy ritter weighted average exercise price	$ 21.94
Number of shares, warrants granted	7,450,193
Weighted average exercise price per share warrants granted	$ 4.18
Number of shares, warrants exercised	(980,198)	(1,000,000)
Weighted average exercise price per share warrants exercised	$ 1.11	$ 0.01
Number of shares, warrants expired	(1,673)	(640)
Weighted average exercise price per share warrants expired	$ 1,562.50	$ 2,325
Number of shares, warrants forfeited
Weighted average exercise price per share warrants forfeited
Number of Shares, Warrants Outstanding Ending	6,549,777	5,549,137
Weighted Average Exercise Price Per Share Warrants Outstanding Ending	$ 4.36	$ 2.01
Number of shares, warrants exercisable	5,707,081	5,549,137
Weighted average exercise price per share exercisable	$ 4.40	$ 2.01
Weighted average remaining life (Years) exercisable	1 year 5 months 4 days	1 year 3 months 25 days
Number of shares, warrants non-exercisable	842,696
Weighted average exercise price per share non-exercisable	$ 4.07
Exercisable non- vested per share	$ 4.07
Number of Shares, Warrants Exercisable	5,707,081	5,549,137
Number of shares, warrants non-exercisable	842,696
Weighted average exercise price per share non-exercisable	$ 4.07
Non exercisable weighted averag remaining contractual term1	3 years
Non Compensatory Warrant Activity [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercisable vested per share	$ 0.01	$ 1.11
Non Compensatory Warrant Activity [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercisable vested per share	$ 2,325.00	$ 3.77

XML

STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)						1 Months Ended			9 Months Ended	12 Months Ended
	Dec. 01, 2021	Dec. 18, 2020	Aug. 04, 2020	Jul. 22, 2020	Jul. 10, 2020	Dec. 31, 2020	Aug. 31, 2020	Jul. 31, 2020	Dec. 31, 2020	Dec. 31, 2021	Nov. 29, 2021	Feb. 28, 2021	Dec. 30, 2020	Dec. 31, 2017
Class of Stock [Line Items]
Share price						$ 4.07			$ 4.07
Common stock, shares reserved for future issuance										14,663,251
Preferred Stock, Shares Outstanding						180			180	0
Share based compensation									$ 2,800,851	$ 5,293,651
Warrants, granted						2,191,000			2,191,000
Fair value of warrants										$ 2,300,000
2020 Plan [Member]
Class of Stock [Line Items]
Common stock, shares reserved for future issuance										3,500,000
Equity Option [Member]
Class of Stock [Line Items]
Common stock, shares reserved for future issuance										4,841,856
Share based compensation									$ 2,800,000	$ 5,300,000
Weighted averge term										1 year 6 months 29 days
Stock options exercised									0	0
Stock option granted exercise price									$ 4.97	$ 1.10
Equity Option [Member] | 2020 Stock Incentive Plan [Member]
Class of Stock [Line Items]
Common stock, shares reserved for future issuance						139,657			139,657	2,809,157
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number						3,917,500			3,917,500	4,748,000
Stock options description										The exercise price for an option issued under the 2020 Plan is determined by the Board of Directors, but will be (i) in the case of an incentive stock option (A) granted to an employee who, at the time of grant of such option, is a 10% stockholder, for no less than 110% of the fair market value per share on the date of grant; or (B) granted to any other employee, for no less than 100% of the fair market value per share on the date of grant; and (ii) in the case of a non-statutory stock option, for no less than 100% of the fair market value per share on the date of grant
Compensatory Warrants [Member]
Class of Stock [Line Items]
Proceeds from issuance of common stock										$ 300,000
Purchase of warrants						811,431			811,431	600,000				514,451
Warrant exercise price						$ 1.11			$ 1.11	$ 1.32				$ 2.30
Share based compensation									$ 0	$ 300,000
Proceeds from issuance or sale of equity									4,000,000.0
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount						$ 0			0
Series C Warrants [Member]
Class of Stock [Line Items]
Share based compensation									$ 0	$ 0
Noncompensatory Equity Classified Warrants [Member]
Class of Stock [Line Items]
Purchase of warrants						270,478		2,700,966	270,478	270,478	5,399,517
Warrant exercise price						$ 1.11		$ 5.25	$ 1.11	$ 1.11	$ 2.00
Investor [Member] | Noncompensatory Equity Classified Warrants [Member]
Class of Stock [Line Items]
Purchase of warrants						1,000,000	1,287,829		1,000,000			1,000,000
Warrant exercise price						$ 0.01	$ 6.00		$ 0.01			$ 0.01
Series Alpha Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Preferred Stock, Shares Outstanding													180
Convertible preferred stock, shares						5,180			5,180	180
Shares issued during conversion, shares									7,004,983	243,416
Securities Purchase Agreement [Member]
Class of Stock [Line Items]
Share price	$ 1.50
Proceeds from issuance of common stock	$ 8,820,000
Beneficial ownership percentage		9.99%	9.99%		9.99%
Securities Purchase Agreement [Member] | Two-year Warrants [Member]
Class of Stock [Line Items]
Purchase of warrants		1,348,314	1,287,829		1,920,768
Warrant exercise price		$ 4.07	$ 6.00		$ 5.25
Securities Purchase Agreement [Member] | Common Stock [Member]
Class of Stock [Line Items]
Shares issued, shares		2,370,786	1,717,106		1,140,570
Securities Purchase Agreement [Member] | Pre-funded Warrants [Member]
Class of Stock [Line Items]
Purchase of warrants		1,000,000			780,198
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Exercised				780,198
Securities Purchase Agreement [Member] | Warrant [Member]
Class of Stock [Line Items]
Purchase of warrants		842,696
Warrant exercise price		$ 4.07
Securities Purchase Agreement [Member] | Single Institutional Investor [Member]
Class of Stock [Line Items]
Sale of stock		$ 12,000,000.0	$ 10,000,000.0		$ 8,000,000.0
Securities Purchase Agreement [Member] | Investor [Member]
Class of Stock [Line Items]
Proceeds from issuance or sale of equity						$ 30,000,000.0	$ 30,000,000.0	$ 30,000,000.0		$ 8,820,000
Securities Purchase Agreement [Member] | Common Stock [Member]
Class of Stock [Line Items]
Shares issued, shares	5,880,000
Unvested Stock Based Compensation Arrangements [Member] | Equity Option [Member]
Class of Stock [Line Items]
Share based compensation										$ 8,200,000

XML

SCHEDULE OF RECONCILIATION OF STATUTORY INCOME TAX RATE (Details)	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Statutory federal income tax rate	21.00%	21.00%
State taxes, net of federal tax benefit	2.50%	6.63%
Non-deductible expenses	(0.50%)	(1.19%)
NOL Expiration	0.00%	(2.71%)
Tax Credit	(2.80%)	0.86%
Change in fair value of warrant liability	(8.90%)	5.54%
True-up	(1.10%)	(2.72%)
Change in valuation allowance	(10.30%)	(27.44%)
Income taxes provision	(0.10%)	(0.03%)

XML

SCHEDULE OF PROVISION FOR INCOME TAXES (Details) - USD ($)	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Federal
State	1,000	5,000
Total current provision	1,000	5,000
Federal	(1,634,000)	(1,268,000)
State	(384,000)	(3,641,000)
Total deferred benefit	(2,018,000)	(4,909,000)
Change in valuation allowance	2,017,000	4,909,000
Total provision for income taxes		$ 5,427

XML

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Net operating loss	$ 33,362,000	$ 28,914,000
Research and development credits	6,185,000	5,464,000
Accrued expenses	757,000	292,000
Patent	262,000	422,000
Impairment loss		361,000
Stock compensation	2,747,000	2,654,000
Other		84,000
Fixed assets	282,000	44,000
Total deferred income tax assets	43,595,000	38,235,000
Intangible assets	(34,000)	(18,000)
Right-of-use asset	(436,000)
Total deferred income tax liabilities	(470,000)	(18,000)
Net deferred income tax assets	43,125,000	38,217,000
Valuation allowance	(43,125,000)	(38,217,000)
Deferred tax asset, net of allowance

XML

INCOME TAXES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Deferred Tax Assets, Operating Loss Carryforwards, State and Local	$ 126,225,000	$ 100,290,000
Research and development credit carryforwards	$ 4,508,000	1,677,000
Tax credit carryforward, limitations on use	The research and development credit carryforwards began to expire in 2020 for federal tax purposes and have an indefinite life for state tax purposes.
Unrecognized tax benefits	$ 0	$ 0
Uncertain tax positions	$ 0

XML

TRANSITION PERIOD COMPARATIVE DATA (Details) - USD ($)	9 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Transition Period Comparative Data
Total revenues	$ 2,849,561	$ 5,653,725	$ 4,306,316
Gross profit on product sales		689,236	629,517
Net loss before income taxes	(19,546,366)	(17,891,710)	(20,419,561)
Net loss	$ (19,546,366)	$ (17,897,137)	$ (20,421,979)
Net loss per share – basic and fully diluted	$ (1.12)	$ (0.61)	$ (1.17)
Weighted average shares used in computing basic and diluted net loss per share	17,431,714	29,334,865	17,431,714

XML

SCHEDULE OF ERROR CORRECTIONS AND PRIOR PERIOD ADJUSTMENTS (Details) - USD ($)	3 Months Ended				6 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Mar. 31, 2020	Jun. 30, 2021	Sep. 30, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Gain on change in fair value of warrant liabilities								$ 2,300,000
Net loss							$ (19,546,366)	$ (17,897,137)	$ (20,421,979)
Net loss per common share							$ (19,546,366)	$ (17,897,137)
Previously Reported [Member]
Gain on change in fair value of warrant liabilities	$ (1,942,900)	$ (2,075,100)	$ (2,122,900)		$ (4,198,000)	$ (6,140,900)
Net loss	$ (2,858,518)	$ (5,305,233)	$ (3,672,627)		$ (8,977,860)	$ (11,836,378)
Net loss per common share	$ (0.10)	$ (0.18)	$ (0.13)		$ (0.31)	$ (0.41)
Revision of Prior Period, Error Correction, Adjustment [Member]
Gain on change in fair value of warrant liabilities	$ (1,763,936)	$ (1,982,256)		$ (552,808)	$ (2,535,064)	$ (4,299,000)
Net loss	$ (3,037,482)	$ (5,398,077)		$ (5,242,719)	$ (10,640,796)	$ (13,678,278)
Net loss per common share	$ (0.10)	$ (0.19)		$ (0.19)	$ (0.37)	$ (0.48)

XML

QUARTERLY FINANCIAL DATA (UNAUDITED) (Details Narrative) $ in Millions	12 Months Ended
	Dec. 31, 2021 USD ($)
Gain on change in fair value of warrant liabilities	$ 2.3
Warrants Liabilities [Member]
Gain on change in fair value of warrant liabilities	$ 1.9

XML

SUBSEQUENT EVENTS (Details Narrative) - USD ($)	Mar. 07, 2022	Jan. 13, 2022	Aug. 31, 2022	Mar. 04, 2022	Dec. 31, 2021	Dec. 31, 2020
Subsequent Event [Line Items]
Share price						$ 4.07
Minimum [Member]
Subsequent Event [Line Items]
Share price					$ 1.24
Maximum [Member]
Subsequent Event [Line Items]
Share price					$ 3.29
Subsequent Event [Member]
Subsequent Event [Line Items]
[custom:ReimbursementOfPatent]		$ 160,000
Share price			$ 1.00	$ 1.00
Subsequent Event [Member] | University of Louisville Research Foundation [Member] | Minimum [Member]
Subsequent Event [Line Items]
Reimbursement of research expense	$ 1,800,000
Subsequent Event [Member] | University of Louisville Research Foundation [Member] | Maximum [Member]
Subsequent Event [Line Items]
Reimbursement of research expense	$ 2,700,000
Upfront Paymenet [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
[custom:ReimbursementOfPatent]		$ 150,000