XML 25 R11.htm IDEA: XBRL DOCUMENT

DISCONTINUED OPERATIONS

12 Months Ended

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:

		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:

		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:

		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	)