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DISCONTINUED OPERATIONS | 12 Months Ended
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Dec. 31, 2023
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS | NOTE 5 — DISCONTINUED OPERATIONS The summary of assets and liabilities classified in discontinued operations as of December 31, 2022 are as follows: SCHEDULE OF BALANCE SHEETS AND INCOME STATEMENT CLASSIFIED IN DISCONTINUED OPERATIONS
|  | Qualigen, Inc. |  |  | NanoSynex |  |  | Total |
Current assets of discontinued operations |  | $ | 4,448,999 |  |  | $ | 1,838,850 |  |  | $ | 6,287,849 |
Non-current assets of discontinued operations |  |  | 1,876,270 |  |  |  | 6,360,441 |  |  |  | 8,236,711 |
Total assets of discontinued operations |  | $ | 6,325,269 |  |  | $ | 8,199,291 |  |  | $ | 14,524,560 |
Current liabilities of discontinued operations |  | $ | 1,299,948 |  |  | $ | 2,141,250 |  |  | $ | 3,441,198 |
Non-current liabilities of discontinued operations |  |  | 1,350,975 |  |  |  | 357,757 |  |  |  | 1,708,732 |
Total liabilities of discontinued operations |  | $ | 2,650,923 |  |  | $ | 2,499,007 |  |  | $ | 5,149,930 |
The summary of gain (loss) from discontinued operations, net of tax, as of December 31, 2023 and 2022 are as follows:
|  |  |  |  | Year ended December 31, 2023 |  |  |  |  |  |  |  |  | Year ended December 31, 2022 |  |  |  |
|  | Qualigen, Inc. |  |  | NanoSynex |  |  | Total |  |  | Qualigen, Inc. |  |  | NanoSynex |  |  | Total |
(Loss) from discontinued operations |  | $ | (171,701 | ) |  | $ | (511,307 | ) |  | $ | (683,008 | ) |  | $ | (2,142,763 | ) |  | $ | (4,997,418 | ) |  | $ | (7,140,181 | )
Gain (loss) on disposal of discontinued operations |  |  | 3,876,778 |  |  |  | (4,479,010 | ) |  |  | (602,232 | ) |  |  | — |  |  |  | — |  |  |  | — |
Total gain (loss) from discontinued operations |  | $ | 3,705,077 |  |  | $ | (4,990,317 | ) |  | $ | (1,285,240 | ) |  | $ | (2,142,763 | ) |  | $ | (4,997,418 | ) |  | $ | (7,140,181 | )
Sale of Qualigen, Inc. On July 20, 2023, the Company completed the sale of Qualigen, Inc., its formerly wholly-owned subsidiary, to Chembio Diagnostics, Inc. for net cash consideration of $5.4 million, of which $4.9 million was received during the year ended December 31, 2023, and $450,000 is being held in escrow until January 20, 2025 to satisfy certain Company indemnification obligations. The assets and liabilities classified in discontinued operations for Qualigen, Inc. as of December 31, 2022 are as follows: ASSETS AND LIABILITIES CLASSIFIED IN DISCONTINUED OPERATIONS
|  | December 31, |
|  | 2022 |
Cash |  | $ | 2,246,482 |
Accounts receivable, net |  |  | 512,088 |
Inventory, net |  |  | 1,586,297 |
Prepaid expenses and other current assets |  |  | 104,132 |
Total current assets of discontinued operations |  |  | 4,448,999 |
Right-of-use assets |  |  | 1,422,538 |
Property and equipment, net |  |  | 289,696 |
Intangible assets, net |  |  | 145,702 |
Other assets |  |  | 18,334 |
Total non-current assets of discontinued operations |  |  | 1,876,270 |
Total assets of discontinued operations of Qualigen, Inc. |  | $ | 6,325,269 |
Accounts payable |  | $ | 236,470 |
Accrued vacation |  |  | 187,906 |
Accrued expenses and other current liabilities |  |  | 518,766 |
Deferred revenue, current portion |  |  | 116,161 |
Operating lease liability, current portion |  |  | 240,645 |
Total current liabilities of discontinued operations |  |  | 1,299,948 |
Operating lease liability, net of current portion |  |  | 1,301,919 |
Deferred revenue, net of current portion |  |  | 49,056 |
Total non-current liabilities of discontinued operations |  |  | 1,350,975 |
Total liabilities of discontinued operations of Qualigen, Inc. |  | $ | 2,650,923 |
The Company reclassified the following statement of operations items to discontinued operations for the years ended December 31, 2023 and 2022, respectively:
|  | 2023 |  |  | 2022 |
|  | For the Years Ended December 31, |
|  | 2023 |  |  | 2022 |
REVENUES |  |  |  |  |  |  |  |
Net product sales |  | $ | 3,661,121 |  |  | $ | 4,983,556 |
Total revenues |  |  | 3,661,121 |  |  |  | 4,983,556 |
EXPENSES |  |  |  |  |  |  |  |
Cost of product sales |  |  | 2,551,114 |  |  |  | 4,302,755 |
General and administrative |  |  | 610,559 |  |  |  | 561,047 |
Research and development |  |  | 206,819 |  |  |  | 1,245,973 |
Sales and marketing |  |  | 405,626 |  |  |  | 950,420 |
Goodwill and fixed asset impairment |  |  | — |  |  |  | 75,000 |
Total expenses |  |  | 3,774,118 |  |  |  | 7,135,195 |
OTHER EXPENSE (INCOME), NET |  |  |  |  |  |  |  |
Loss on disposal of equipment held for lease |  |  | 63,302 |  |  |  | — |
Interest (income) expense, net |  |  | — |  |  |  | (7,751 | )
Other expense (income), net |  |  | (4,898 | ) |  |  | (1,125 | )
Loss on fixed asset disposal |  |  | 300 |  |  |  | — |
Total other expense (income), net |  |  | 58,704 |  |  |  | (8,876 | )
INCOME (LOSS) FROM DISCONTINUED OPERATIONS BEFORE DISPOSAL |  |  | (171,701 | ) |  |  | (2,142,763 | )
Gain on sale of Qualigen, Inc., net of tax |  |  | 3,876,778 |  |  |  | — |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS OF QUALIGEN, INC. |  | $ | 3,705,077 |  |  | $ | (2,142,763 | )
In connection with this transaction, the Company recorded a gain on the sale of Qualigen, Inc. in its consolidated financial statements for the years ended December 31, 2023:
|  | Gain on sale of Qualigen, Inc. |
Fair value of consideration received |  | $ | 5,489,337 |
Working capital adjustment |  |  | 235,402 |
Total Assets of discontinued operations |  |  | (4,225,562 | )
Total Liabilities of discontinued operations |  |  | 3,005,407 |
Transaction expenses |  |  | (627,806 | )
Gain on sale of Qualigen, Inc. |  | $ | 3,876,778 |
In the fourth quarter of 2023, the gain was adjusted upward by $17,000 upon final payment of transaction costs. Amendment and Settlement Agreement with NanoSynex Ltd. On July 20, 2023, the Company entered into and effectuated the NanoSynex Amendment, pursuant to which the Company agreed to, in exchange for eliminating all future NanoSynex Funding Agreement obligations for the Company to invest further cash in NanoSynex (except for obligations to lend NanoSynex $560,000 on or before November 30, 2023, and $670,000 on or before March 31, 2024), surrender 281,000 Series B Preferred Shares of NanoSynex held by the Company, resulting in the Company’s ownership in NanoSynex being reduced from approximately 52.8% to approximately 49.97% of the voting equity of NanoSynex; in addition, the Company agreed to surrender approximately $3.0 million of promissory notes which NanoSynex had issued to the Company under the NanoSynex Funding Agreement. On November 22, 2023, the Company further agreed to eliminate the Company’s obligations to lend NanoSynex $560,000 on or before November 30, 2023, and $670,000 on or before March 31, 2024, by instead surrendering shares of Series A-1 Preferred Stock of NanoSynex in an amount that reduced the Company’s ownership in NanoSynex voting equity from approximately 49.97% to 39.90%. The surrender of Series B Preferred Shares of NanoSynex was accounted for as a loss of control of a subsidiary that constitutes a business under ASC 810. As a result, on July 20, 2023, the Company deconsolidated NanoSynex’s related assets, liabilities, accumulated other comprehensive income, and the noncontrolling interest. Subsequently, the retained investment in NanoSynex is accounted for as an equity method investment. On the date of deconsolidation, the Company recognized its retained investment at fair value, which during the preparation of these financial statements was determined to be de minimis based on various economic, industry, and other factors. As a result, the Company has discontinued recognition of its proportionate share of equity method losses following the date of initial recognition. Future equity method earnings, if any, will not be recognized until the amount exceeds the unrecognized net losses in prior periods. Based upon the magnitude of the disposition and because the Company is exiting certain research and development operations, the disposition represents a strategic shift that will have a material effect on the Company’s operations and financial results. Accordingly, the business of NanoSynex is classified as discontinued operations for all periods presented herein. The assets and liabilities classified in discontinued operations for NanoSynex as of December 31, 2022 are as follows: ASSETS AND LIABILITIES CLASSIFIED IN DISCONTINUED OPERATIONS
|  | December 31, |
|  | 2022 |
Cash |  | $ | 1,621,967 |
Accounts receivable, net |  |  | 26,499 |
Prepaid expenses and other current assets |  |  | 190,384 |
Total current assets of discontinued operations |  |  | 1,838,850 |
Restricted cash |  |  | 5,690 |
Property and equipment, net |  |  | 29,149 |
Intangible assets, net |  |  | 5,700,000 |
Goodwill |  |  | 625,602 |
Total non-current assets of discontinued operations |  |  | 6,360,441 |
Total assets of discontinued operations of NanoSynex |  | $ | 8,199,291 |
Accounts payable |  | $ | 1,273 |
Accrued vacation |  |  | 115,002 |
Accrued expenses and other current liabilities |  |  | 293,571 |
R&D grant liability |  |  | 780,682 |
Short term debt-related party |  |  | 950,722 |
Total current liabilities of discontinued operations |  |  | 2,141,250 |
Deferred tax liability |  |  | 357,757 |
Total non-current liabilities of discontinued operations |  |  | 357,757 |
Total liabilities of discontinued operations of NanoSynex |  | $ | 2,499,007 |
The Company reclassified the following statement of operations items to discontinued operations for the years ended December 31, 2023 and 2022, respectively:
|  | 2023 |  |  | 2022 |
|  | For the Years Ended December 31, |
|  | 2023 |  |  | 2022 |
EXPENSES |  |  |  |  |  |  |  |
Research and development |  | $ | 869,064 |  |  | $ | 1,105,040 |
Goodwill and fixed asset impairment |  |  | — |  |  |  | 4,164,000 |
Total expenses |  |  | 869,064 |  |  |  | 5,269,040 |
Loss on disposal of discontinued operations |  |  | 4,479,010 |  |  |  | — |
(BENEFIT) PROVISION FOR INCOME TAXES |  |  | (357,757 | ) |  |  | (271,622 | )
LOSS FROM DISCONTINUED OPERATIONS |  |  | (4,990,317 | ) |  |  | (4,997,418 | )
Loss attributable to noncontrolling interest |  |  | (343,038 | ) |  |  | (2,394,100 | )
NET LOSS ATTRIBUTABLE TO STOCKHOLDERS |  | $ | (4,647,279 | ) |  | $ | (2,603,318 | )
In connection with this transaction, the Company recorded a loss on deconsolidation of NanoSynex in its consolidated financial statements for the years ended December 31, 2023:
|  | Loss on deconsolidation of NanoSynex |
Fair value of NanoSynex interest retained |  | $ | — |
Net assets deconsolidated |  |  | (2,768,403 | )
Non-controlling interest share |  |  | 1,235,443 |
Accumulated other comprehensive income attributable to NanoSynex |  |  | 131,891 |
Forgiveness of debt |  |  | (3,077,941 | )
Loss from deconsolidation of NanoSynex |  | $ | (4,479,010 | )

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