UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~March 31,~~June 30, 2022

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

For the transition period from _____________ to _____________

Qualigen Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-37428

26-3474527

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(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)

n/a

(Former name or former address, if changed since last report)

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

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $.001 per share		QLGN		The Nasdaq Capital Market of The Nasdaq Stock Market LLC

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 an emerging growth company. See the 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of ~~May 10,~~August 15, 2022, there were ~~35,295,541~~38,795,541 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

TABLE OF CONTENTS

		Page
PART I.	Financial Information

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of ~~March 31,~~June 30, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Operations and Other Comprehensive Loss for the Three and Six Months Ended ~~March 31,~~June 30, 2022 and 2021	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended ~~March 31,~~June 30, 2022 and 2021	5
	Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2022 and 2021	6
	Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2529
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3140
Item 4.	Controls and Procedures	3240

PART II.	Other Information	3342

Item 1.	Legal Proceedings	3342
Item 1A.	Risk Factors	3342
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3343
Item 3.	Defaults Upon Senior Securities	3343
Item 4.	Mine Safety Disclosures	3343
Item 5.	Other Information	3343
Item 6.	Exhibits	3444

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

QUALIGEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31,			December 31,			June 30,			December 31,
	2022			2021			2022			2021
ASSETS
Current assets
Cash	$	13,610,894			17,538,272		$	9,746,257		$	17,538,272
Accounts receivable, net		594,338			822,351			719,883			822,351
Inventory, net		1,400,712			1,055,878			1,310,213			1,055,878
Prepaid expenses and other current assets		1,097,822			1,379,896			1,928,383			1,379,896
Total current assets		16,703,766			20,796,397			13,704,736			20,796,397
Restricted cash								5,719			—
Right-of-use assets		1,591,072			1,645,568			1,535,764			1,645,568
Property and equipment, net		230,242			203,920			329,630			204,216
Equipment held for lease, net		221			296
Intangible assets, net		164,818			171,190			5,858,446			171,190
Goodwill								4,896,223			—
Other assets		18,334			18,334			18,333			18,334
Total Assets	$	18,708,453		$	22,835,705		$	26,348,851		$	22,835,705

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	997,406		$	886,224		$	918,327		$	886,224
Accrued expenses and other current liabilities		1,343,375			1,793,901			1,414,535			1,793,901
R&D grant liability								1,098,733			—
Deferred revenue, current portion		127,304			135,063			109,833			135,063
Operating lease liability, current portion		155,525			134,091			177,439			134,091
Short term debt-related party								939,919			—
Warrant liabilities		1,002,100			1,686,200			987,300			1,686,200
Total current liabilities		3,625,710			4,635,479			5,646,086			4,635,479
Operating lease liability, net of current portion		1,484,833			1,542,564			1,425,808			1,542,564
Deferred revenue, net of current portion		81,081			92,928			70,814			92,928
Deferred tax liability								736,000			—
Total liabilities		5,191,624			6,270,971			7,878,708			6,270,971
Stockholders’ equity
Common stock, $0.001 par value; 225,000,000 shares authorized; 35,295,541 and 35,290,178 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		35,295			35,290
Qualigen Therapeutics, Inc. stockholders’ equity:
Common stock, $0.001 par value; 225,000,000 shares authorized; 38,795,541 and 35,290,178 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively								38,795			35,290
Additional paid-in capital		102,545,950			101,274,073			107,557,744			101,274,073
Accumulated other comprehensive income								65,540			—
Accumulated deficit		(89,064,416	)		(84,744,629	)		(93,187,820	)		(84,744,629	)
Total stockholders’ equity		13,516,829			16,564,734
Total Qualigen Therapeutics, Inc. stockholders’ equity								14,474,259			16,564,734
Noncontrolling interest								3,995,884			—
Total Stockholders’ Equity								18,470,143			16,564,734
Total Liabilities & Stockholders’ Equity	$	18,708,453		$	22,835,705		$	26,348,851		$	22,835,705

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

QUALIGEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS

(Unaudited)

~~(Unaudited)~~

	2022			2021			2022			2021			2022			2021
	For the Three Months Ended March 31,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2022			2021			2022			2021			2022			2021
REVENUES
Net product sales	$	722,029		$	1,420,842		$	1,430,534		$	1,117,935		$	2,152,563		$	2,538,776
License revenue		0			478,654			—			—			—			478,654
Total revenues		722,029			1,899,496			1,430,534			1,117,935			2,152,563			3,017,430
EXPENSES
Cost of product sales		828,848			1,202,479			1,099,677			916,624			1,928,524			2,119,103
General and administrative		2,898,751			2,873,939			2,660,857			2,952,100			5,559,608			5,826,038
Research and development		1,864,745			3,499,373			1,506,227			4,508,466			3,370,972			8,007,840
Sales and marketing		138,323			136,587			305,103			135,543			443,426			272,129
Total expenses		5,730,667			7,712,378			5,571,864			8,512,733			11,302,530			16,225,110

LOSS FROM OPERATIONS		(5,008,638	)		(5,812,882	)		(4,141,330	)		(7,394,798	)		(9,149,967	)		(13,207,680	)

OTHER (INCOME), NET
OTHER INCOME (EXPENSE), NET
Gain on change in fair value of warrant liabilities		(683,242	)		(552,808	)		14,800			1,982,256			698,042			2,535,064
Interest income, net		(6,309	)		(17,343	)		4,824			12,718			11,132			30,061
Other income, net		(36	)		(542	)
Other income (expense), net								(376	)		2,352			(341	)		2,894
Total other income, net		(689,587	)		(570,693	)		19,248			1,997,326			708,833			2,568,019

LOSS BEFORE PROVISION FOR INCOME TAXES		(4,319,051	)		(5,242,189	)		(4,122,082	)		(5,397,472	)		(8,441,134	)		(10,639,661	)

PROVISION FOR INCOME TAXES		736			530			5,438			605			6,173			1,135

NET LOSS	$	(4,319,787	)	$	(5,242,719	)		(4,127,520	)		(5,398,077	)		(8,447,307	)		(10,640,796	)

Net loss attributable to noncontrolling interest								(4,116	)		—			(4,116	)		—

Net loss attributable to Qualigen Therapeutics, Inc.							$	(4,123,404	)	$	(5,398,077	)	$	(8,443,191	)	$	(10,640,796	)

Net loss per common share, basic and diluted	$	(0.12	)	$	(0.19	)	$	(0.11	)	$	(0.19	)	$	(0.23	)	$	(0.37	)
Weighted—average number of shares outstanding, basic and diluted		35,294,051			28,165,796			36,680,156			28,850,451			35,990,933			28,510,014

Other comprehensive loss, net of tax
Net loss							$	(4,127,520	)	$	(5,398,077	)	$	(8,447,307	)	$	(10,640,796	)
Foreign currency translation adjustment								65,540			—			65,540			—
Other comprehensive loss								(4,061,980	)		(5,398,077	)		(8,381,767	)		(10,640,796	)
Comprehensive loss attributable to noncontrolling interest								(4,116	)		—			(4,116	)		—
Comprehensive loss attributable to Qualigen Therapeutics, Inc.							$	(4,057,864	)	$	(5,398,077	)	$	(8,377,651	)	$	(10,640,796	)

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

QUALIGEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)


													Total
								Accumulated					Qualigen Therapeutics,
		Common Stock				Additional		Other					Inc.						Total
		Shares		Amount $		Paid-In Capital		Comprehensive Income		Accumulated Deficit			Stockholders’ Equity			Noncontrolling Interest			Stockholders’ Equity
Balance at December 31, 2021	-		35,290,178	$	35,290	$	101,274,073	$	—	$	(84,744,629	)	$	16,564,734		$	—		$	16,564,734
Stock issued upon exercise of warrants			5,363		5		4,711		—		—			4,716			—			4,716
Stock-based compensation	-		—		—		1,267,166		—		—			1,267,166			—			1,267,166
Net loss			—		—		—		—		(4,319,787	)		(4,319,787	)		—			(4,319,787	)
Balance at March 31, 2022	-		35,295,541	$	35,295	$	102,545,950	$	—	$	(89,064,416	)	$	13,516,829		$	—		$	13,516,829
Common stock issued for business acquisition			3,500,000		3,500		1,841,000		—		—			1,844,500			—		$	1,844,500
Prefunded warrants issued for business acquisition			—		—		1,746,816		—		—			1,746,816			—			1,746,816
Foreign currency translation adjustment			—		—		—		65,540		—			65,540			—			65,540
Fair value of noncontrolling interest related to business acquisition			—		—		—		—		—			—			4,000,000			4,000,000
Fair value of warrant modification for business acquisition			—		—		696		—		—			696			—			696
Stock-based compensation	-		—		—		1,423,282		—		—			1,423,282			—			1,423,282
Net loss			—		—		—		—		(4,123,404	)		(4,123,404	)		(4,116	)		(4,127,520	)
Balance at June 30, 2022	-		38,795,541	$	38,795	$	107,557,744	$	65,540	$	(93,187,820	)	$	14,474,259		$	3,995,884		$	18,470,143

Shares
Amount $
Capital Deficit Total
Common Stock Additional
Paid-In Accumulated
Shares
Amount $
Capital Deficit Total
Balance at December 31, 2021 - 35,290,178 $ 35,290 $ 101,274,073 $ (84,744,629 ) $ 16,564,734
Stock issued upon exercise of warrants 5,363 5 4,711 — 4,716
Stock-based compensation — — 1,267,166 — 1,267,166
Net Loss - — — — (4,319,787 ) (4,319,787 )
Balance at March 31, 2022 - 35,295,541 $ 35,295 $ 102,545,950 $ (89,064,416 ) $ 13,516,829


	Shares		Amount $		Shares		Amount $		Capital			Deficit			Total																			Total
	Series Alpha Convertible								Additional									Series Alpha Convertible											Accumulated					Qualigen Therapeutics,
	Preferred Stock				Common Stock				Paid-In			Accumulated						Preferred Stock				Common Stock				Additional			Other					Inc.					Total
	Shares		Amount $		Shares		Amount $		Capital			Deficit			Total			Shares		Amount $		Shares		Amount $		Paid-In Capital			Comprehensive Income		Accumulated Deficit			Stockholders’ Equity			Noncontrolling Interest		Stockholders’ Equity
Balance at December 31, 2020	$	180	$	1		27,296,061	$	27,296	$	85,114,755		$	(66,847,492	)	$	18,294,560		$	180	$	1		27,296,061	$	27,296	$	85,114,755		$	—	$	(66,847,492	)	$	18,294,560		$	—	$	18,294,560
Beginning Balance	$	180	$	1		27,296,061	$	27,296	$	85,114,755		$	(66,847,492	)	$	18,294,560
Stock issued upon exercise of warrants		—		—		1,319,625		1,320		1,813,353			—			1,814,673
Stock issued upon cash exercise of warrants																			—		—		1,319,625		1,320		1,813,353			—		—			1,814,673			—		1,814,673
Stock issued upon net-exercise of warrants		—		—		192,373		192		(192	)		—			—			—		—		192,373		192		(192	)		—		—			—			—		—
Stock issued for professional services		—		—		25,000		25		101,725			—			101,750			—		—		25,000		25		101,725			—		—			101,750			—		101,750
Stock-based compensation		—		—		—		—		1,262,123			—			1,262,123			—		—		—		—		1,262,123			—		—			1,262,123			—		1,262,123
Net Loss		—		—		—		—		—			(5,242,719	)		(5,242,719	)
Net loss																			—		—		—		—		—					(5,242,719	)		(5,242,719	)				(5,242,719	)
Balance at March 31, 2021		180	$	1		28,833,059	$	28,833	$	88,291,764		$	(72,090,211	)	$	16,230,387			180	$	1		28,833,059	$	28,833	$	88,291,764		$	—	$	(72,090,211	)	$	16,230,387		$	—	$	16,230,387
Ending Balance		180	$	1		28,833,059	$	28,833	$	88,291,764		$	(72,090,211	)	$	16,230,387
Stock issued upon cash exercise of warrants																			—		—		69,129		69		142,513			—		—			142,582			—		142,582
Stock-based compensation																			—		—		—		—		1,286,926			—		—			1,286,926			—		1,286,926
Net loss																			—		—		—		—		—			—		(5,398,077	)		(5,398,077	)		—		(5,398,077	)
Balance at June 30, 2021																			180	$	1		28,902,188	$	28,902	$	89,721,203		$	—	$	(77,488,288	)	$	12,261,818		$	—	$	12,261,818

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

QUALIGEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	2022			2021			2022			2021
	For the Three Months Ended March 31,						For the Six Months Ended June 30,
	2022			2021			2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(4,319,787	)	$	(5,242,719	)	$	(8,447,307	)	$	(10,640,796	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		29,749			27,453			66,258			53,736
Amortization of right-of-use assets		54,495			54,179			109,803			109,719
Accounts receivable reserves and allowances		(88,129	)		8,490			(75,295	)		3,645
Inventory reserves		4,074			29,615			(16,405	)		40,644
Common stock issued for professional services		—			101,750
Stock-based compensation		1,267,166			1,262,123			2,690,447			2,549,049
Change in fair value of warrant liabilities		(683,242	)		(552,808	)		(698,042	)		(2,535,064	)

Changes in operating assets and liabilities:
Accounts receivable		316,142			(254,968	)		250,201			(154,799	)
Inventory and equipment held for lease		(348,908	)		107,588			(237,930	)		(89,617	)
Prepaid expenses and other assets		282,074			1,459,135			(548,487	)		746,787
Accounts payable		111,184			(15,217	)		27,941			283,706
Accrued expenses and other current liabilities		(450,526	)		1,122,686			(828,229	)		1,176,970
Operating lease liability		(36,297	)		(60,710	)		(73,408	)		(122,780	)
Deferred revenue		(19,606	)		(127,701	)		(47,345	)		(206,257	)
Net cash used in operating activities		(3,881,611	)		(2,081,104	)		(7,827,798	)		(8,785,057	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(49,625	)		(62,265	)		(63,483	)		(107,798	)
Payments for patents and licenses		—			(6,737	)		—			(6,893	)
Net cash used in investing activities		(49,625	)		(69,002	)
Net cash acquired in business combination								135,354			—
Net cash provided by (used in) investing activities								71,871			(114,691	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from warrant exercises		3,858			244,581			3,859			294,319
Principal payments on notes payable		—			(123,133	)		—			(138,739	)
Net cash provided by financing activities		3,858			121,448			3,859			155,580

Net change in cash		(3,927,378	)		(2,028,658	)

Cash - beginning of period		17,538,272			23,976,570
Cash - end of period	$	13,610,894		$	21,947,912
Net change in cash and restricted cash								(7,752,068	)		(8,744,168	)
Effect of exchange rate changes on cash and restricted cash								(34,228	)		—
Cash and restricted cash - beginning of period								17,538,272			23,976,570
Cash and restricted cash - end of period							$	9,751,976		$	15,232,402

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest	$	—		$	831		$	—		$	1,683
Taxes	$	—		$	100		$	3,501		$	2,200

NONCASH FINANCING AND INVESTING ACTIVITIES:
Issuance of common stock for professional services							$	—		$	101,750
Net transfers to inventory from equipment held for lease							$	—		$	1,304
Fair value of shares issued for cashless warrant exercises	$	—		$	722,970		$	—		$	722,970
Fair value of warrant liabilities on date of exercise	$	858		$	1,570,092		$	858		$	1,662,936

ACQUISITION:
Fair value of assets acquired							$	(5,896,278	)	$	—
Fair value of liabilities assumed, net of goodwill								2,439,620			—
Fair value of Alpha Capital/Qualigen warrants repriced due to acquisition								696			—
Fair value of Qualigen prefunded warrant issued in exchange for NanoSynex stock								1,746,816			—
Fair value of Qualigen common stock issued in exchange for NanoSynex stock								1,844,500			—
Net cash acquired in business acquisition (Note 3)							$	135,354		$	—

Cash and restricted cash included in the accompanying balance sheet was as follows:
Cash							$	9,746,257		$	15,232,402
Restricted cash								5,719			—
Total cash and restricted cash							$	9,751,976		$	15,232,402

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

QUALIGEN THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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. 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.

On May 26, 2022, the Company acquired 2,232,861 shares of Series A-1 Preferred Stock of NanoSynex, Ltd, (“NanoSynex”) from Alpha Capital Anstalt (“Alpha Capital”) in exchange for 3,500,000 shares of the Company’s common stock and a prefunded warrant to purchase 3,314,641 shares of the Company’s common stock at an exercise price of $0.001 per share. Concurrently with this transaction, the Company also purchased 381,786 shares of Series B preferred stock from NanoSynex for a total purchase price of $600,000. The transactions resulted in the Company acquiring a 52.8% interest in NanoSynex. The Company envisions future synergies from the integration of its own proprietary results-proven FastPack diagnostics platform with the innovative NanoSynex technology. NanoSynex is a micro-biologics diagnostics company domiciled in Israel.

Basis of Presentation

The ~~accompanying~~unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim reports of companies filing as a smaller reporting company. These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities Exchange Commission on March 31, 2022, as amended on April 29, 2022 (the “2021 Annual Report”). In the opinion of management, the accompanying condensed consolidated interim financial statements include all adjustments necessary in order to make the financial statements not misleading. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year or any other future period. Certain notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Company’s 2021 Annual Report have been omitted. The accompanying condensed consolidated balance sheet at December 31, 2021 has been derived from the audited balance sheet at December 31, 2021 contained in the 2021 Annual Report.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its ~~wholly~~majority owned ~~subsidiary.~~subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP. The Company views its operations and manages its business in one operating segment. ~~All long-lived assets~~In general, the functional currency of the Company and its subsidiaries is the U.S. dollar, however for NanoSynex, the functional currency is the local currency, New Israeli Shekels (NIS). As such, assets and liabilities for NanoSynex are ~~located~~translated into U.S. dollars and the effects of foreign currency translation adjustments are reflected as a component of accumulated other comprehensive income within the Company’s consolidated statements of changes in ~~the United States.~~stockholders’ equity.

Accounting Estimates

Management uses estimates and assumptions in preparing its unaudited condensed 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 in-process research and development, goodwill, warrant liabilities, stock-based compensation, amortization and depreciation, inventory reserves, allowances for doubtful accounts and returns, and warranty costs. Actual results could vary from the estimates that were used.

Cash, cash equivalents and restricted 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. Restricted cash includes cash that is restricted due to Israeli banking regulations.

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 three and six months ended ~~March 31,~~June 30, 2022 and 2021, 0 such impairment losses have been 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, net is comprised of the following at:

SCHEDULE OF ACCOUNTS RECEIVABLE

							June 30,			December 31,
	March 31, 2022			December 31, 2021			2022			2021
Accounts Receivable	$	642,306		$	958,448		$	780,684		$	958,448
Less Allowances		(47,968	)		(136,097	)		(60,801	)		(136,097	)
Accounts receivable, net	$	594,338		$	822,351		$	719,883		$	822,351

Research and Development

~~The~~Except for acquired in process research and development (IPR&D), 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 which totaled approximately $~~39,000~~72,000 and $~~30,000~~28,000, respectively, for the three months ended ~~March 31,~~June 30, 2022 and ~~2021.~~2021, and approximately $111,000 and $58,000, respectively, for the six months ended June 30, 2022 and 2021. Other shipping and handling costs included in general and administrative, research and development, and sales and marketing expenses totaled approximately $4,000 ~~and $1,000~~for both the three months ended ~~March 31,~~June 30, 2022 and 2021, and approximately $8,000 and $5,000 for the six months ended June 30, 2022 and 2021, 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 prostate-specific antigen (“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 three months ended ~~March 31,~~June 30, 2022 and 2021, the Company recognized no license revenue, and during the six months ended June 30, 2022 and 2021, the Company recognized license revenue of $0 and approximately $479,000, 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 performance of the related services, the Company records deferred revenue until the performance obligations are satisfied.

Multiple performance obligations 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 three months ended ~~March 31,~~June 30, 2022 and 2021, product sales are stated net of an allowance for estimated returns of approximately $~~43,000~~10,000 and $0, respectively.During the six months ended June 30, 2022 and 2021, product sales are stated net of an allowance for estimated returns of approximately $53,000 and $0, 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 condensed consolidated balance sheets date to the future date of revenue recognition.

Operating Leases

Effective April 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2018-11, Leases (Topic 842) Targeted Improvements (“Topic 842”). In accordance with the guidance in Topic 842, the Company recognizes lease liabilities and corresponding right-of-use-assets for all leases with terms of greater than 12 months. Leases with a term of 12 months or less will be accounted for in a manner similar to the guidance for operating leases prior to the adoption of Topic ~~842. Refer to~~ 842 (seeNote 912 – Commitments and Contingencies for more ~~information.~~information).

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:

SCHEDULE OF USEFUL LIVES OF PROPERTY AND EQUIPMENT

Machinery and equipment			5 years
Computer equipment			3 years ~~years~~
Molds and tooling			5 years ~~years~~
Furniture and fixtures			5 years ~~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~~Business Combinations

~~Intangibles~~The Company accounts for business combinations using the acquisition method pursuant to FASB ASC Topic 805. This method requires, among other things, that results of operations of acquired companies are included in Qualigen’s financial results beginning on the respective acquisition dates, and that assets acquired and liabilities assumed are recognized at fair value as of the acquisition date. Intangible assets acquired in a business combination are recorded at fair value using a discounted cash flow model. The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, the cost of capital and terminal values from the perspective of a market participant. Each of these factors can significantly affect the value of the intangible asset. Any excess of the fair value of consideration transferred (the “Purchase Price”) over the fair values of the net assets acquired is recognized as goodwill. The fair value of assets acquired and liabilities assumed in certain cases may be subject to revision based on the final determination of fair value during a period of time not to exceed 12 months from the acquisition date. Legal costs, due diligence costs, business valuation costs and all other acquisition-related costs are expensed when incurred.

Goodwill

Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets acquired, when accounted for using the purchase method of accounting. Goodwill has an indefinite useful life and is not amortized but is reviewed for impairment annually and whenever events or changes in circumstances indicate that the carrying value of the goodwill may not be recoverable.

In testing for impairment, the fair value of the reporting unit is compared to the carrying value. If the net assets assigned to the reporting unit exceed the fair value of the reporting unit, an impairment loss equal to the difference would be recorded.

Intangible Assets

In Process R&D

Acquired in process R&D (IPR&D) represents the fair value assigned to the research and development assets that have not reached technological feasibility. The value assigned to IPR&D is determined by estimating the costs to develop the acquired technology into commercially viable products, estimating the resulting revenue from the projects, and discounting the net cash flow to present value. The revenue and cost projections used to value acquired IPR&D are, as applicable, reduced based on the probability of success of developing the new product. Additionally, projections consider relevant market sizes and growth factors, expected trends in technology and the nature and expected timing of new product introductions. The rates utilized to discount the net cash flow to its present value are commensurate with the stage of development of the project and uncertainties in the economic estimates used in the projections. Upon the acquisition of acquired IPR&D, an assessment is completed as to whether the acquisition constitutes an acquisition of the purchase of a single asset or a group of assets. Multiple factors are considered in this assessment, including the nature of the technology acquired, the presence or absence of separate cash flows, the development process and stage of completion, quantitative significance, and the Company’s rationale for entering into the transaction.

If a business is acquired, as defined under the applicable accounting standards, then the acquired IPR&D is capitalized as an intangible asset. If an asset or group of assets is acquired that do not meet the definition under the applicable accounting standards, then the acquired IPR&D is expensed on its acquisition date. Future costs to develop these assets are recorded to research and development expense in the Company’s condensed consolidated statements of operations and other comprehensive income (loss) as they are incurred.

IPR&D is evaluated for impairment annually using the same methodology as described above for calculating fair value. If the carrying value of the acquired IPR&D exceeds the fair value, then the intangible asset is written down to its fair value, with the resulting adjustment recorded as a charge to operations. Changes in estimates and assumptions used in determining the fair value of acquired IPR&D could result in an impairment.

Other Intangible Assets, Net

Other intangible assets consist of patent-related costs and costs for license agreements. Management reviews the carrying value of other intangible assets that are being amortized on an annual basis or sooner when there is evidence that events or changes in circumstances may indicate that impairment exists. The Company considers relevant cash flow and profitability information, including estimated future operating results, trends and other available information, in assessing whether the carrying value of intangible assets being amortized can be recovered.

If the Company determines that the carrying value of other intangible assets will not be recovered from the undiscounted future cash flows expected to result from the use and eventual disposition of the underlying assets, the Company considers the carrying value of such intangible assets as impaired and reduces them by a charge to operations in the amount of the impairment.

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 license 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 $154,000~~ ~~and $159,000~~ ~~at March 31, 2022 and December 31, 2021, respectively, are stated net of accumulated amortization of approximately $325,000~~ ~~and $320,000, respectively. Amortization of patents charged to operations for the three months ended March 31, 2022 and 2021 was approximately $5,000~~ ~~and $3,000, respectively. Total future estimated amortization of patent costs for the five succeeding years is approximately $14,000~~ ~~for the remaining nine months in 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 in-licenses of approximately $11,000~~ ~~and $12,000~~ ~~at March 31, 2022 and December 31, 2021, respectively, are stated net of accumulated amortization of approximately $408,000~~ ~~and $407,000, respectively. Amortization of licenses charged to operations for the three months ended March 31, 2022 and 2021 was approximately $2,000~~ ~~for each period. Total future estimated amortization of license costs is approximately $6,000~~ ~~for the remaining nine months in the year ending December 31, 2022, approximately $5,000~~ ~~for the year ending December 31, 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 condensed consolidated statements of ~~operations.~~operations and other comprehensive income (loss). 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~~(see Note 7)10 – Warrant Liabilities).

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 the Company has the ability to access at the measurement date;
	●	Level 2 - Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly, including inputs in markets that are not considered to be active; and
	●	Level 3 - Inputs that are unobservable.

Fair Value of Financial Instruments

Cash, accounts receivable, prepaids, accounts payable, and accrued liabilities are carried at 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 condensed 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 $~~72,000~~101,000 and $60,000, respectively, as of ~~March 31,~~June 30, 2022 and December 31, 2021 and are included in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheets. Warranty costs were approximately $~~53,000~~22,000 and $~~25,000~~20,000 for the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively, and approximately $41,000 and $41,000 for the six months ended June 30, 2022 and 2021, respectively, and are included in cost of product sales in the condensed consolidated statements of ~~operations.~~operations and other comprehensive loss.

Foreign Currency Translation

The functional currency for the Company is the U.S. dollar. The functional currency for NanoSynex, the Company’s newly acquired majority owned subsidiary, is the New Israeli Shekel (NIS). The financial statements of NanoSynex are translated into U.S. dollars using exchange rates in effect at each period end for assets and liabilities; using exchange rates in effect during the period for results of operations; and using historical exchange rates for certain equity accounts. The adjustment resulting from translating the financial statements of NanoSynex is reflected as a separate component of other comprehensive income (loss).

1112

Other comprehensive loss related to the effects of foreign currency translation adjustments attributable to NanoSynex was $65,540 at June 30, 2022.

Recent Accounting Pronouncements

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 condensed 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 condensed 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 have had a dramatic impact on businesses globally and our business as well. Our sales of diagnostic products fell significantly during 2020 and our net loss increased significantly, as deferral of patients’ non-emergency visits to physician offices, clinics and small hospitals sharply reduced demand for FastPack tests. Since then we have experienced some recovery in demand. 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 throughout the course of the pandemic to manage public health concerns and address the economic impacts of the pandemic, 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 unaudited condensed financial statements.

NOTE 2 — LIQUIDITY

The Company has incurred recurring losses from operations and has an accumulated deficit at ~~March 31,~~June 30, 2022. The Company expects to continue to incur losses subsequent to the condensed consolidated balance sheet date of ~~March 31,~~June 30, 2022. InIn December 2021, the Company raised $8.82million through a Securities Purchase Agreement with several institutional investors.

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. ~~Also, beyond such 12-month period,~~In order to fully execute our business plan, we will require significant additional financing for planned research and development activities, capital expenditures, clinical and pre-clinical testing and commercialization ~~activities of the Company’s products are expected to require significant additional financing. Additional~~activities. There can be no assurance that further financing ~~may not~~can be ~~available~~obtained on ~~acceptable~~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.

1213

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

As a condition to the NanoSynex closing, the Company agreed to provide NanoSynex with up to $10.4 million of future funding based on NanoSynex’s achievement of certain future development milestones and subject to other terms and conditions described in the Master Agreement for the Operational and Technological Funding of NanoSynex (the “Funding Agreement”) entered into with NanoSynex. These funding commitments are in the form of convertible promissory notes to be issued to the Company with a face value equal to the amount paid by the Company to NanoSynex upon satisfaction of the applicable performance milestone, bearing interest at the rate of 9% per annum on the principal balance from time to time outstanding under the particular promissory note, convertible at the option of the Company into additional shares of NanoSynex in order for the Company to maintain at least a 50.1% controlling ownership interest in NanoSynex, should NanoSynex issue additional shares. The principal of the convertible notes are due and payable upon the sooner to occur of: i) five years from the date of issuance of the particular promissory note; ii) the acquisition by any person or entity of all or substantially all of the share capital of NanoSynex, through share purchase, issuance or shares or merger of NanoSynex, or the purchase of all or substantially all of the assets of NanoSynex; or iii) the initial public offering of NanoSynex. The Company provided funding to NanoSynex of $1.5 million on July 5, 2022 pursuant to this agreement. The Company may terminate the Funding Agreement after October 29, 2022 upon 120 days’ notice.

NOTE 3 — ACQUISITION

Business Combination

The Company acquired a 52.8% voting equity interest in NanoSynex on May 26, 2022 (the “Acquisition Date”) through: (1) the purchase of 2,232,861 shares Preferred A-1 Stock of NanoSynex for 3,500,000 shares of the Company’s common stock and a prefunded warrant to purchase 3,314,641 shares of the Company’s common stock at a purchase price of $0.001 per share and, (2) the purchase of 381,786 shares of Series B preferred stock of NanoSynex from NanoSynex in exchange for $600,000.

The acquisition of the majority interest of NanoSynex was accounted for as a business combination using the acquisition method, in accordance with FASB ASC Topic 805. A summary of the consideration transferred and recorded fair value of assets acquired and liabilities assumed in the NanoSynex acquisition is as follows:

SCHEDULE OF CONSIDERATION TRANSFERRED

Consideration transferred, net of cash acquired
Cash paid for NanoSynex preferred stock:	$	600,000

Purchase of NanoSynex common Stock:
Price per share of Qualigen Stock on May 26, 2022	$	0.527

FMV of 3,500,000 shares of Qualigen stock issued to Alpha Capital Anstalt	$	1,844,500
FMV of 3,314,641 shares of Qualigen stock related to prefunded warrant issued to Alpha Capital Anstalt	$	1,746,816
Total consideration paid for NanoSynex common stock	$	3,591,316

FMV of consideration related to related to repricing of 70,478 shares of Alpha Capital/Qualigen warrants ^*	$	696

NanoSynex cash acquired		(735,354	)
Total consideration transferred, net of cash acquired	$	3,456,658

*	See disclosure under Noncompensatory Equity Classified Warrants regarding May 26, 2022 transaction in Note 14 – Stockholders Equity.

SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES

	Purchase Price Allocation
Accounts receivable	$	75,336
Property and equipment		120,942
In process R&D		5,700,000
Accounts payable		(4,588	)
Accrued expenses and other payables		(291,093	)
R&D grant liability		(1,362,264	)
Short term debt		(941,898	)
Deferred tax liability		(736,000	)
Noncontrolling interest assumed		(4,000,000	)
Identifiable net assets acquired		(1,439,565	)
Goodwill		4,896,223
Total consideration transferred, net of cash acquired	$	3,456,658

The purchase accounting adjustments are preliminary and subject to revision within the measurement period provided by ASC Topic 805. Qualigen transaction costs, which were immaterial, have been expensed as incurred and charged to the Company’s consolidated statements of operations and other comprehensive loss. There was no provision for reimbursement of transaction costs from Qualigen to NanoSynex.

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired as of the acquisition date. Goodwill represents the value of the future technology to be developed in excess of the identifiable assets as well as the operational synergies of the combined companies to be recognized. Goodwill has an indefinite useful life and is not amortized.

As a condition to the closing, the Company agreed to provide NanoSynex with up to $10.4 million of future funding based on NanoSynex’s achievement of certain future development milestones and subject to other terms and conditions described in the Funding Agreement entered into with NanoSynex (see Note 2 - Liquidity for further details regarding the terms and conditions of the Funding Agreement).

The Company’s condensed consolidated statement of operations and other comprehensive loss for the three and six months ended June 30, 2022 includes $8,722 of net loss associated with the results of operations of NanoSynex from the Acquisition Date to June 30, 2022.

The following pro forma information has been prepared as if the NanoSynex acquisition occurred on January 1, 2021. The following unaudited supplemental pro forma consolidated results do not purport to reflect what the combined Company’s results of operations would have been, nor do they project the future results of operations of the combined company. The unaudited supplemental pro forma consolidated results reflect the historical financial information of Qualigen and NanoSynex, adjusted to give effect to the NanoSynex acquisition as if it had occurred on January 1, 2021, as well as to record NanoSynex stock compensation expense and to record the net loss related to the noncontrolling interest, in accordance with generally accepted accounting principles.:

SCHEDULE OF PRO FORMA INFORMATION

	Consolidated Pro Forma Financial Results for the Six Months Ending
	June 30, 2022			June 30, 2021
Net revenues	$	2,152,563		$	3,017,430
Net loss	$	(8,722,302	)	$	(10,800,317	)

NOTE 4 — INVENTORY, NET

Inventory, net consisted of the following at ~~March 31,~~June 30, 2022 and December 31, 2021:

SCHEDULE OF INVENTORY

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Raw materials	$	819,434	$	823,315	$	808,815	$	823,315
Work in process		539,085		188,135		327,311		188,135
Finished goods		42,193		44,428		174,087		44,428
Total inventory	$	1,400,712	$	1,055,878	$	1,310,213	$	1,055,878

NOTE 45 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following at ~~March 31,~~June 30, 2022 and December 31, 2021:

SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

					June 30,		December 31,
	March 31, 2022		December 31, 2021		2022		2021
Prepaid insurance	$	818,216	$	1,197,726	$	1,810,413	$	1,197,726
Prepaid manufacturing expenses		32,087		50,371		54,741		67,410
Other prepaid expenses		247,519		131,799		63,229		114,760
Prepaid expenses	$	1,097,822	$	1,379,896
Prepaid expenses and other current assets					$	1,928,383	$	1,379,896

NOTE 56 — PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following at ~~March 31,~~June 30, 2022 and December 31, 2021:

SCHEDULE OF PROPERTY AND EQUIPMENT

							June 30,			December 31,
	March 31, 2022			December 31, 2021			2022			2021
Machinery and equipment	$	2,493,222		$	2,482,841		$	2,505,367		$	2,482,841
Computer equipment		384,361			345,117			500,488			345,117
Leasehold improvements		333,271			333,271			333,271			333,271
Molds and tooling		260,002			260,002			260,002			260,002
Furniture and fixtures		143,013			143,013			143,013			143,013
Equipment held for lease, net								148			296
Property and equipment, gross		3,613,869			3,564,244			3,742,289			3,564,540
Less Accumulated depreciation		(3,383,627	)		(3,360,324	)
Accumulated depreciation								(3,412,659	)		(3,360,324	)
Property and equipment, net	$	230,242		$	203,920		$	329,630		$	204,216

Depreciation expense relating to property and equipment was approximately $~~23,000~~24,000 and $~~15,000~~17,000 for the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively, and $48,000 and $32,000 for the six months ended June 30, 2022 and 2021, respectively.

1316

NOTE 7 — GOODWILL, IPR&D AND OTHER INTANGIBLES

SCHEDULE OF GOODWILL AND OTHER INTANGIBLE

		June 30,			December 31,
		2022			2021
	Estimated Useful Lives	Gross carrying amounts			Gross carrying amounts

Goodwill (Note 3)		$	4,896,223		$	—

Finite-lived intangible assets:
Developed-product-technology rights	8 - 17 years	$	479,103		$	479,103
Licensing rights	10 years		418,836			418,836
Less: Accumulated amortization			(739,493	)		(726,749	)
Total finite-lived intangible assets, net			158,446			171,190
Indefinite-lived intangible assets:
In-process research and development			5,700,000			—
Total intangible assets, net		$	5,858,446		$	171,190

The carrying value of the patents of approximately $150,000 and $159,000 at June 30, 2022 and December 31, 2021, respectively, are stated net of accumulated amortization of approximately $329,000 and $320,000, respectively. Amortization of patents charged to operations for the three months ended June 30, 2022 and 2021 was approximately $5,000 and $4,000 respectively, and for the six months ended June 30, 2022 and 2021 was approximately $9,000 and $7,000, respectively. Total future estimated amortization of patent costs for the five succeeding years is approximately $9,000 for the remaining six months in the year ending December 31, 2022, approximately $18,000 for year 2023, approximately $15,000 for year 2024, approximately $14,000 for years 2025, 2026 and 2027.

The carrying value of the in-licenses of approximately $9,000 and $12,000 at June 30, 2022 and December 31, 2021, respectively, are stated net of accumulated amortization of approximately $410,000 and $407,000, respectively, and amortization of licenses charged to operations for both the three months ended June 30, 2022 and 2021 was approximately $2,000. Amortization of licenses charged to operations for both the six months ended June 30, 2022 and 2021 was approximately $3,000. Total future estimated amortization of license costs is approximately $4,000 for the remaining six months in the year ending December 31, 2022, and approximately $5,000 for the year ending December 31, 2023.

NOTE 68 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following at ~~March 31,~~June 30, 2022 and December 31, 2021:

SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

					June 30,		December 31,
	March 31, 2022		December 31, 2021		2022		2021
Board compensation	$	17,500	$	17,500	$	26,500	$	17,500
Franchise, sales and use taxes		11,975		14,090		20,467		14,090
Income taxes		4,356		3,620		4,356		3,620
Payroll		105,877		682,036		101,557		682,036
Professional fees		265,421		225,308		139,551		225,308
Research and development		293,624		232,712		299,288		232,712
Royalties		8,880		10,152		13,900		10,152
Vacation		313,633		282,910		457,022		282,910
Warranty liability		71,974		60,281		101,103		60,281
Other		250,135		265,292		250,791		265,292
Accrued liabilities	$	1,343,375	$	1,793,901	$	1,414,535	$	1,793,901

NOTE 9 – SHORT TERM DEBT-RELATED PARTY

NanoSynex has four separate Notes Payable (‘the Notes”) outstanding to Alpha Capital, dated between March 26, 2020 and September 2, 2021, aggregating to a total principal outstanding balance of $905,000, and aggregate accrued interest of $34,919 for a total outstanding balance of $939,919 as of June 30, 2022. The Notes all accrue interest at 2.62% per annum, accrued daily and provide that the full amount of principal and interest under each Note shall be due immediately prior to a Liquidation Event (the Maturity Date) unless due earlier in accordance with the terms of the Notes. “Liquidation Event” means either i) the merger or consolidation of NanoSynex into any other entity, other than one in control or under control of NanoSynex or NanoSynex’s majority shareholder; ii) a transaction or series of transactions resulting in the transfer of all or substantially all of NanoSynex’s assets or issued and outstanding share capital (other than to a company under the control of NanoSynex or NanoSynex’s majority shareholders; or iii) an underwritten public offering by NanoSynex of its ordinary shares. Notwithstanding the above, if NanoSynex receives subsequent debt, convertible debt, or equity funding with gross proceeds of USD $3,000,000 or more, then these Notes shall be due and payable upon the actual receipt of such funding.

NOTE 710 – 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 approximately $0.72 per share, subject to adjustment. As of ~~March 31,~~June 30, 2022, the warrants received in exchange for the Series C Warrants have remaining terms ranging from ~~1.7~~1.4 to ~~2.2~~1.9 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. On April 25, 2022 the warrants were repriced from $0.7195 to $0.60 with an additional 493,187 ratchet shares issued, and on May 26, 2022 the warrants were repriced from $0.60 to $0.5136 with an additional 499,520 ratchet shares issued. As a result of these repricings, 2,476,251 warrants were forfeited and 3,468,958 warrants were reissued at the current $0.5136 exercise price.

The following table summarizes the activity in the Common Stock Warrants (received in exchange for the Series C Warrants) for the ~~three~~six months ended ~~March 31,~~June 30, 2022:

SCHEDULE OF WARRANTS ACTIVITY

	Common Stock Warrants (received in exchange for the Series C Warrants)									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)		Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2021		2,481,614		$	0.72				2.00		2,481,614		$	0.72				2.00
Exercised		(5,363	)		0.72						(5,363	)		0.72
Forfeited		—			—						(2,476,251	)		0.72
Expired		—			—						—			—
Granted		—			—						3,468,958			0.51
Total outstanding – March 31, 2022		2,476,251		$	0.72
Total outstanding – June 30, 2022											3,468,958		$	0.51
Exercisable		2,476,251		$	0.72	$	0.72		1.76		3,468,958		$	0.51	$	0.51		1.51

The following table summarizes the activity in the Common Stock Warrants (received in exchange for the Series C Warrants) activity for the ~~three~~six months ended ~~March 31,~~June 30, 2021:

	Common Stock Warrants (received in exchange for the Series C Warrants)									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)		Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding –December 31, 2020		3,378,596		$	0.72						3,378,596		$	0.72
Exercised		(473,608	)		0.72						(542,737	)		0.72
Forfeited		(36,097	)		0.72						(36,097	)		0.72
Expired		—			—						—			—
Granted		—			—						—			—
Total outstanding – March 31, 2021		2,868,891		$	0.72
Total outstanding – June 30, 2021											2,799,762		$	0.72
Exercisable		2,868,891		$	0.72	$	0.72		2.75		2,799,762		$	0.72	$	0.72		2.5

The following table presents the Company’s fair value hierarchy for its warrant liabilities and exercises (all of which arise under the warrants received in exchange for the Series C Warrants) measured at fair value on a recurring basis using Level 3 inputs as of ~~March 31,~~June 30, 2022:

SCHEDULE OF FAIR VALUE HIERARCHY FOR WARRANT LIABILITIES

	Quoted										Quoted
	Market		Significant								Market		Significant
	Prices for		Other		Significant						Prices for		Other		Significant
	Identical		Observable		Unobservable						Identical		Observable		Unobservable
Common Stock Warrant	Assets		Inputs		Inputs
liabilities	(Level 1)		(Level 2)		(Level 3)			Total
											Assets		Inputs		Inputs
Common Stock Warrant liabilities											(Level 1)		(Level 2)		(Level 3)			Total
Balance as of December 31, 2021	$	—	$	—	$	1,686,200		$	1,686,200		$	—	$	—	$	1,686,200		$	1,686,200
Exercises		—		—		(858	)		(858	)		—		—		(858	)		(858	)
Gain on change in fair value of warrant liabilities		—		—		(683,242	)		(683,242	)		—		—		(698,042	)		(698,042	)
Balance as of March 31, 2022	$	—	$	—	$	1,002,100		$	1,002,100
Balance as of June 30, 2022											$	—	$	—	$	987,300		$	987,300

There were no transfers of financial assets or liabilities between category levels for the three and six months ended ~~March 31,~~June 30, 2022.

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 table shows the range of assumptions used in estimating the fair value of warrant liabilities as of ~~March 31,~~June 30, 2022 and 2021:

SCHEDULE OF ASSUMPTIONS OF WARRANT LIABILITIES

	March 31, 2022						March 31, 2021						June 30, 2022						June 30, 2021
	Range			Weighted Average			Range			Weighted Average			Range			Weighted Average			Range			Weighted Average
Risk-free interest rate		2.03% — 2.29	%		2.08	%		0.28% — 0.42	%		0.30	%		2.80% — 2.87	%		2.82	%		0.34% — 0.46	%		0.103	%
Expected volatility (peer group)		88% — 101	%		90.4	%		81% — 84	%		83.52	%		74% — 96	%		78.6	%		82% — 83	%		82.83	%
Term of warrants (in years)		1.65 — 2.24			1.76			2.65 — 3.24			2.75			1.39 — 1.99			1.51			2.41 — 2.99			2.5
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%

NOTE 811 — LOSS PER SHARE

Basic loss per share (“EPS”) is computed by dividing net 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:

SCHEDULE OF EARNINGS PER SHARE BASIC AND DILUTED


	For the Three Months Ended March 31,			For the Three Months Ended March 31,			For the Three Months Ended June 30,			For the Three Months Ended June 30,			For the Six Months Ended June 30,			For the Six Months Ended June 30,
	2022			2021			2022			2021			2022			2021

Net loss used for basic earnings per share	$	(4,319,787	)	$	(5,242,719	)	$	(4,123,404	)	$	(5,398,077	)	$	(8,443,191	)	$	(10,640,796	)

Basic weighted-average common shares outstanding		35,294,051			28,165,796			36,680,156			28,850,451			35,990,933			28,510,014
Dilutive potential shares issuable from stock options and warrants		—			—			—		��	—			—			—
Diluted weighted-average common shares outstanding		35,294,051			28,165,796			36,680,156			28,850,451			35,990,933			28,510,014

The following potentially dilutive securities have been excluded from diluted net loss per share as of ~~March 31,~~June 30, 2022 and 2021 because their effect would be antidilutive:

SCHEDULE OF DILUTIVE SECURITIES EXCLUDED FROM DILUTED NET LOSS PER SHARE

	For the Three Months Ended March 31,		For the Three Months Ended March 31,		As of June 30,		As of June 30,
	2022		2021		2022		2021
Shares of common stock subject to outstanding options		4,864,023		4,033,856		4,767,834		4,133,856
Shares of common stock subject to outstanding warrants		9,816,032		9,609,316		14,123,380		9,540,187
Shares of common stock subject to conversion of Series Alpha Convertible Preferred Stock		—		243,418		—		243,418
Total common stock equivalents		14,680,055		13,886,590		18,891,214		13,917,461

NOTE 912 — 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 ~~March 31,~~June 30, 2022, including the changes during the periods:

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

	Operating lease right-of-use assets			Operating lease right-of-use assets
Net right-of-use assets at December 31, 2021	$	1,645,568		$	1,645,568
Less amortization of operating lease right-of-use assets		(54,496	)		(109,804	)
Operating lease right-of-use assets at March 31, 2022	$	1,591,072
Operating lease right-of-use assets at June 30, 2022				$	1,535,764

	Operating lease liabilities			Operating lease liabilities
Lease liabilities at December 31, 2021	$	1,676,655		$	1,676,655
Less principal payments on operating lease liabilities		(36,297	)		(73,408	)
Lease liabilities at March 31, 2022		1,640,358
Lease liabilities at June 30, 2022					1,603,247
Less non-current portion		(1,484,833	)		(1,425,808	)
Current portion at March 31, 2022	$	155,525
Current portion at June 30, 2022				$	177,439

As of ~~March 31,~~June 30, 2022, the Company’s operating leases have a weighted-average remaining lease term of ~~5.6~~ 5.4years and a weighted-average discount rate of 8.9%.

1620

As of ~~March 31,~~June 30, 2022, future minimum payments during the next five fiscal years and thereafter are as follows:

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

Year Ending December 31,	Amount			Amount
2022 (nine months)	$	203,857
2022 (six months)				$	277,192
2023		368,341			368,341
2024		379,392			379,392
2025		390,773			390,773
2026		402,497			402,497
2027		379,165			379,165
Total		2,124,025			2,197,360
Less present value discount		(483,667	)		(594,113	)
Operating lease liabilities	$	1,640,358		$	1,603,247

Total lease expense was approximately $~~114,000~~119,000 and $86,000 for the three months ended ~~March 31,~~June 30, 2022 and 2021, ~~respectively.~~respectively, and approximately $233,000 and $172,000, respectively, for the six months ended June 30, 2022 and 2021. Lease expense was recorded in cost of product sales, general and administrative expenses, research and development and sales and marketing expenses.

Termination of Sekisui Distribution Agreement

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 expired on March 31, 2022. Subsequent to the expiration of the agreement, ~~in the second quarter of 2022~~ the Company ~~will have~~has a commitment to purchase leased FastPack rental systems back from Sekisui at Sekisui’s net book value, the amount of which has not yet been determined.

NanoSynex Funding Commitment

As a condition to the closing, the Company agreed to provide NanoSynex with up to $10.4 million of future funding based on NanoSynex’s achievement of certain future development milestones and subject to other terms and conditions described in the Funding Agreement entered into with NanoSynex (see Note 2 – Liquidity for further details regarding the terms and conditions of the Funding Agreement).

Litigation and Other Legal Proceedings

On November 9, 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 alleged 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 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 settled the litigation on April 5, 2022 in the amount of $96,558~~. This~~, at which time the amount ~~is included in accounts payable and accrued expenses on the Company’s March 31, 2022 condensed consolidated balance sheet.~~was paid.

NOTE 1013 — RESEARCH AND LICENSE AGREEMENTS

The University of Louisville Research Foundation

Between June 2018 and April 2022, 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 $50,000convertible promissory note in payment of an upfront license fee, which was subsequently converted into the Company’s common stock, and the Company agreed to reimburse ULRF for sponsored research expenses of up to approximately $805,000and 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 $100,000to $5,000,000upon the achievement of certain regulatory and commercial ~~milestones.~~milestones. Milestone payments for the first therapeutic indication would be $100,000for first dosing in a Phase 1 clinical trial, $200,000for first dosing in a Phase 2 clinical trial, $350,000for first dosing in a Phase 3 clinical trial, $500,000for regulatory marketing approval and $5,000,000upon achieving a cumulative $500,000,000of Licensed Product sales; the Company would also pay another $500,000milestone 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 $10,000to $50,000) for such year.

1721

Sponsored research expenses related to these agreements for the three months ended ~~March 31,~~June 30, 2022 and 2021 were approximately $~~87,000~~ 77,000and $~~62,000~~89,000, respectively, and for the six months ended June 30, 2022 and 2021 were approximately $164,000 and $152,000, respectively, and these amounts are recorded in research and development expenses in the condensed consolidated statements of ~~operations.~~operations and other comprehensive loss. License costs were approximately $~~55,000~~14,000 and $~~36,000~~17,000 related to these agreements for the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively, and approximately $69,000 and $53,000 related to these agreements for the six months ended June 30, 2022 and 2021, respectively, and are included in research and development expenses in the condensed consolidated statements of ~~operations.~~operations and other comprehensive loss.

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 agreed to reimburse ULRF for sponsored research expenses of up to $693,000for this program. In February 2021 and March 2022, the Company extended the term of this agreement until January 2023 and increased the amount that the Company will reimburse ULRF for sponsored research expenses to approximately $2.7million. 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~~took over development, regulatory approval and commercialization of the candidates from ULRF and is responsible for maintenance of the related intellectual property portfolio. In return, ULRF received approximately $112,000 for an upfront license fee and reimbursement of prior patent costs. In addition, the Company has agreed to pay ULRF (i) royalties, on patent-covered net sales associated with the commercialization, of 4% (on net sales up to a cumulative $250,000,000) or 5% (on net sales above a cumulative $250,000,000), until expiration of the licensed patent, and 2.5% (on net sales for any sales not covered by Licensed Patents), (ii) 30% to 50% of any non-royalty sublicensee income received (50% for sublicenses granted in the first two years of the ULRF license agreement, 40% for sublicenses granted in the third or fourth years of the ULRF license agreement, and 30% for sublicenses granted in the fifth year of the ULRF license agreement or thereafter), (iii) reimbursements for ongoing costs associated with the preparation, filing, prosecution and maintenance of licensed patents, incurred prior to July 2020, and (iv) payments ranging from $50,000to $5,000,000upon the achievement of certain regulatory and commercial ~~milestones.~~milestones. Milestone payments for the first therapeutic indication would be $50,000for first dosing in a Phase 1 clinical trial, $100,000for first dosing in a Phase 2 clinical trial, $150,000for first dosing in a Phase 3 clinical trial, $300,000for regulatory marketing approval and $5,000,000upon achieving a cumulative $500,000,000of 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 $20,000to $100,000) for such year.

Sponsored research expenses related to these agreements for the three months ended ~~March 31,~~June 30, 2022 and 2021 were approximately $~~184,000~~220,000 and $~~107,000~~99,000, respectively, and for the six months ended June 30, 2022 and 2021 were approximately $405,000 and $206,000, respectively, and are recorded in research and development expenses in the condensed consolidated statements of ~~operations.~~operations and other comprehensive loss. License costs related to these agreements for the three months ended ~~March 31,~~June 30, 2022 and 2021 were approximately $~~2,000~~16,000 and $~~46,000~~0, respectively, and for the six months ended June 30, 2022 and 2021 were approximately $18,000 and $40,000, respectively, and are included in research and development expenses in the condensed consolidated statements of ~~operations.~~operations and other comprehensive loss.

In June 2020, the Company entered into an exclusive license agreement with ULRF for its intellectual property in the use of QN-165 as a treatment for COVID-19. Under the agreement, the Company ~~will take~~took over development, regulatory approval and commercialization of the compound (for such use) from ULRF and is responsible for maintenance of the related intellectual property portfolio. In return, ULRF received approximately $24,000for 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 $430,000in research which satisfied this requirement. This sponsored research agreement expired in November 2021.

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.~~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 three months ended ~~March 31,~~June 30, 2022 and 2021 were $0 and approximately $~~69,000~~25,000, respectively, and for the six months ended June 30, 2022 and 2021 were $0 and $94,000, respectively, and are recorded in research and development expenses in the condensed consolidated statements of ~~operations. There were~~ 0 ~~license~~operations and other comprehensive loss. License costs related to these agreements for the three months ended ~~March 31,~~June 30, 2022 and ~~2021.~~2021 were $0 and $16,000, respectively, and for the six months ended June 30, 2022 and 2021 were $0 and $16,000, respectively.

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~~)$3,000,000) or 1% (if not patent-covered, but only on net sales above a cumulative $~~3,000,000~~)$3,000,000), until the 15th anniversary of the ACT license agreement and (ii) milestone payments of $~~100,000~~$100,000 for the Company raising a cumulative total of $~~2,000,000~~$2,000,000 in new equity financing after the date of the ACT license agreement, $~~100,000~~$100,000 upon any first QN-165-based licensed product receiving the CE Mark or similar FDA status, and $~~500,000~~$500,000 upon cumulative worldwide QN-165-based licensed product net sales reaching $~~3,000,000~~$3,000,000.. For the three months ended ~~March 31,~~June 30, 2022 and 2021, there were 0license costs of, and for the six months ended June 30, 2022 and 2021, there were $0 and approximately $2,000, respectively, related to this agreement which are included in research and development expenses in the condensed consolidated statements of ~~operations.~~operations and other comprehensive loss.

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 three and six months ended ~~March 31,~~June 30, 2022 and 2021, there was 0 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”).~~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 expired on March 31, 2022. ~~The agreement contains a right of first refusal for Sekisui against any potential acquisition of the Company which expired on March 31, 2022.~~

~~There~~Under the terms of the arrangement, there were product sales to Sekisui of $0 and approximately $~~403,000~~ ~~and $1,017,000~~701,000, respectively, for the three months ended ~~March 31,~~June 30, 2022 and 2021, ~~related to this agreement.~~and approximately $403,000 and $1.72 million, respectively, for the six months ended June 30, 2022 and 2021.

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.

The Company will receive low- to mid-single-digit royalties on any future new-generations and current-generations product sales by Yi Xin. The Company recognized $0 and approximately $38,000 in product sales and $0 and approximately $479,000 in license revenue included in the statement of operations for the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively. 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). After March 31, 2022, Yi Xin has the right to sell Yi Xin-manufactured versions of existing FastPack 1.0, IP and PRO product lines worldwide (other than in the United States and other than to or toward current non-U.S. customers of those products), as well as 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. In the Technology Transfer Agreement, the Company also confirmed that it would not, after March 31, 2022, seek new FastPack customers outside the United States.

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, for potential clinical trials in 2021.

Research and development expenses related to this agreement for the three months ended ~~March 31,~~June 30, 2022 and 2021 were $0 and $1.9 million, respectively, and for the six months ended June 30, 2022 and 2021 were approximately $9,000 and $~~1.1~~ 3.1million, respectively, and are recorded in research and development expenses in the condensed consolidated statements of ~~operations.~~operations and other comprehensive loss.

UCL Business Limited

In January 2022, the Company entered into a License Agreement with UCL Business Limited to obtain an exclusive worldwide in-license of a genomic quadruplex (G4)-selective transcription inhibitor drug development program which had been developed at University College London, including lead and back-up compounds, preclinical data and a patent estate. (UCL Business Limited is the commercialization company for University College London.) The program’s lead compound is now being developed at Qualigen under the name QN-302 as a candidate for treatment for pancreatic ductal adenocarcinoma (PDAC), which represents the vast majority of pancreatic cancers. The License Agreement ~~requires~~required a $150,000upfront payment, reimbursement of past patent prosecution expenses (approximately $160,000), and (if and when applicable) tiered royalty payments in the low to mid-single digits, clinical/regulatory/sales milestone payments and a percentage of any non-royalty sublicensing consideration paid to Qualigen.

For both the three months ended ~~March 31,~~June 30, 2022 and 2021, there were license costs of $0, and for the six months ended June 30, 2022 and 2021 there were license costs of approximately $310,000 and $0, ~~respectively,~~respectively, related to this agreement which are included in research and development expenses in the condensed consolidated statements of ~~operations.~~operations and other comprehensive loss.

NOTE 1114 — STOCKHOLDERS’ EQUITY

As of ~~March 31,~~June 30, 2022 and December 31, 2021, the Company had two classes of authorized capital stock: common stock and Series Alpha 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,~~June 30, 2022 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.

At ~~March 31,~~June 30, 2022, the Company has reserved ~~14,680,055~~18,891,214 shares of authorized but unissued common stock for possible future issuance.

At ~~March 31,~~June 30, 2022, shares were reserved in connection with the following:

SCHEDULE OF RESERVED SHARES


Exercise of issued and future grants of stock options			~~4,864,023~~4,767,834
Exercise of stock warrants			~~9,816,032~~14,123,380
Total			~~14,680,055~~18,891,214

Series Alpha Convertible Preferred Stock

As of ~~March 31,~~June 30, 2022, and December 31, 2021, there were 0 shares of Series Alpha convertible preferred stock outstanding.

Stock Options and Warrants

The Company recognizes all compensatory share-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~~non-statutory common stock options and other types of awards to qualified employees, officers, directors, consultants and other service providers. At ~~March 31,~~June 30, 2022 and December 31, 2021 there were ~~4,770,167~~ 4,767,834and 4,748,000outstanding options, respectively, under the 2020 Plan and on ~~those~~such dates there were ~~2,786,990~~ 2,789,323and 2,809,157~~unused~~ shares reserved under the 2020 Plan, ~~shares available,~~ respectively, for future grant. The shares available for future grant 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.

The following represents a summary of the options granted (under the 2020 Plan and otherwise) to employees and non-employee service providers that are outstanding at ~~March 31,~~June 30, 2022, and changes during the ~~three-month~~six-month period then ended:

SCHEDULE OF STOCK OPTION ACTIVITY

	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)		Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2021		4,841,856		$	6.07	$	1.24 — $1,465.75		8.52		4,841,856		$	6.07	$	1.24 — $1,465.75		8.52
Granted		25,000			1.05		1.05		9.79		25,000			1.05		1.05		9.54
Expired		—			—		—		—		(93,856	)		93.59		5.75 - 1,465.75		—
Forfeited		(2,833	)		3.00		1.24 - 4.97		—		(5,166	)		3.51		1.24 - 4.97		—
Total outstanding – March 31, 2022		4,864,023		$	6.05	$	1.05 — $1,465.75		8.28
Total outstanding – June 30, 2022											4,767,834		$	4.33	$	1.05 — $5.13		8.19
Exercisable (vested)		1,417,195		$	10.83	$	3.29 — $1,465.75		7.69		2,643,665		$	4.84	$	1.24 — $5.13		8.00
Non-Exercisable (non-vested)		3,446,828		$	4.08	$	1.05 — $5.13		8.57		2,124,169		$	3.68	$	1.05 — $5.13		8.48

There was approximately $2.6 and $~~1.3~~2.5 million of compensation cost related to outstanding options for ~~each of~~ the ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~2021.~~2021 respectively. As of ~~March 31,~~June 30, 2022, there was approximately $~~6.9~~5.6 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 ~~1.35~~1.1 years.

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 27,000 3.29 3.29 9.91
Expired — — — —
Forfeited (4,500 ) 3.68 3.52 — 4.97 9.78
Total outstanding – March 31, 2021 4,033,856 $ 7.03 $ 3.29 - $1,465.75 9.04
Exercisable (vested) 108,856 $ 81.38 $ 4.97— $1,465.75 2.26
Non-Exercisable (non-vested) 3,925,000 $ 4.96 $ 3.29 — $5.13 9.23

The following represents a summary of the options granted (under the 2020 Plan and otherwise) to employees and non-employee service providers that are outstanding at June 30, 2021, and changes during the six-month period 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		127,000			2.12		1.80 — 3.29		9.83
Expired		—			—		—		—
Forfeited		(4,500	)		3.68		3.52 — 4.97		—
Total outstanding – June 30, 2021		4,133,856		$	6.90	$	1.80 - $1,465.75		8.82
Exercisable (vested)		1,296,860		$	11.50	$	4.97— $1,465.75		8.36
Non-Exercisable (non-vested)		2,836,996		$	4.80	$	1.80 — $5.13		9.04

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, no less than 110% of the fair market value per share on the date of grant; or (B) granted to any other employee, 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, no less than 100% of the fair market value per share on the date of ~~grant.~~grant. The options awarded under the 2020 Plan will vest as determined by the Board of Directors but will not exceed a ten-year period. The weighted average grant date fair value per share of options granted during the ~~three~~six months ended ~~March 31,~~June 30, 2022 was $0.84.

Fair Value of Equity Awards

The Company utilizes the Black-Scholes option pricing model to value awards under its Plans. 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 Securities and Exchange Commission. 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:

SCHEDULE OF ASSUMPTIONS USED IN BLACK-SCHOLES OPTION-PRICING METHOD

	2022			2021
	For the three months ended March 31,						For the Six Months Ended June 30,
	2022			2021			2022			2021
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%
Expected stock-price volatility		102	%		102	%		102	%		102	%
Risk-free interest rate		1.58% — 1.67	%		0.84% — 1.04	%		1.58% — 1.67	%		0.84% — 1.81	%
Expected average term of options (in years)		6.00			6.00			6.00			6.00
Stock price	$	1.05		$	3.29		$	1.05		$	2.12

The Company recorded share-based compensation expense and classified it in the ~~unaudited~~ condensed consolidated statements of operations and other comprehensive loss as follows:

SCHEDULE OF SHARE-BASED COMPENSATION EXPENSE

	2022		2021		2022		2021
	For the three months ended March 31,				For the Six Months Ended June 30,
	2022		2021		2022		2021
General and administrative	$	1,113,384	$	1,092,228	$	2,329,418	$	2,201,499
Research and development		153,782		169,895		361,029		347,550
Total	$	1,267,166	$	1,262,123	$	2,690,447	$	2,549,049

Equity Classified Compensatory Warrants

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 onin the Company’s condensed consolidated statements of ~~operations.~~operations and other comprehensive loss.

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 668,024 shares of Company common stock at a weighted average exercise price of $2.34 per share. These are to be differentiated from the Series C Warrants described in Note 7.10 – Warrant Liabilities.

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 $1.32per 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~~condensed consolidated statements of ~~Operations. In~~operations and other comprehensive loss. On April 25, 2022,600,000 warrants were repriced from $1.32 to $0.60 and extended from June 3, 2023 to September 14, 2023. The increase in fair value of $67,370 using a Monte Carlo pricing model for the modification of these warrants was charged to general and administrative expenses in the Company’s condensed consolidated statements of operations and other comprehensive loss. On April 25, 2022 and May 26, 2022 an additional 676,194 warrants were ~~subsequently modified (see Note 13)~~repriced from $1.11 to $0.5136. The increase in fair value of $31,010 using a Monte Carlo pricing model for the modification of these warrants was charged to additional paid-in capital and did not result in expense on the Company’s condensed consolidated statements of operations and other comprehensive loss.

No compensatory warrants were issued during the ~~three~~six months ended ~~March 31,~~June 30, 2022.

The following table summarizes the activity in the common stock equity classified compensatory warrants for the ~~three~~six months ended ~~March 31,~~June 30, 2022:

SCHEDULE OF WARRANT ACTIVITY

Common Stock
Shares
Weighted– Average
Exercise
Price

Range of
Exercise Price

Weighted–
Average
Remaining
Life (Years)

Total outstanding – December 31, 2021 1,790,648 $ 1.52 $ 1.11 — $2.54 2.64
Granted to advisor and its designees — —
Exercised — —
Expired — —
Forfeited — —
Total outstanding – March 31, 2022 1,790,648 $ 1.52 $ 1.11 — 2.54 2.39
Exercisable 1,790,648 $ 1.52 $ 1.11 — $2.54 2.39
Non-Exercisable — $ — $ — —

	Common Stock
	Shares		Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2021		1,790,648	$	1.52	$	1.11 — $2.54		2.64
Granted to advisor and its designees		—		—
Exercised		—		—
Expired		—		—
Forfeited		—		—
Total outstanding – June 30, 2022		1,790,648	$	1.06	$	0.5136 — 2.54		2.23
Exercisable		1,790,648	$	1.06	$	0.5136 — $2.54		2.23
Non-Exercisable		—	$	—	$	—		—

The following table summarizes the activity in the common stock equity classified compensatory warrants for the ~~three~~six months ended ~~March 31,~~June 30, 2021:

	Common Stock									Common Stock
	Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)		Shares			Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2020		1,294,217		$	1.66						1,294,217		$	1.66
Granted		—			—						—			—
Exercised		(38,390	)		2.09						(38,390	)		2.09
Expired		—			—						—			—
Forfeited		(65,179	)		2.07						(65,179	)		2.07
Total outstanding – March 31, 2021		1,190,648		$	1.61
Total outstanding – June 30, 2021											1,190,648		$	1.62
Exercisable		1,187,052		$	1.60	$	1.11 — $2.54		4.00		1,187,052		$	1.62	$	1.11 — $2.54		3.75
Non-Exercisable		3,596		$	2.54	$	2.54		5.48		3,596		$	2.54	$	2.54		5.23

There were no$67,370 in compensation costs related to outstanding equity classified compensatory warrants for the ~~three~~six months ended ~~March 31,~~June 30, 2022 orand $0 for the ~~three~~six months ended ~~March 31,~~June 30, 2021. ~~As of March 31, 2022 and 2021, there were~~ 0~~unrecognized compensation costs related to nonvested equity classified compensatory warrants.~~

Noncompensatory Equity Classified Warrants

In May 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 (of which warrants for 200,000 shares were subsequently exercised in December 2020). In July 2020 the Company issued noncompensatory equity classified warrants to such investor for the purchase of 780,198 shares of Company common stock at an exercise price of $0.001 per share (which were subsequently exercised in July 2020), and 1,920,678 shares of Company common stock at an exercise price of $5.25 per share. 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~~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 (which were exercised in February 2021) and 2,191,010shares of Company common stock at an exercise price of $4.07 per share. NoIn May 2022 the Company issued noncompensatory equity classified warrants ~~were issued during~~to such investor for the ~~three months ended March 31, 2022.~~purchase of 3,314,641 shares of Company common stock at an exercise price of $0.001 per share.

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~~condensed consolidated statements of ~~Operations.~~operations and other comprehensive loss. During the period ended June 30, 2022 pre-funded warrants to purchase 3,314,641 shares of the Company’s common stock at an exercise price of $0.001 per share with no expiration date were issued.

In conjunction with the NanoSynex acquisition, on April 25, 2022 the exercise price of 70,478 outstanding warrants at $1.11 was modified to an exercise price of $0.60. The increase in fair value of $2,533, using a Monte Carlo pricing model for the modification of these warrants, was charged to additional paid-in capital and did not result in expense on the Company’s condensed consolidated statements of operations and other comprehensive loss. On May 26, 2022 the exercise price of these warrants was modified again to $0.5136, and the increase in fair value of $696, using a Monte Carlo pricing model for the modification of these warrants, was included in consideration transferred in the NanoSynex acquisition (see Note 3 - Acquisitions).

Weighted average remaining life below was calculated excluding the 3,314,641 pre-funded warrants as they have no expiration date.

The following table summarizes the noncompensatory equity classified warrant activity for the ~~three~~six months ended ~~March 31,~~June 30, 2022:

SCHEDULE OF WARRANT ACTIVITY

	Common Stock								Common Stock
	Shares		Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)		Shares		Weighted– Average Exercise Price		Range of Exercise Price		Weighted– Average Remaining Life (Years)
Total outstanding – December 31, 2021		5,549,137	$	2.01						5,549,137	$	2.01
Legacy Ritter warrants		—		—
Granted		—		—						3,314,641		0.001		0.001
Exercised		—		—						—		—
Expired		—		—						—		—
Forfeited		—		—						—		—
Total outstanding – March 31, 2022		5,549,137	$	2.01
Total outstanding – June 30, 2022										8,863,778		1.26
Exercisable		5,549,137	$	2.01	$	1.11 — $3.77		1.07		8,863,778	$	1.26	$	0.001 — $3.77		0.82
Non-Exercisable		—	$	—	$	—		—		—	$	—	$	—		—

NOTE 1215 - QUARTERLY FINANCIAL DATA (UNAUDITED)

As disclosed in the 2021 Annual Report, ~~our~~the Company’s 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~~the Company’s exercised liability classified warrants had been inadvertently excluded from reclassification into shareholders’ equity. All financial information contained in the accompanying notes to these condensed consolidated financial statements has been revised to reflect the correction of this error as shown in the table below.

SCHEDULE OF ERROR CORRECTIONS AND PRIOR PERIOD ADJUSTMENTS

	As reported			Corrected			As reported			Corrected			As reported			Corrected
	For the Quarter Ended March 31, 2021						For the Quarter Ended June 30, 2021						For the Six Months Ended June 30, 2021
	As reported			Corrected			As reported			Corrected			As reported			Corrected
Gain on change in fair value of warrant liabilities	$	(2,122,900	)	$	(552,808	)	$	(2,075,100	)	$	(1,982,256	)	$	(4,198,000	)	$	(2,535,064	)
Net loss	$	(3,672,627	)	$	(5,242,719	)	$	(5,305,233	)	$	(5,398,077	)	$	(8,977,860	)	$	(10,640,796	)
Net loss per common share	$	(0.13	)	$	(0.19	)	$	(0.18	)	$	(0.19	)	$	(0.31	)	$	(0.37	)

NOTE 1316 — SUBSEQUENT EVENTS

~~On April 25, 2022,~~In conjunction with the Company’s Funding Agreement with NanoSynex, the Company ~~amended~~provided $1.5 million in funding to NanoSynex on July 5, 2022. Repayment terms under the ~~terms of outstanding warrants to purchase~~ ~~600,000~~ ~~shares of the Company’s common stock previously issued to GreenBlock, LLC on December 3, 2021 (300,000~~ ~~of which had been transferred to an individual affiliated with GreenBlock, LLC), to reduce the exercise price of the warrants to $0.60~~ ~~per share and extend the expiration date to September 14, 2023.~~Funding Agreement are described in Note 2 - Liquidity.

On April 29, 2022, the Company entered into a Series B Preferred Share Purchase Agreement (the “Series B Purchase Agreement”) with NanoSynex Ltd., a company established under the laws of the State of Israel (“NanoSynex”),Management has evaluated subsequent events pursuant to ~~which it will acquire~~ ~~381,786~~ ~~newly authorized Series B preferred shares~~the requirements of ~~NanoSynex, nominal value NIS~~ ~~0.01~~ ~~per share, for a total purchase price of $600,000, subject to certain closing conditions described~~ASC Topic 855, Subsequent Events, from the balance sheet date through August 15, 2022 and has determined that there are no material subsequent events that require disclosure in ~~the Series B Purchase Agreement. As a condition to the Series B Purchase Agreement, the Company has agreed to, among~~these financial statements, other things, enter into a Master Agreement for the Operational and Technological Funding of NanoSynex (the “Funding Agreement”), pursuant to which the Company will agree to fund NanoSynex up to an aggregate of approximately $~~10.4~~ million over the following three years, subject to NanoSynex’s achievement of certain performance milestones specified in the Funding Agreement and the satisfaction of other terms and conditions described in the Funding Agreement.than as disclosed above.

~~Also on April 29, 2022, the Company entered into a Share Purchase Agreement (the “Series A-1 Purchase Agreement”) with Alpha Capital Anstalt (“Alpha”), pursuant to which it will acquire~~ ~~2,232,861~~ ~~Series A-1 preferred shares, nominal value NIS~~ ~~0.01~~ ~~each, of NanoSynex from Alpha in exchange for~~ ~~3,500,000~~ ~~shares of Company common stock and pre-funded warrants to purchase~~ ~~2,432,203~~ ~~shares of Company common stock, subject to certain closing conditions described in the Series A-1 Purchase Agreement.~~

~~Subject to the satisfaction of the applicable closing conditions set forth in the Series B Purchase Agreement and Series A-1 Purchase Agreement, the Company will acquire an approximate~~ ~~53% interest in the voting securitiesof NanoSynex. The Company believes the NanoSynex share purchases result in a business combination which will be accounted for during the three and six months ended June 30, 2022, respectively.~~

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and the audited financial statements and notes thereto as of and for the twelve months ended December 31, 2021, which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 31, 2022 (as amended, the “2021 Annual Report.) As used in this Quarterly Report, unless the context suggests otherwise, “we,” “us,” “our,” or “Qualigen” refer to Qualigen Therapeutics, Inc. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

Cautionary Note Regarding Forward Looking Statements

This Quarterly Report contains forward-looking statements by Qualigen Therapeutics, Inc. that involve risks and uncertainties and reflect our judgment as of the date of this Quarterly 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 following the expiration of our distribution agreement with ~~Sekisui.~~Sekisui Diagnostics, LLC (“Sekisui”).

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. These risks and uncertainties include risks related to our financial position and our ability to raise additional capital as needed to fund our operations and product development; risks related to the initiation, cost, timing, progress and results of current and future research and development programs, preclinical studies and clinical trials and our ability to obtain and maintain regulatory approvals; risks related to our reliance on third party suppliers and manufacturers; risks related to market acceptance of our products and competition; risks related to our acquisition of NanoSynex, Ltd.; risks related to the ongoing COVID-19 pandemic and the war in Ukraine, including instability in the global credit markets and supply chain disruptions. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent in some future periods with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in other future periods. Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of this Quarterly Report, and we disclaim any intent or obligation to update these forward-looking statements beyond the date of this Quarterly Report, except as required by law. This caution is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

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

Overview

We are 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. 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.

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. Prior to March 31, 2022, most of our FastPack product sales were through our partner Sekisui ~~Diagnostics, LLC (“Sekisui”)~~ pursuant to a distribution agreement, but we maintained 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 expired on March 31, 2022, at which time the services previously provided by Sekisui reverted to us and as of April 1, 2022 we 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 and other markets outside of the United States in which the Company does not currently sell.

Our condensed consolidated 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 therapeutics-related and diagnostics-related expenses.

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~~“Sekisui Distribution Agreement”) with Sekisui. Under the Sekisui Distribution Agreement, Sekisui served as the exclusive worldwide distributor for FastPack products (although we retained certain specific accounts for direct transactions). Sekisui’s exclusive distribution arrangements expired on March 31, 2022.

Under the Sekisui Distribution Agreement, we began development of a proposed “FastPack 2.0” product line for a new whole blood vitamin D assay, 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 related to this product line.

We conducted a clinical trial of FastPack 2.0 in March 2019, and determined in May 2019 that it was uncertain whether the results of the trial would enable the test to receive FDA approval. As a result, we discontinued our FastPack 2.0 project with Sekisui. 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 as described below.

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 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 our core FastPack technology. In addition, the Technology Transfer Agreement authorized 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 received aggregate net cash payments of $670,000, of which we recognized approximately $38,000 in product sales and $632,000 in license revenue during 2021. In addition, we will receive low- to mid-single-digit royalties on any future new-generations and current-generations product sales by Yi Xin. ~~There were~~We recognized no product sales or license revenue for the three months and six months ended ~~March 31, 2022. We~~June 30, 2022 .We recognized ~~approximately~~no product sales or license revenue in the three months ended June 30, 2021 and $38,000 in product sales and $479,000 in license revenue ~~included~~ in the condensed consolidated statement of operations and other comprehensive loss for the ~~three~~six months ended ~~March 31, 2021.~~June 30, 2021

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

In the Technology Transfer Agreement (as amended in August 2021), we gave Yi Xin the exclusive rights for China – which is a market we have not otherwise entered – both for Yi Xin’s new generations of FastPack-based products and for Yi Xin-manufactured versions of our existing FastPack product lines. Yi Xin also has the right to sell its new generations of FastPack-based diagnostic test systems throughout the world (but not to or toward current customers of our existing generations of FastPack products). In addition, after March 31, 2022, Yi Xin has the right to sell Yi Xin-manufactured versions of existing FastPack 1.0, IP and PRO product lines worldwide (other than in the United States and other than to or toward current non-US customers of those products). Also, after March 31, 2022, Yi Xin has the right to buy Qualigen-manufactured FastPack 1.0, IP and PRO products from us at distributor prices for resale in and for the United States (but not to or toward current US 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.

In the Technology Transfer Agreement, we also confirmed that we would not, after the March 31, 2022 expiration of the Sekisui Distribution Agreement, seek new FastPack customers outside the United States.

Yi Xin is a newly-formed company and isits operations are 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 a series of 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 reverse recapitalization transaction and are now exercisable for Qualigen common stock. These warrants contained a provision that if Qualigen, Inc. ~~issued~~issues shares (except in certain defined scenarios) at a price below the warrants’ exercise price, the exercise price ~~would~~will be re-set to such new price and the number of shares underlying the warrants ~~would~~will be increased in the same proportion as the exercise price decrease. For accounting purposes, this provision gives rise to “warrant liabilities” (even though there is not any “liability” in the sense that we would be obligated to pay any cash sum to anyone). Accounting principles generally accepted in the United States (“U.S. GAAP”) require us to recognize the fair value of these warrants as warrant liabilities on our condensed consolidated balance sheets and to reflect period-to-period changes in the fair value of the warrant liabilities on our condensed consolidated statements of ~~operations.~~operations and other comprehensive loss.

~~The size of these warrant~~Warrant liabilities ~~at March 31, 2022 was~~were $1.0 million at June 30, 2022 and the change in fair value was $0.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022. Because fair value will be determined each quarter on a “mark-to-market” basis, this item will usually result in significant variability in our future quarterly and annual statements of operations and condensed 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 a (possibly quite large) increase in the fair value of the warrant liabilities and a quarter-to-quarter decrease in our stock price would result in a (possibly quite large) decrease in the fair value of the warrant liabilities. There were ~~2,476,251~~3,468,958 and 2,481,614 of these warrants outstanding at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively.

COVID-19 Update

The COVID-19 pandemic has had a dramatic impact on businesses globally and our business as well. Our sales of diagnostic products fell significantly during 2020 and our net loss increased significantly, as deferral of patients’ non-emergency visits to physician offices, clinics and small hospitals sharply reduced demand for FastPack tests. Since then we have experienced some recovery in demand. The ultimate severity and duration of the pandemic and economic repercussions of the virus and government actions taken in response to the pandemic remain uncertain at this time, 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, and the emergence of new vaccine-resistant variants or new outbreaks.

In the United States, federal, state, and local government directives and policies have been put in place ~~throughout~~from time to time during the course of the pandemic to manage public health concerns and address the economic impacts of the pandemic, 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~~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.

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Results of Operations

Comparison of the Three Months Ended ~~March 31,~~June 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended ~~March 31,~~June 30, 2022 and 2021:

	For the Three Months Ended March 31,						For the Three Months Ended June 30,
	2022			2021			2022			2021
REVENUES
Net product sales	$	722,029		$	1,420,842		$	1,430,534		$	1,117,935
License revenue		—			478,654			—			—
Total revenues		722,029			1,899,496			1,430,534			1,117,935

EXPENSES
Cost of product sales		828,848			1,202,479			1,099,677			916,624
General and administrative		2,898,751			2,873,939			2,660,857			2,952,100
Research and development		1,864,745			3,499,373			1,506,227			4,508,466
Sales and marketing		138,323			136,587			305,103			135,543
Total expenses		5,730,667			7,712,378			5,571,864			8,512,733

LOSS FROM OPERATIONS		(5,008,638	)		(5,812,882	)		(4,141,330	)		(7,394,798	)

OTHER (INCOME), NET
OTHER INCOME (EXPENSE), NET
Gain on change in fair value of warrant liabilities		(683,242	)		(552,808	)		14,800			1,982,256
Interest income, net		(6,309	)		(17,343	)		4,824			12,718
Other income, net		(36	)		(543	)
Other income (expense), net								(376	)		2,352
Total other income, net		(689,587	)		(570,693	)		19,248			1,997,326

LOSS BEFORE PROVISION FOR INCOME TAXES		(4,319,051	)		(5,242,189	)		(4,122,082	)		(5,397,472	)

PROVISION FOR INCOME TAXES		736			530			5,438			605

NET LOSS	$	(4,319,787	)	$	(5,242,719	)		(4,127,520	)		(5,398,077	)

Net loss attributable to noncontrolling interest								(4,116	)		—

Net loss attributable to Qualigen Therapeutics, Inc.							$	(4,123,404	)	$	(5,398,077	)

Other comprehensive loss, net of tax
Net loss							$	(4,127,520	)	$	(5,398,077	)
Foreign currency translation adjustment								65,540			—
Other comprehensive loss								(4,061,980	)		(5,398,077	)
Comprehensive loss attributable to noncontrolling interest								(4,116	)		—
Comprehensive loss attributable to Qualigen Therapeutics, Inc. stockholders							$	(4,057,864	)	$	(5,398,077	)

Revenues

Net product sales

Net product sales are primarily generated from sales of diagnostic tests. Net product sales during the three-month periods ended ~~March 31,~~June 30, 2022 and 2021 were approximately ~~$0.7~~$1.4 million and ~~$1.4~~$1.1 million, respectively, representing ~~a decrease~~an increase of approximately ~~$0.7~~$0.3 million, or ~~49%~~28%. This ~~decline~~increase was due to the ~~termination~~expiration of the Sekisui Distribution Agreement ~~which caused Sekisui to reduce its purchases from us during the quarter as it sold off its remaining inventory prior to termination of the agreement~~ on March 31, ~~2022.~~2022, at which time the services previously provided by Sekisui reverted to the Company, which resulted in the Company recognizing 100% of the revenue from direct sales of our FastPack diagnostic instruments and test kits.

~~License Revenue~~

There was no license revenue for three months ended March 31, 2022. During the three months ended March 31, 2021 there was approximately $0.5 million, due to the recognition of revenue from Yi Xin under the Technology Transfer Agreement.

Expenses

Cost of Product Sales

Cost of product sales ~~decreased~~increased during the three months ended ~~March 31,~~June 30, 2022, to ~~$0.8~~$1.1 million, or ~~115%~~77% of net product sales, compared to approximately ~~$1.2~~$0.9 million, or ~~85%~~82% of net product sales, during the three months ended ~~March 31,~~June 30, 2021. This ~~decrease~~increase of ~~$0.4~~$0.2 million, and ~~increase~~decrease as a percentage of sales was due ~~to a reduction in production volumes compared~~primarily to the ~~prior~~increase in sales during the three-month period and higher average unit selling prices due to the termination of the Sekisui ~~Distribution Agreement which caused negative gross profit, as Sekisui sold off its remaining inventory during the three months ended~~agreement on March 31, 2022.

General and Administrative Expenses

General and administrative expenses ~~were approximately $2.9~~decreased 10% from $3.0 million, ~~for both~~during the three months ended ~~March 31, 2022 and 2021. For~~June 30, 2021, to $2.7 million during the three months ended ~~March 31,~~June 30, 2022 ~~payroll~~. This decrease was primarily due to a $0.4 million reduction in spending for professional fees related ~~expenses increased by $0.2 million~~to investor relations, legal, accounting, and ~~legal~~consulting fees, ~~increased by $0.2 million,~~partially offset by a ~~decrease~~$0.1 million increase in ~~consulting fees of $0.4 million compared to the three months ended March 31, 2021.~~employee/director stock-based compensation expense.

Research and Development Costs

Research and development costs include ~~therapeutic~~therapeutics and ~~diagnostic~~diagnostics research and product development costs. Research and development costs decreased from ~~$3.5~~$4.5 million for the three months ended ~~March 31,~~June 30, 2021 to ~~$1.9~~$1.5 million for the three months ended ~~March 31,~~June 30, 2022. Of the ~~$1.9~~$1.5 million of research and development costs for the three months ended ~~March 31,~~June 30, 2022, ~~$1.6~~$1.1 million ~~(85%~~(73%) was attributable to therapeutics and ~~$0.3~~$0.4 million ~~(15%~~(27%) was attributable to diagnostics. Of the ~~$3.5~~$4.5 million of research and development costs for the three months ended ~~March 31,~~June 30, 2021, ~~$3.2~~$4.2 million ~~(91%~~(93%) was attributable to therapeutics and $0.3 million ~~(9%~~(7%) was attributable to diagnostics.

The decrease in therapeutics research and development costs during the three months ended ~~March 31,~~June 30, 2022 compared to the three months ended ~~March 31,~~June 30, 2021 was primarily due to a ~~$2.6~~$3.4 million decrease in pre-clinical research costs related to the potential application of QN-165 for the treatment of COVID-19 (which has since been ~~deprioritized)~~deprioritized to a non-core program), a $0.2 million decrease in legal and recruiting fees, offset by an increase of ~~$0.4~~$0.1 million in pre-clinical research costs for QN-302, which we acquired in January 2022, an increase of ~~$0.4~~$0.2 million in pre-clinical research costs for QN-247, and an increase of ~~$0.1~~$0.2 million in pre-clinical research costs for our RAS ~~program,~~program.

The increase in diagnostics research and development costs during the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was due primarily to an increase in supplies expense of ~~about~~approximately $0.1 ~~million in payroll related expenses.~~million.

For the future, we expect our therapeutic research and development costs to continue to 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 were approximately ~~$0.1~~$0.3 million for ~~both~~ the three months ended ~~March 31,~~June 30, 2022, an increase of $0.2 million or 125% from the three months ended June 30, 2021. This increase was primarily due to a $0.1 million increase in payroll expenses related to the assumption of Sekisui sales personnel in the current quarter, and ~~2021.~~also due to increased spending for advertising, conventions and tradeshows of $0.1 million.

Other Income (Expense), Net

Change in Fair Value of Warrant Liabilities

During the three months ended ~~March 31,~~June 30, 2022 and 2021, we experienced a ~~$0.7~~gain of approximately $15,000 and $2.0 million, ~~and $0.6 million gain,~~ respectively, on change in fair value of warrant liabilities, primarily due to declines in our stock price and ~~warrant exercises during both periods.~~reduction in the remaining terms of the warrants. 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 statements of operations based on unpredictable changes in our public market common stock price and the number of liability classified warrants outstanding at the end of each quarter.

Interest Income, Net

There was approximately ~~$6,000~~$5,000 and ~~$17,000~~$13,000 in interest income during the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively.

Other Income, Net

Other income was immaterial during the three months ended June 30, 2022 and 2021.

Net loss attributable to noncontrolling interest

Net loss attributable to noncontrolling interest was immaterial during the three months ended June 30, 2022 and 2021.

Other comprehensive income-foreign currency translation adjustment

Other comprehensive income-foreign currency translation adjustment was $65,540 for the three months ended June 30, 2022 as compared to $0 for the three months ended June 30, 2021. The increase of $65,540 was due to the acquisition of NanoSynex in May 2022 and the translation of their June 30, 2022 financial statements into U.S. dollars from New Israeli Shekels.

Comparison of the Six Months Ended June 30, 2022 and 2021

The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021:

	For the Six Months Ended June 30,
	2022			2021
REVENUES
Net product sales	$	2,152,563		$	2,538,776
License revenue		—			478,654
Total revenues		2,152,563			3,017,430

EXPENSES
Cost of product sales		1,928,524			2,119,103
General and administrative		5,559,608			5,826,038
Research and development		3,370,972			8,007,840
Sales and marketing		443,426			272,129
Total expenses		11,302,530			16,225,110

LOSS FROM OPERATIONS		(9,149,967	)		(13,207,680	)

OTHER INCOME (EXPENSE), NET
Gain on change in fair value of warrant liabilities		698,042			2,535,064
Interest income, net		11,132			30,061
Other income (expense), net		(341	)		2,894
Total other income, net		708,833			2,568,019

LOSS BEFORE PROVISION FOR INCOME TAXES		(8,441,134	)		(10,639,661	)

PROVISION FOR INCOME TAXES		6,173			1,135

NET LOSS		(8,447,307	)		(10,640,796	)

Net loss attributable to noncontrolling interest		(4,116	)		—

Net loss attributable to Qualigen Therapeutics, Inc.	$	(8,443,191	)	$	(10,640,796	)

Other comprehensive loss, net of tax
Net loss	$	(8,447,307	)	$	(10,640,796	)
Foreign currency translation adjustment		65,540			—
Other comprehensive loss		(8,381,767	)		(10,640,796	)
Comprehensive loss attributable to noncontrolling interest		(4,116	)		—
Comprehensive loss attributable to Qualigen Therapeutics, Inc. stockholders	$	(8,377,651	)	$	(10,640,796	)

Revenues

Net product sales

Net product sales are primarily generated from sales of diagnostic tests. Net product sales during the six-month periods ended June 30, 2022 and 2021 were approximately $2.2 million and $2.5 million, respectively, representing a decrease of approximately $0.4 million, or 15%. This decrease was primarily due to the expiration of the Sekisui Distribution Agreement on March 31, 2022, which caused Sekisui to reduce its purchases from us during the first quarter of 2022, as it sold off its remaining inventory prior to the expiration of the agreement. However this reduction in Sekisui purchases during the first quarter was partially offset by higher direct sales of FastPack diagnostic instruments and test kits during the second quarter of 2022 and the Company recognizing 100% of the revenue from these sales, compared to the second quarter of 2021.

License Revenue

There was no license revenue for the six months ended June 30, 2022. During the six months ended June 30, 2021 there was approximately $0.5 million, due to the recognition of revenue from Yi Xin under the Technology Transfer Agreement.

Expenses

Cost of Product Sales

Cost of product sales decreased during the six months ended June 30, 2022, to $1.9 million, or 90% of net product sales, compared to approximately $2.1 million, or 83% of net product sales, during the six months ended June 30, 2021. This decrease of $0.2 million, and increase as a percentage of sales was due to a reduction in production volumes compared to the prior period due to the expiration of the Sekisui Distribution Agreement, as Sekisui sold off its remaining inventory during the first quarter.

General and Administrative Expenses

General and administrative expenses decreased from $5.8 million, during the six months ended June 30, 2021, to approximately $5.6 million during the six months ended June 30, 2022, a decrease of $0.3 million or 5%. This decrease was primarily due to a $0.6million decrease in investor relations, legal, accounting and consulting fees, partially offset by increases in stock-based compensation expense of $0.1 million, increases in wages/bonuses and related payroll taxes of $0.2 million

Research and Development Costs

Research and development costs include therapeutics and diagnostics research and product development costs. Research and development costs decreased from $8.0 million for the six months ended June 30, 2021 to $3.4 million for the six months ended June 30, 2022. Of the $3.4 million of research and development costs for the six months ended June 30, 2022, $2.7 million (80%) was attributable to therapeutics and $0.7 million (20%) was attributable to diagnostics. Of the $8.0 million of research and development costs for the six months ended June 30, 2021, $7.3 million (91%) was attributable to therapeutics and $0.7 million (9%) was attributable to diagnostics.

The decrease in therapeutics research and development costs during the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to a $6.0 million decrease in pre-clinical research costs related to the potential application of QN-165 for the treatment of COVID-19 (which has since been deprioritized to a non-core program), offset by an increase of $0.5 million in pre-clinical research costs for QN-302, which we acquired in January 2022, an increase of $0.6 million in pre-clinical research costs for QN-247, and an increase of $0.3 million in pre-clinical research costs for our RAS program.

There were no material changes in diagnostics research and development costs during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Sales and Marketing Expenses

Sales and marketing expenses were approximately $0.4 million for the six months ended June 30, 2022 , an increase of $0.2 million or 63% from the six months ended June 30, 2021. This increase was primarily due to a $0.1 million increase in payroll expenses related to the assumption of Sekisui sales personnel in the current period and also due to increased spending for advertising, conventions and tradeshows of $0.1 million.

Other Income (Expense), Net

Change in Fair Value of Warrant Liabilities

During the six months ended June 30, 2022 and 2021, we experienced a gain of $0.7 million and $2.5 million, respectively, on change in fair value of warrant liabilities, primarily due to declines in our stock price, reductions in the remaining terms of the warrants during both periods, and warrant exercises during the prior period. Typically, a decline in our stock price would result in a decline in the fair value of our warrant liabilities, generating a gain, while an increase in our stock price would result in an increase in the fair value of our warrant liabilities, generating a loss.

Interest Income, Net

There was approximately $11,000 and $30,000 in interest income during the six months ended June 30, 2022 and 2021, respectively.

Other Income, Net

Other income was immaterial during the six months ended June 30, 2022 and 2021.

Net loss attributable to noncontrolling interest

Net loss attributable to noncontrolling interest was immaterial during the six months ended June 30, 2022 and $0 during the six months ended June 30, 2021.

Other comprehensive income-foreign currency translation adjustment

Other comprehensive income-foreign currency translation adjustment was $65,540 for the six months ended June 30, 2022 as compared to $0 for the six months ended June 30, 2021. The increase of $65,540 was due to the acquisition of NanoSynex in May 2022 and the translation of their June 30, 2022 financial statements into U.S. dollars from New Israeli Shekels.

Liquidity and Capital Resources

As of ~~March 31,~~June 30, 2022, we had ~~$13.6~~approximately $9.7 million ~~of cash.~~ in cash. The Company has incurred recurring losses from operations and has an accumulated deficit at ~~March 31,~~June 30, 2022. The Company expects to continue to incur losses subsequent to the condensed consolidated balance sheet date of ~~March 31,~~June 30, 2022. InIn December 2021, the Company raised $8.82 million through a Securities Purchase Agreement with several institutional investors.

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 unaudited condensed financial statements. ~~However, there is no assurance that profitable~~We will need substantial additional funding to continue our operations, ~~will ever be achieved, or if achieved, could be sustained on a continuing basis. Also, beyond such 12-month period, planned research~~particularly for QN-302 clinical trials, to continue preclinical development of QN-247 and ~~development activities, capital expenditures, clinical~~RAS-F, and ~~pre-clinical testing, and commercialization activities of~~to continue funding the ~~Company’s products are expected to require significant additional financing. Additional financing may not be available on acceptable terms or at all.~~NanoSynex operations.

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.~~financing for planned research and development activities, capital expenditures, clinical and pre-clinical testing and commercialization activities. 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 condensed consolidated balance sheet at ~~March 31,~~June 30, 2022 ~~included $1.0~~includes $1.0 million of warrant liabilities. We do not consider ~~that~~ the warrant liabilities to constrain our liquidity, as a practical matter. Our current liabilities at ~~March 31,~~June 30, 2022 ~~included $1.0~~include $0.9 million of accounts payable and ~~$1.3~~$1.4 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 912 – Commitments and Contingencies of the consolidated financial statements for additional details.

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

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.

License and Sponsored Research Agreements with ULRF

~~These commitments include~~We have multiple license and sponsored research agreements with UofL Research Foundation (“ULRF”). Under these agreements, we ~~will take~~have taken over development, regulatory approval and commercialization of various drug compounds from ULRF and are responsible for maintenance of the related intellectual property portfolio. We agreed to reimburse ULRF for sponsored research expenses of up to $805,000 and prior patent costs of up to $200,000 for QN-247. As of ~~March 31,~~June 30, 2022, ~~we had up to $52,000~~there were no remaining ~~due~~unexpensed amounts under this sponsored research agreement for QN-247. We also agreed to reimburse ULRF for sponsored research expenses of up to $2.7 million and prior patent costs of up to $112,000 for RAS. As of ~~March 31,~~June 30, 2022 we had up to ~~$1.4~~$1.2 million remaining due under this sponsored research agreement for RAS. 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 ~~March 31,~~June 30, 2022 we had no remaining unexpensed amounts ~~due~~ under this sponsored research agreement for QN-165. ~~For~~Under the terms of these agreements, we are required to make patent maintenance payments and payments based upon development, regulatory and commercial milestones for any products covered by the in-licensed intellectual property. The maximum aggregate milestone payments we may be obligated to make per product are $5 million. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low single digits. The royalty is subject to reduction for any third-party payments required to be made, with a minimum floor in the low single digits. We have the right to sublicense our rights under these agreements, and we will be required to pay a percentage of any sublicense income.

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~~of pancreatic ductal adenocarcinoma (PDAC), which represents the vast majority of pancreatic cancers. The Agreement requires (if and when applicable) tiered royalty payments in the low to mid-single digits, clinical/regulatory/sales milestone payments, and a percentage of any non-royalty sublicensing consideration paid to Qualigen.

Termination of Sekisui Distribution Agreement

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 expired on March 31, 2022. Subsequent toFollowing the expiration of the ~~agreement,~~Sekisui Distribution Agreement, in the second quarter of 2022 the Company ~~will have~~has a commitment to purchase leased FastPack rental systems back from Sekisui at Sekisui’s net book value, the amount of which has not yet been determined.

Master Agreement for the Operational and Technological Funding of NanoSynex

As a condition to the closing of the NanoSynex transaction on May 26, 2022, the Company entered into a Master Agreement for the Operational and Technological Funding of NanoSynex (the “Funding Agreement”) pursuant to which we agreed to fund NanoSynex up to an aggregate of approximately $10.4 million over the next three years, subject to NanoSynex’s achievement of certain performance milestones specified in the Funding Agreement and the satisfaction of other terms and conditions described in the Funding Agreement. The Company may terminate the Funding Agreement after October 29, 2022 upon 120 days’ notice.

Other Service Agreements

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

Cash Flows

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

	For the Three Months Ended						For the Six Months Ended
	March 31,						June 30,
	2022			2021			2022			2021
Net cash (used in) provided by:
Operating activities	$	(3,881,611	)	$	(2,081,104	)	$	(7,827,798	)	$	(8,785,057	)
Investing activities		(49,625	)		(69,002	)		71,871			(114,691	)
Financing activities		3,858			121,448			3,859			155,580
Net increase (decrease) in cash	$	(3,927,378	)	$	(2,028,658	)
Net decrease in cash							$	(7,752,068	)	$	(8,744,168	)

Net Cash Used in Operating Activities

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, operating activities used ~~$3.9~~$7.8 million of cash, primarily resulting from a net loss of ~~$4.3~~$8.4 million. Cash flows from operating activities (as opposed to net loss) for the ~~three~~six months ended ~~March 31,~~June 30, 2022 benefitted from ~~$1.2~~$2.7 million in ~~employee/director~~ stock-based compensation expense, ~~a $0.3 million decrease in prepaid expenses and other assets,~~ a $0.2 million decrease in net accounts receivable, ~~a $0.1 million increase in accounts payable,~~ and depreciation and amortization of ~~$0.1~~$0.2 million. Cash flows from operating activities (as opposed to net loss) for the ~~three~~six months ended ~~March 31,~~June 30, 2022 were negatively impacted by a ~~$0.5~~$0.8 million decrease in accrued expenses and other current liabilities, a $0.6 million increase in prepaid expenses and other assets, $0.3 million increase in net inventory, ~~and~~ a $0.7 million decrease in fair value of warrant ~~liabilities.~~liabilities and a $0.1 million decrease in operating lease liability.

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, operating activities used ~~$2.1~~$8.8 million of cash, primarily resulting from a net loss of ~~$5.2~~$10.6 million. Cash flows from operating activities ~~(as opposed to net loss)~~ for the ~~three~~six months ended ~~March 31,~~June 30, 2021 benefitted from ~~a $1.5~~the $0.7 million decrease in prepaid expenses and other assets, ~~$1.3~~a $2.5 million increase in ~~employee/director~~ stock-based compensation expense, a ~~$1.1~~$1.2 million increase in accrued expenses and other current liabilities and a ~~$0.1~~$0.3 million ~~decrease~~increase in ~~inventory. Cash~~accounts payable, due to higher costs related to therapeutics research and development. On the other hand, cash flows from operating activities ~~(as opposed to net loss)~~ for the ~~three~~six months ended ~~March 31,~~June 30, 2021 were negatively impacted by a ~~$0.6~~$2.5 million decrease in fair value of warrant liabilities, a $0.2 million increase in accounts receivable, and a ~~$0.1~~$0.2 million ~~decrease~~increase in deferred revenue. The decrease in prepaid expenses was primarily due to the expensing during the period of $1.1 million of ~~upfront deposits paid~~previous prepayments to STA Pharmaceutical Co., Ltd., a subsidiary of WuXi AppTec, our manufacturer of QN-165 for our ~~then~~ anticipated clinical ~~trials. QN-165 has since been deprioritized.~~trials, but was offset in part by an approximately $0.6 million increase of prepaid expenses for director and officer liability insurance.

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

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, net cash ~~used in~~provided by investing activities was approximately ~~$50,000,~~$0.1 million, primarily ~~related~~due to $0.7 million in cash acquired in the NanoSynex transaction, offset by the $0.6 million purchase of ~~property and equipment.~~NanoSynex stock.

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, net cash used in investing activities was approximately ~~$69,000,~~$0.1 million, primarily related to the purchase of property and equipment.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was approximately $4,000, due to net proceeds from exercise of warrants.

Net cash provided by financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2021 was ~~$0.1~~approximately $0.2 million, due to ~~$0.2~~approximately $0.3 million of net proceeds from the exercise of warrants, offset by a $0.1 million in principal ~~payment~~payments on notes payable.

Critical Accounting Estimates

We believe the estimates, assumptions and judgments involved in the accounting policies described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”) are most critical to understanding and evaluating our reported financial results. During the three and six months ended June 30, 2022, other than the business combinations, IPR&D, and goodwill accounting policies described below, there have been no material changes to the critical accounting policies and estimates as described in Item 7 of our 2021 Annual Report.

The Company accounts for business combinations using the acquisition method pursuant to FASB ASC Topic 805. This method requires, among other things, that results of operations of acquired companies are included in the Company’s financial results beginning on the respective acquisition dates, and that assets acquired and liabilities assumed are recognized at fair value as of the acquisition date. Intangible assets acquired in a business combination are recorded at fair value using a discounted cash flow model. The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, the cost of capital and terminal values from the perspective of a market participant. Each of these factors can significantly affect the value of the intangible asset. Any excess of the fair value of consideration transferred (the “Purchase Price”) over the fair values of the net assets acquired is recognized as goodwill. The fair value of assets acquired and liabilities assumed in certain cases may be subject to revision based on the final determination of fair value during a period of time not to exceed 12 months from the acquisition date. Legal costs, due diligence costs, business valuation costs and all other acquisition-related costs are expensed when incurred.

IPR&D represents the fair value assigned to the research and development assets that have not reached technological feasibility. The value assigned to IPR&D is determined by estimating the costs to develop the acquired technology into commercially viable products, estimating the resulting revenue from the projects, and discounting the net cash flow to present value. The revenue and cost projections used to value acquired IPR&D are, as applicable, reduced based on the probability of success of developing the new product. Additionally, projections consider relevant market sizes and growth factors, expected trends in technology and the nature and expected timing of new product introductions. The rates utilized to discount the net cash flow to its present value are commensurate with the stage of development of the project and uncertainties in the economic estimates used in the projections. Upon the acquisition of acquired IPR&D, an assessment is completed as to whether the acquisition constitutes an acquisition of the purchase of a single asset or a group of assets. Multiple factors are considered in this assessment, including the nature of the technology acquired, the presence or absence of separate cash flows, the development process and stage of completion, quantitative significance, and the Company’s rationale for entering into the transaction.

If a business is acquired, as defined under the applicable accounting standards, then the acquired IPR&D is capitalized as an intangible asset. If an asset or group of assets is acquired that do not meet the definition under the applicable accounting standards, then the acquired IPR&D is expensed on its acquisition date. Future costs to develop these assets are recorded to research and development expense in the Company’s consolidated statements of income as they are incurred.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Smaller~~As a “smaller reporting ~~companies~~company” as defined by Item 10 of Regulation S-K, we are not required to ~~respond to this Item.~~provide the information required by Item 3.

ITEM 4. 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 of ~~March 31,~~June 30, 2022, the end of the period covered by this Quarterly Report.

Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures as of ~~March 31,~~June 30, 2022 were effective to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act’), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. We believe that a disclosure controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the disclosure controls system are met, and no evaluation of disclosure controls can provide absolute assurance that all disclosure control issues, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the 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 condensed consolidated financial statements for external purposes in accordance with U.S. GAAP.

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 (the “2013 Framework”). Based on this assessment, our management concluded that, as of December 31, 2021, our internal control over financial reporting was not effective because of 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 generally accepted accounting ~~principles.~~principles, as further described in our 2021 Annual Report. We have taken and are taking steps to remediate the material weakness, 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. Nevertheless, an internal control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the internal control system are met, and no evaluation of internal control can provide absolute assurance that all internal control issues and instances of fraud, if any, within a company are detected.

Except as described above, there were no changes to the Company’s internal control over financial reporting made during the quarter ended ~~March 31,~~June 30, 2022 that we believe materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We do expect to implement additional internal controls related to the acquisition of NanoSynex to include internal and external audits related to the international operations of this entity.

Notwithstanding the identified material weakness, our management believes that the condensed consolidated financial statements included in this Quarterly Report fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

3241

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~The information set forth~~We are not currently involved in ~~“Litigation~~any legal matters. From time to time, we could become involved in disputes and ~~Other Legal Proceedings”~~various litigation matters that arise in ~~Note 9~~the normal course of business. These may include disputes and lawsuits related to ~~the condensed consolidated financial statements included in this Quarterly Report is incorporated herein by reference.~~intellectual property, licensing, contract law and employee relations matters.

ITEM 1A. RISK FACTORS

The Company’s business, reputation, results of operations and financial condition, as well as the price of its stock, can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the Company’s 2021 Annual Report under the heading “Risk Factors.” When any one or more of these risks materialize, the Company’s business, reputation, results of operations and financial condition, as well as the price of its stock, can be materially and adversely affected. ~~There~~Except for the following additional risk factors related to the acquisition of NanoSynex, Ltd., there have been no material changes to the Company’s risk factors ~~since~~described in the 2021 Annual Report.

Risks Related to the Acquisition of NanoSynex, Ltd. (“NanoSynex”)

The NanoSynex acquisition may not be successful in achieving its intended benefits and may disrupt our current operations.

In May 2022, we acquired a majority interest in NanoSynex, Ltd (“NanoSynex”). This acquisition poses a number of potential integration risks that may result in negative consequences to our business, financial condition, and results of operations. These risks include, but are not limited to:

	●	failure of the business to perform as planned following the acquisition, and to receive the necessary regulatory approvals for its Antimicrobial Susceptibility Testing (AST) platform;

	●	the assimilation and retention of employees, including key employees;

	●	higher than expected costs and/or a need to allocate resources to manage unexpected operating difficulties;

	●	diversion of the attention and resources of management or other disruptions to current operations;

	●	retaining required regulatory approvals, licenses, and permits;

	●	the assumption of liabilities of the acquired business not identified during due diligence; and

	●	other unanticipated issues, expenses, and liabilities.

	●	establishing appropriate internal controls for the management of overseas financial and other resources.

In addition, while we are based in Carlsbad, California, NanoSynex’s operations are located in Ness Ziona, Israel, which could further stretch our resources and management’s time, and we will need to rely, to a large extent, on the existing executive team of NanoSynex. Failure to adequately integrate our operations and personnel could adversely affect our combined business and our ability to achieve our objectives and strategy. No assurance can be given that we will realize synergies in the areas we currently operate.

Our Master Agreement for the Operational and Technological Funding of NanoSynex obligates us to make milestone payments to NanoSynex.

As a condition to the closing with NanoSynex, we entered into a Master Agreement for the Operational and Technological Funding of NanoSynex (the “Funding Agreement”) with NanoSynex pursuant to which we have agreed to fund NanoSynex up to an aggregate of approximately $10.4 million over the next three years, subject to NanoSynex’s achievement of certain performance milestones specified in the Funding Agreement and the satisfaction of other terms and conditions described in the Funding Agreement.

The requirement to make any payments under the Funding Agreement will reduce our liquidity. Furthermore, there can be no assurance that we will have the funds necessary to make the required payments to NanoSynex, if required, or be able to raise such funds when needed on terms acceptable to us, or at all. As a result, we may be required to delay our product development or future commercialization efforts. In addition, our inability to make any required payments to NanoSynex could negatively impact NanoSynex’s ability to further its development efforts, which will ultimately have a negative impact on our business and results of operations due to our majority interest in NanoSynex. We may terminate this agreement after October 29, 2022, but only after providing 120 days’ notice.

Under the terms of the Funding Agreement, we will receive in exchange for any payment made to NanoSynex under the Funding Agreement one or more promissory notes (which may contain convertible features) with a face value equal to the amount paid by us to NanoSynex upon satisfaction of the applicable performance milestones. Any promissory notes issued to us by NanoSynex under the Funding Agreement will bear interest at a rate of 9.00% per annum on the principal balance from time to time outstanding under the promissory note. If NanoSynex is unable to make the required payments of principal or interest under any promissory notes that are issued, our liquidity will be negatively impacted, which may require us to delay our product development or future commercialization efforts.

Because a significant portion of NanoSynex’s total assets are represented by goodwill, indefinite-lived intangible assets, and definite-lived intangible assets, we could be required to write off some or all of this goodwill and other intangibles, which may adversely affect our financial condition and results of operations.

We used the acquisition method of accounting to account for the acquisition of a majority interest in NanoSynex consummated on May 26, 2022. A portion of the purchase price for this business is allocated to identifiable tangible and intangible assets and assumed liabilities based on estimated fair values at the date of acquisition. Goodwill is measured indirectly as the excess of the sum of (1) the consideration transferred (including contingent consideration, if any) and (2) the fair value of any noncontrolling interest in the acquiree over the net assets acquired and liabilities assumed. The purchase price allocation resulted in a goodwill value of $4.9 million and a value of $5.7 million related to other intangible assets. The carrying value of these assets as of June 30, 2022, was $4.9 million and $5.7 million, respectively. When we perform impairment tests, it is possible that the carrying value of goodwill or other intangible assets could exceed their implied fair value and therefore would require adjustment. Such adjustment would result in a charge to operating income in that period. Once adjusted, there can be no assurance that there will not be further adjustments for impairment in future periods.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

None

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

None

3343

ITEM 6. EXHIBITS

		Incorporated by Reference
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	January 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	April 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	April 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	May 29, 2020

3.1	Amended and Restated Certificate of Incorporation	8-K	001-37428	3.1	July 1, 2015

3.2	Certificate of Amendment to the Amended and Restated Certificate of Incorporation	8-K	001-37428	3.1	September 15, 2017

3.3	Certificate of Amendment to the Amended and Restated Certificate of Incorporation	8-K	001-37428	3.1	March 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	May 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	May 29, 2020

3.6	Certificate of Merger, filed with the Delaware Secretary of State on May 22, 2020	8-K	001-37428	3.3	May 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 [name change]	8-K	001-37428	3.4	May 29, 2020

3.8	Amended and Restated Bylaws of the Company, through August 10, 2021	10-Q	001-37428	3.8	August 16, 2021

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	October 4, 2017

Incorporated by Reference
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 January 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 April 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 April 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 May 29, 2020

3.1 Amended and Restated Certificate of Incorporation 8-K 001-37428 3.1 July 1, 2015

3.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation 8-K 001-37428 3.1 September 15, 2017

3.3 Certificate of Amendment to the Amended and Restated Certificate of Incorporation 8-K 001-37428 3.1 March 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 May 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 May 29, 2020

3.6 Certificate of Merger, filed with the Delaware Secretary of State on May 22, 2020 8-K 001-37428 3.3 May 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 [name change] 8-K 001-37428 3.4 May 29, 2020

4.2	First Amendment to Warrant Agency Agreement between Ritter Pharmaceuticals, Inc. and Corporate Stock Transfer, Inc.	8-K	001-37428	4.1	May 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	March 31, 2021

4.4	Warrant, issued by the Company in favor of Alpha Capital Anstalt, dated May 22, 2020 [post-Merger]	8-K	001-37428	10.13	May 29, 2020

4.5	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	May 29, 2020

4.6	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	July 10, 2020

4.7	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	July 10, 2020

4.8	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	August 4, 2020

4.9	“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	December 18, 2020

4.10	“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	December 18, 2020

4.11	“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	December 18, 2020

4.12	Form of liability classified Warrant to Purchase Common Stock (“exploding warrant”)	10-K	001-37428	4.13	March 31, 2021

4.13	Form of “service provider” (non-”exploding”) compensatory equity classified Warrant	10-K	001-37428	4.14	March 31, 2021

4.14	Description of Common Stock	10-K	001-37428	4.7	March 31, 2020

3431.1*		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

3.8 Amended and Restated Bylaws of the Company, through August 10, 2021 10-Q 001-37428 3.8 August 16, 2021

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 October 4, 2017

4.2 First Amendment to Warrant Agency Agreement between Ritter Pharmaceuticals, Inc. and Corporate Stock Transfer, Inc. 8-K 001-37428 4.1 May 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 March 31, 2021

4.4 Warrant, issued by the Company in favor of Alpha Capital Anstalt, dated May 22, 2020 [post-Merger] 8-K 001-37428 10.13 May 29, 2020

4.5 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 May 29, 2020

4.6 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 July 10, 2020

4.7 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 July 10, 2020

4.8 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 August 4, 2020

4.9 “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 December 18, 2020

4.10 “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 December 18, 2020

4.11 “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 December 18, 2020

4.12 Form of liability classified Warrant to Purchase Common Stock (“exploding warrant”) 10-K 001-37428 4.13 March 31, 2021

4.13 Form of “service provider” (non-“exploding”) compensatory equity classified Warrant 10-K 001-37428 4.14 March 31, 2021

4.14 Description of Common Stock 10-K 001-37428 4.7 March 31, 2020

4.15* Amended and Restated Common Stock Purchase Warrant to GreenBlock Capital LLC (300,000 shares)

4.16* Amended and Restated Common Stock Purchase Warrant to Christopher Nelson (300,000 shares)

10.1*† Series B Preferred Share Purchase Agreement between the Company and NanoSynex Ltd. dated April 29, 2022

10.2*†
Share Purchase Agreement between the Company and Alpha Capital Anstalt dated April 29, 2022

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(a)(5) 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.

3646

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~May 13,~~August 15, 2022	QUALIGEN THERAPEUTICS, INC.

	By:	/s/ Michael S. Poirier
	Name:	Michael S. Poirier
	Title:	Chief Executive Officer

3747

		Shares		Amount $		Capital		Deficit			Total
		Common Stock				Additional Paid-In		Accumulated
		Shares		Amount $		Capital		Deficit			Total
Balance at December 31, 2021	-		35,290,178	$	35,290	$	101,274,073	$	(84,744,629	)	$	16,564,734
Stock issued upon exercise of warrants			5,363		5		4,711		—			4,716
Stock-based compensation			—		—		1,267,166		—			1,267,166
Net Loss	-		—		—		—		(4,319,787	)		(4,319,787	)
Balance at March 31, 2022	-		35,295,541	$	35,295	$	102,545,950	$	(89,064,416	)	$	13,516,829

4.13	Form of “service provider” (non-“exploding”) compensatory equity classified Warrant	10-K	001-37428	4.14	March 31, 2021

4.14	Description of Common Stock	10-K	001-37428	4.7	March 31, 2020

4.15*	Amended and Restated Common Stock Purchase Warrant to GreenBlock Capital LLC (300,000 shares)

4.16*	Amended and Restated Common Stock Purchase Warrant to Christopher Nelson (300,000 shares)

10.1*†	Series B Preferred Share Purchase Agreement between the Company and NanoSynex Ltd. dated April 29, 2022

10.2*†	Share Purchase Agreement between the Company and Alpha Capital Anstalt dated April 29, 2022
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