26779270221604260001596062--11-302021FYQBIOfalse22799822799850313440000023816489286477880.330.65P5YP0YP0Y0001596062qbio:AfterModificationMember2021-11-300001596062srt:MinimumMemberqbio:AfterModificationMember2020-05-010001596062srt:MaximumMemberqbio:AfterModificationMember2020-05-0100015960622020-02-120001596062qbio:ManninAgreementMember2020-06-152020-06-150001596062us-gaap:CommonStockMember2022-02-092022-02-090001596062us-gaap:CommonStockMember2022-01-212022-01-210001596062qbio:ManninAgreementMember2019-04-092019-04-090001596062us-gaap:GeneralAndAdministrativeExpenseMember2020-12-012021-11-300001596062us-gaap:GeneralAndAdministrativeExpenseMember2019-12-012020-11-300001596062us-gaap:SeriesBPreferredStockMember2021-01-012021-02-280001596062us-gaap:RetainedEarningsMember2021-11-300001596062us-gaap:AdditionalPaidInCapitalMember2021-11-300001596062us-gaap:RetainedEarningsMember2020-11-300001596062us-gaap:AdditionalPaidInCapitalMember2020-11-300001596062us-gaap:RetainedEarningsMember2019-11-300001596062us-gaap:AdditionalPaidInCapitalMember2019-11-300001596062us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2021-11-300001596062us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2021-11-300001596062us-gaap:CommonStockMember2021-11-300001596062us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2020-11-300001596062us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2020-11-300001596062us-gaap:CommonStockMember2020-11-300001596062us-gaap:CommonStockMember2019-11-300001596062srt:DirectorMember2021-02-010001596062us-gaap:EmployeeStockOptionMemberqbio:BeforeModificationMember2021-11-300001596062us-gaap:EmployeeStockOptionMemberqbio:AfterModificationMember2021-11-300001596062us-gaap:WarrantMember2021-11-300001596062us-gaap:EmployeeStockOptionMember2021-11-300001596062us-gaap:WarrantMember2020-11-300001596062us-gaap:EmployeeStockOptionMember2020-11-300001596062us-gaap:WarrantMember2019-11-300001596062us-gaap:EmployeeStockOptionMember2019-11-300001596062us-gaap:EmployeeStockOptionMemberqbio:BeforeModificationMember2020-12-012021-11-300001596062srt:MinimumMemberus-gaap:EmployeeStockOptionMember2020-12-012021-11-300001596062srt:MinimumMemberus-gaap:EmployeeStockOptionMember2019-12-012020-11-300001596062us-gaap:EmployeeStockOptionMemberqbio:AfterModificationMember2020-12-012021-11-300001596062us-gaap:EmployeeStockOptionMemberqbio:BeforeModificationMember2019-12-012020-11-300001596062qbio:Debenture2021Member2020-12-012021-11-300001596062qbio:LicenseAgreementMember2020-12-012021-11-300001596062qbio:OptionsAndWarrantsMember2019-12-012020-11-300001596062qbio:LicenseAgreementMember2019-12-012020-11-300001596062srt:ManagementMember2021-08-312021-08-310001596062qbio:ManninMember2020-09-1500015960622021-02-262021-02-260001596062qbio:ManninMember2020-09-152020-09-150001596062qbio:ConvertibleSeriesPreferredStockMember2021-11-300001596062qbio:ConvertibleSeriesBPreferredStockMember2021-11-300001596062qbio:ConvertibleSeriesPreferredStockMember2020-11-300001596062qbio:ConvertibleSeriesBPreferredStockMember2020-11-300001596062us-gaap:SeriesBPreferredStockMember2020-04-030001596062us-gaap:SeriesAPreferredStockMember2020-04-030001596062us-gaap:SeriesAPreferredStockMember2021-11-300001596062qbio:ScenarioTwoMemberus-gaap:SeriesBPreferredStockMember2021-11-300001596062us-gaap:SeriesBPreferredStockMember2021-11-300001596062qbio:ScenarioTwoMember2021-11-300001596062qbio:ScenarioOneMember2021-11-300001596062us-gaap:CommonStockMember2022-02-012022-02-280001596062us-gaap:StateAndLocalJurisdictionMember2021-11-300001596062us-gaap:DomesticCountryMember2021-11-300001596062us-gaap:RetainedEarningsMember2020-12-012021-11-300001596062us-gaap:RetainedEarningsMember2019-12-012020-11-300001596062qbio:LeaseAgreementMember2016-12-310001596062qbio:Debenture2019AugustMember2019-08-282019-08-280001596062qbio:LeaseAgreementMember2016-12-012016-12-310001596062qbio:MetastronAssetMember2019-12-012020-11-300001596062qbio:OptionsAndWarrantsMember2020-12-012021-11-300001596062qbio:Debenture2020Member2020-12-012021-11-300001596062us-gaap:IntellectualPropertyMember2020-12-012021-11-300001596062qbio:MetastronAssetMember2020-12-012021-11-3000015960622018-11-232018-11-230001596062qbio:MetastronAssetMember2021-11-300001596062qbio:GeHealthcareLimitedMemberus-gaap:IntellectualPropertyMember2020-12-012021-11-300001596062us-gaap:WarrantMember2019-12-012020-11-300001596062us-gaap:EmployeeStockOptionMember2019-12-012020-11-300001596062us-gaap:WarrantMember2018-12-012019-11-300001596062us-gaap:EmployeeStockOptionMember2018-12-012019-11-300001596062us-gaap:CommonStockMember2021-11-300001596062us-gaap:SeriesBPreferredStockMember2020-11-300001596062us-gaap:SeriesAPreferredStockMember2020-11-300001596062us-gaap:CommonStockMember2020-11-300001596062qbio:ManninMemberus-gaap:CommonStockMember2020-09-150001596062qbio:SecuritiesPurchaseAgreementIssuedInOctober2020Member2021-11-300001596062us-gaap:CommonStockMemberqbio:SecuritiesPurchaseAgreementIssuedInOctober2020Member2020-09-250001596062qbio:SecuritiesPurchaseAgreementsMemberus-gaap:CommonStockMember2021-05-202021-05-200001596062us-gaap:ConvertibleDebtMember2021-11-300001596062us-gaap:MeasurementInputRiskFreeInterestRateMember2021-11-300001596062us-gaap:MeasurementInputPriceVolatilityMember2021-11-300001596062us-gaap:MeasurementInputExpectedTermMember2021-11-300001596062us-gaap:MeasurementInputExpectedDividendRateMember2021-11-300001596062us-gaap:MeasurementInputExercisePriceMember2021-11-300001596062us-gaap:MeasurementInputRiskFreeInterestRateMember2021-09-290001596062us-gaap:MeasurementInputPriceVolatilityMember2021-09-290001596062us-gaap:MeasurementInputExpectedTermMember2021-09-290001596062us-gaap:MeasurementInputExpectedDividendRateMember2021-09-290001596062us-gaap:MeasurementInputExercisePriceMember2021-09-290001596062us-gaap:MeasurementInputRiskFreeInterestRateMember2021-07-260001596062us-gaap:MeasurementInputPriceVolatilityMember2021-07-260001596062us-gaap:MeasurementInputExpectedTermMember2021-07-260001596062us-gaap:MeasurementInputExpectedDividendRateMember2021-07-260001596062us-gaap:MeasurementInputExercisePriceMember2021-07-260001596062us-gaap:MeasurementInputRiskFreeInterestRateMember2021-02-120001596062us-gaap:MeasurementInputPriceVolatilityMember2021-02-120001596062us-gaap:MeasurementInputExpectedTermMember2021-02-120001596062us-gaap:MeasurementInputExpectedDividendRateMember2021-02-120001596062us-gaap:MeasurementInputExercisePriceMember2021-02-120001596062us-gaap:MeasurementInputRiskFreeInterestRateMember2020-12-230001596062us-gaap:MeasurementInputPriceVolatilityMember2020-12-230001596062us-gaap:MeasurementInputExpectedTermMember2020-12-230001596062us-gaap:MeasurementInputExpectedDividendRateMember2020-12-230001596062us-gaap:MeasurementInputExercisePriceMember2020-12-230001596062qbio:Debenture2020Memberus-gaap:ConvertibleDebtMember2020-12-230001596062qbio:Debenture2021Member2021-02-120001596062qbio:Debenture2020Member2020-12-230001596062qbio:Debenture2019AugustMember2019-08-280001596062qbio:Debenture2021Member2021-09-290001596062srt:MaximumMemberqbio:Debenture2021Member2021-07-260001596062srt:MinimumMemberqbio:Debenture2021Member2021-02-120001596062srt:MaximumMemberqbio:Debenture2021Member2021-02-120001596062srt:MinimumMemberqbio:Debenture2020Member2020-12-230001596062srt:MaximumMemberqbio:Debenture2020Member2020-12-230001596062us-gaap:SeriesBPreferredStockMemberqbio:SecuritiesPurchaseAgreementMember2020-04-062020-04-060001596062us-gaap:SeriesAPreferredStockMemberqbio:SecuritiesPurchaseAgreementMember2020-04-062020-04-060001596062us-gaap:SeriesBPreferredStockMember2021-02-280001596062us-gaap:PreferredStockMember2021-11-300001596062qbio:Debenture2019AugustMember2020-11-300001596062srt:OfficerMember2020-11-300001596062srt:DirectorMember2020-11-300001596062qbio:Debenture2021Member2021-07-260001596062qbio:SecuritiesPurchaseAgreementsMemberus-gaap:CommonStockMember2021-05-200001596062qbio:SecuritiesPurchaseAgreementIssuedInOctober2020Member2020-10-220001596062qbio:AfterModificationMember2020-05-010001596062qbio:AfterModificationMember2020-02-1200015960622019-11-300001596062us-gaap:WarrantMember2020-12-012021-11-300001596062us-gaap:SeriesBPreferredStockMember2020-12-012021-11-300001596062us-gaap:SeriesAPreferredStockMember2020-12-012021-11-300001596062us-gaap:EmployeeStockOptionMember2020-12-012021-11-300001596062us-gaap:ConvertibleDebtSecuritiesMember2020-12-012021-11-300001596062us-gaap:WarrantMember2019-12-012020-11-300001596062us-gaap:SeriesBPreferredStockMember2019-12-012020-11-300001596062us-gaap:SeriesAPreferredStockMember2019-12-012020-11-300001596062us-gaap:EmployeeStockOptionMember2019-12-012020-11-300001596062us-gaap:ConvertibleDebtSecuritiesMember2019-12-012020-11-300001596062qbio:SecuritiesPurchaseAgreementIssuedInOctober2020Member2020-10-222020-10-220001596062us-gaap:SubsequentEventMember2021-12-022021-12-020001596062us-gaap:CommonStockMember2020-12-012021-11-300001596062us-gaap:CommonStockMember2019-12-012020-11-300001596062qbio:SecuritiesPurchaseAgreementIssuedInOctober2020Member2020-09-252020-09-250001596062qbio:AfterModificationMember2021-11-302021-11-300001596062us-gaap:WarrantMember2020-12-012021-11-300001596062us-gaap:EmployeeStockOptionMember2020-12-012021-11-300001596062qbio:ScenarioTwoMemberus-gaap:SeriesBPreferredStockMember2020-12-012021-11-300001596062us-gaap:SeriesBPreferredStockMember2020-12-012021-11-300001596062qbio:ScenarioTwoMember2020-12-012021-11-300001596062qbio:ScenarioOneMember2020-12-012021-11-3000015960622021-11-302021-11-3000015960622020-05-012020-05-0100015960622020-02-122020-02-1200015960622020-10-222020-10-220001596062qbio:ScenarioOneMemberus-gaap:SeriesBPreferredStockMember2021-11-300001596062qbio:UnsecuredPromissoryNotesAgreementMembersrt:ManagementMember2021-04-160001596062qbio:ManninMemberus-gaap:IntellectualPropertyMemberqbio:LicenseAgreementMember2015-10-012015-10-290001596062qbio:ManninAgreementMember2021-06-302021-06-300001596062qbio:ManninAgreementMember2020-12-312020-12-310001596062qbio:ManninAgreementMember2020-09-012020-09-010001596062qbio:ManninAgreementMember2021-11-300001596062us-gaap:CommonStockMember2020-12-012021-11-300001596062qbio:Debenture2020Member2021-07-220001596062qbio:GeHealthcareLimitedMemberus-gaap:IntellectualPropertyMember2021-11-3000015960622021-02-012021-02-010001596062qbio:Debenture2021Member2021-11-300001596062us-gaap:CommonStockMember2019-12-012020-11-300001596062qbio:WashingtonUniversityMember2019-03-092019-03-090001596062srt:MinimumMemberqbio:WashingtonUniversityMember2019-03-092019-03-090001596062srt:MaximumMemberqbio:WashingtonUniversityMember2019-03-092019-03-090001596062us-gaap:SeriesAPreferredStockMember2020-12-012021-11-3000015960622021-11-3000015960622020-11-300001596062us-gaap:ConvertibleDebtMember2020-12-012021-11-300001596062us-gaap:ConvertibleDebtMember2020-12-012021-11-300001596062qbio:Debenture2021Member2021-02-122021-02-120001596062qbio:Debenture2021Member2021-09-292021-09-290001596062qbio:Debenture2021Member2021-07-262021-07-2600015960622021-02-122021-02-120001596062qbio:Debenture2020Member2020-12-232020-12-230001596062qbio:Debenture2020Member2021-11-300001596062qbio:Debenture2019Member2021-11-300001596062qbio:Debenture2020Member2020-11-300001596062qbio:Debenture2019Member2020-11-300001596062qbio:Debenture2018Member2020-11-300001596062qbio:ManninAgreementMember2020-12-012021-11-300001596062qbio:GeHealthcareLimitedMemberus-gaap:IntellectualPropertyMember2018-11-232018-11-230001596062qbio:AfterModificationMember2020-02-122020-02-120001596062us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2020-12-012021-11-300001596062us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2020-12-012021-11-300001596062us-gaap:PreferredStockMember2020-12-012021-11-300001596062us-gaap:AdditionalPaidInCapitalMember2020-12-012021-11-300001596062us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2019-12-012020-11-300001596062us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2019-12-012020-11-300001596062us-gaap:AdditionalPaidInCapitalMember2019-12-012020-11-3000015960622019-12-012020-11-3000015960622021-05-3100015960622022-02-2500015960622020-12-012021-11-30xbrli:sharesiso4217:USDxbrli:pureqbio:itemiso4217:USDxbrli:sharesqbio:D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

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

For the fiscal year ended November 30, 2021

or

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

For the Transition Period from __________ to __________

Commission File Number: 000-55535

Q BIOMED INC.

(Exact name of registrant specified in its charter)

Nevada

    

30-0967746

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

c/o Ortoli Rosenstadt LLP

366 Madison Avenue, 3rd Floor

New York, NY 10017

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (212) 588-0022

Securities Registered Pursuant to Section 12(b) of the Exchange Act:

Title of Each Class

    

Trading Symbol(s)

    

Name of Exchange on which Registered

None

N/A

 

None

Securities Registered Pursuant to Section 12(g) of the Act: Common Stock

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

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

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 definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

Accelerated filer  

Non-accelerated filer

 

Smaller reporting company  

 

 

Emerging growth company

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes No

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the most recent price at which the common equity was sold:  $23,172,626 as of May 31, 2021.

As of February 25, 2022, there were 30,602,888 shares of the registrant’s common stock, $0.001 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Table of Contents

FORWARD LOOKING STATEMENTS

This annual report contains forward-looking statements that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. In evaluating these statements, you should consider various factors, including the assumptions, risks and uncertainties outlined in this annual report. Any of these items may cause our actual results to differ materially from any forward-looking statement made in this annual report. Forward-looking statements in this annual report include, among others, statements regarding our capital needs, business plans and expectations.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding future events, our actual results will likely vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Some of the risks and assumptions include:

our need for additional financing;
our limited operating history;
our history of operating losses;
our lack of insurance coverage;
the competitive environment in which we operate;
changes in governmental regulation and administrative practices;
our dependence on key personnel;
conflicts of interest of our directors and officers;
our ability to fully implement our business plan;
our ability to effectively manage our growth; and
other regulatory, legislative and judicial developments.

We advise the reader that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. The forward-looking statements in this annual report are made as of the date of this annual report and we do not intend or undertake to update any of the forward-looking statements to conform these statements to actual results, except as required by applicable law, including the securities laws of the United States.

AVAILABLE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). We are a voluntary filer with the SEC. As a voluntary filer, we are not required to file periodic reports under the Exchange Act. If we were to cease to be a reporting company under the Exchange Act, the information now available to shareholders in the annual, quarterly and other reports filed by us would not be available.

You may read and copy documents referred to in this Annual Report on Form 10-K that have been filed with the SEC at the SEC’s Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also obtain copies of our SEC filings by going to the SEC’s website at http://www.sec.gov.

REFERENCES

As used in this annual report: (i) the terms “we”, “us”, “our” and the “Company” mean Q BioMed Inc. and, where applicable, our wholly-owned subsidiaries; (ii) “SEC” refers to the Securities and Exchange Commission; (iii) “Securities Act” refers to the United States Securities Act of 1933, as amended; (iv) “Exchange Act” refers to the U.S. Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated.

Table of Contents

FORM 10-K

For the fiscal year ended November 30, 2021

TABLE OF CONTENTS

PART I

4

ITEM 1. BUSINESS

4

ITEM 1A. RISK FACTORS

12

ITEM 1B. UNRESOLVED STAFF COMMENTS

12

ITEM 2. PROPERTIES

12

ITEM 3. LEGAL PROCEEDINGS

12

ITEM 4. MINE SAFETY DISCLOSURES

12

PART II

13

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

13

ITEM 6. [RESERVED]

14

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

14

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

23

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

23

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

23

ITEM 9A. CONTROLS AND PROCEDURES

24

ITEM 9B. OTHER INFORMATION

25

PART III

25

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

25

ITEM 11. EXECUTIVE COMPENSATION

26

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

27

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

28

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

29

PART IV

30

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

30

ITEM 16. FORM 10-K SUMMARY

31

SIGNATURES

32

Table of Contents

PART I

ITEM 1. BUSINESS

We are a commercial stage biotechnology acceleration and development company focused on acquiring and in-licensing pre-clinical, clinical-stage and approved life sciences therapeutic products. We aim to acquire, or license and have assembled, a pipeline of multiple therapeutics in development stages ranging from early pre-clinical to commercial ready. Our model seeks to diversify risk by broadening the therapeutic areas we work in as well as providing multiple catalysts as we advance assets through the clinical and regulatory process. We aim to maximize risk-adjusted returns by focusing on multiple assets throughout the discovery and development cycle as well as commercial product revenue generation. We expect to benefit from early positioning in illiquid and/or less well known privately-held assets, thereby enabling us to capitalize on valuation growth as these assets move forward in their development.

Currently, we have a portfolio of five therapeutic products, including an FDA approved radiopharmaceutical for metastatic bone cancer pain (Strontium-89 and MetastronTM) and three development stage products: QBM-001 for rare pediatric non-verbal autism spectrum disorder, Uttroside-B for liver cancer, and the MANNIN Platform starting with MAN19 for Acute Respiratory Distress Syndrome caused by infectious diseases like COVID19. The MANNIN platform has several potential therapeutics in development in various indications, including vascular (glaucoma, Cystic kidney disease) and infectious diseases. The infectious diseases we may ultimately treat include influenza, COVID-19, Ebola and others.

In 2020, we began generating revenue from our Strontium-89 product for pain palliation in bone metastases. We are exploring a therapeutic expansion post-marketing clinical trials or data aggregation for Strontium-89. We also intend to file investigational new drug applications or equivalent in 2022 with the Canadian regulators for MAN-19 for Acute Respiratory Diseases Syndrome (caused by COVID-19) and later in the United States for Uttroside-B for the treatment of liver cancer. Additional Mannin indications will also be advanced towards clinical trials for other vascular diseases. We also intend to advance our QBM-001 asset to address a non-verbal learning disorder in autistic children and are assessing additional technologies to focus our pipeline in the rare disease space to complement our orphan drug designated liver cancer drug candidate and the rare autism spectrum program.

Following is a summary of our product pipeline.

Our Strategy

Our goal is to become a leading biotechnology acceleration and development company with a diversified portfolio of therapeutic products and product candidates. To achieve this goal, we are executing on the following strategy:

Strategically collaborate or in- and out-license select programs.

We seek to collaborate or in- and out-license certain potentially therapeutic candidate products to biotechnology or pharmaceutical companies for preclinical and clinical development and commercialization.

Highly leverage external talent and resources.

We plan to maintain and further build our team which is skilled in evaluating technologies for development and product development towards commercialization. By partnering with industry specific experts, we are able to identify undervalued assets that we can fund and assist in enhancing inherent value. We plan to continue to rely on the extensive experience of our management team to execute on our objectives.

Evaluate commercialization and monetization strategies on a product-by-product basis in order to maximize the value of our product candidates or future potential products.

As we move our drug candidates through development toward regulatory approval, we will evaluate several options for each drug candidate’s commercialization or monetization strategy. These options include building our own internal sales force; entering into a joint marketing partnership with another pharmaceutical or biotechnology company, whereby we jointly sell and market the product; and out-licensing any product that we develop by ourselves or jointly with another party, whereby another pharmaceutical or biotechnology company sells and markets such product and pays us a royalty on sales. Our decision will be made separately for each product and will be based on a number of factors including capital necessary to execute on each option, size of the market to be addressed and terms of potential offers from other pharmaceutical and biotechnology companies. It is too early for us to know which of these options we will pursue for our drug candidates, assuming their successful development.

4

Table of Contents

Acquire commercially or near-commercially ready products and build out the current market for such.

In addition to acquiring pre-clinical products, in assembling a diversified portfolio of healthcare assets, we plan on acquiring assets that are either FDA approved or are reasonably expected to be FDA approved within 12 months of our acquiring them. We anticipate hiring a contract sales organization to assume the bulk of the sales and distribution efforts related to any such product.

General Information

We were incorporated in the State of Nevada on November 22, 2013. In June 2015, we became a biomedical acceleration and development company focused on licensing, acquiring and providing strategic resources to life sciences and healthcare companies.

Our Drug Discovery Approach

We aim to acquire, or license and have assembled, a pipeline of multiple therapeutics in development stages ranging from early pre-clinical to commercial ready. Our model seeks to diversify risk by broadening the therapeutic areas we work in as well as providing multiple catalysts as we advance assets through the clinical and regulatory process.

Our mission is to:

(i)

license and acquire pre-commercial innovative life sciences assets in different stages of development and therapeutic areas from academia or small private companies;

(ii)

license and acquire FDA approved drugs and medical devices with limited current and commercial activity; and

(iii)

accelerate and advance our assets to the next value inflection point by providing: (A) strategic capital, (B) business development and financial advice and (C) experienced sector specific advisors.

Our Research and Development Activities

As a biomedical acceleration and development company, research and development is a core aspect of our business. In the fiscal years ended November 30, 2021 and 2020, we incurred approximately $1.1 million and $1.9 million, respectively, in research and development activities.

Metastron™ and Strontium-89 Chloride USP Injection

We have been working hard to commercialize Strontium-89 for the non-opiate treatment of metastatic cancer bone pain. In November 2019, the Department of Health and Human Services approved our supplemental abbreviated new drug application for a new drug product manufacturing site, IsoTherapeutics Group, LLC. In 2020, IsoTherapeutics began manufacturing our FDA approved non-opioid cancer bone pain drug Strontium-89 Chloride USP.

On February 13, 2020, we launched our FDA approved non-opioid drug Strontium-89 (Strontium Chloride Sr-89 Injection, USP). In January 2021, we received full reimbursement from Medicare and Medicaid, were approved as a federal supplier in March 2021, and engaged a federal sales team working mostly with the U.S Departments of Veterans’ Affairs, the Department of Defense and Indian Health Services. We have recently retained Eversana to partner on the institutional sales efforts and expect to deploy in field sales reps in 2022. Stontium-89 has been shown to relieve the persistent pain associated with cancer that has metastasized to bone. In several multicenter, placebo-controlled trials in cancer patients with persistent pain after external beam radiation therapy for bone metastases, pain relief occurred in more patients treated with a single injection of Strontium-89 than in patients treated with an injection of placebo, with a greater percentage of patients experiencing pain scores of zero with no use of rescue opioid analgesics. Median duration of pain palliation has been shown to be 2 to 5 months. Strontium-89 can be re-dosed every 90 days.

An estimated 10 million people are living with this condition, and due to the opioid crisis, doctors and patients are looking for an alternative to treat metastatic cancer associated bone pain. Given that Strontium-89 can be administered every three months and has proven effective in approximately 80% of the patients who received the drug, Q BioMed is hopeful that a broad market is available and can be accessed with the right resources.

5

Table of Contents

We have a Non-USA named patient program and few international distribution contracts in place expect to be able to generate sales outside the US this year. Through our US distribution partner, Jubilant RadiopharmaTM, we have the capability to reach patients in all 50 states. Our contract manufacturing facility, which is FDA approved to manufacture Strontium-89, is manufacturing commercial-scale quantities on a regular schedule. COVID-19 restrictions on people and supply chains have slowed our commercial rollout to some extent. We are fully commercial in terms of product availability, infrastructure and distribution and expect to have a meaningful sales team deployed during 2022 once funding is available.

We plan to launch the Strontium-89 in global markets, including Europe, in 2022 as we navigate the regulatory approval process, and we have already seen interest from this region. With the necessary funding, we also plan to undertake further research for Strontium-89 for potential label extension into therapeutic use for survival benefit in metastatic bone cancer through a Phase IV study as well as to explore combination studies for enhancing the value proposition of the drug through better outcomes.

We have proactively on-boarded our commercial team tasked with infrastructure set-up, including medical information and pharmacovigilance, government contracting, marketing and a contract federal sales team. We have announced a distribution partnership with Jubilant Radiopharma who have all the capabilities we require to access the U.S. market, including warehousing/inventory management, invoicing and customer service/ordering. Jubilant also has a sales team that calls on major providers, a national network of nuclear pharmacies in the United States and distribution and coverage throughout the United States.

The global demand for access to generic drugs and non-opioid therapies has given Q BioMed access to a global market we continue to be extremely excited about its prospects to re-establish a deserved niche in the late stage cancer treatment landscape.

Mannin Research Inc. Intellectual Property

On October 29, 2015, we entered into a Patent and Technology License and Purchase Option Agreement, as amended in March 2019, with Mannin Research Inc. (Mannin) whereby we were granted a worldwide, exclusive license on, and option to acquire, certain Mannin intellectual property, or IP, within a four-year term. Under the 2019 amendment, the option to acquire was extended to October 29, 2021 and is now expired. On September 1, 2020, we further amended the license agreement allowing Mannin to grant an exclusive license to Mannin GmbH (its wholly owned German subsidiary) in order fully take advantage of the German government grant to Mannin. The agreement also confirms our ongoing investment into the Tie2 platform to create, and therefore maintain economic value for us and our shareholders. We have agreed to contribute funds in Mannin GmbH. We paid Mannin $1.5 million in cash in three instalments. In addition, we paid to Mannin $0.75 million in shares of our common stock valued as of June 15, 2020, in full satisfaction of R&D payables, contracted by Mannin in development of the Tie2 platform. We continue to have the right to 100% of the revenues, if any, derived from the Mannin Tie2 technology platform, until such time that Mannin and its subsidiaries have independently raised at least $2 million in funds, at which time the parties have agreed to a 50% profit share structure reducing our future capital commitments to Mannin R&D and commercial rollout, which is expected to happen this year.

The Mannin IP and Tie2 platform technology was initially focused on developing a first-in-class eye drop treatment for glaucoma, but was shifted in 2020 to quickly advance a therapeutic for acute respiratory distress syndrome (ARDS) that causes the most severe COVID19 infections to require intubation, ICU and poor outcomes. The technology platform is being expanded and development is underway for ophthalmological uses and also includes other indications in cystic kidney disease, cardiovascular diseases and other infectious disease. This platform technology has application in many disease states that result in ‘leaky’ vessels and the inefficient flow of fluids, like COVID-19. During the years ended November 30, 2021 and 2020, we respectively incurred approximately $0.8 million and $1.0 million of research and development expenses under our license with Mannin. The purchase price for the Mannin IP is $30.0 million less the amount of cash paid by us for development and the value of the Common Stock issued to the vendor. We can make this all or part of this payment in stock, provided that such stock does not represent 15% or more of our issued and outstanding Common Stock.

Mannin COVID-19, Glaucoma and Others – More Government Funding

In March 2021, Mannin Research Inc. was granted an additional CAD$1.7 million from the Canadian governments COVID response budget, adding to the approximate $7.7 million granted in Europe, which together will fund 65-75 percent of every dollar incurred to advance the Acute Respiratory Distress Syndrome therapy for COVID patients as well as a portfolio of therapeutic assets for vascular diseases currently in development at Mannin, including: glaucoma, cardiovascular diseases, acute kidney disease, and other infectious diseases.

6

Table of Contents

The MAN-19 therapeutic is a recombinant fusion protein that treats the patient, instead of targeting the virus. It is not a cure for COVID-19, but it strengthens a patient’s blood vessels and protects them against ARDS, breathing problems, sepsis and other infections that may cause the body’s organs to begin shutting down. It is designed to keep COVID-19 patients out of the ICU and off a ventilator. Initial manufacturing and preclinical testing has shown promise, and pending upcoming toxicology testing, the drug is poised for clinical trials to start in 2022. If the drug proves both safe and effective, our goal is to have it available for use by patients by early 2023.

Our next steps are to complete the final toxicology studies, data aggregation and achieve approval of a Phase 1 clinical trial. The market for this kind of treatment in the current pandemic climate is substantial and global. COVID-19 is not going away any time soon. As a result, there is a need to develop more effective treatments. We believe that this technology will play a role in the broader treatment landscape and not only for COVID-19, but also for other infectious diseases that cause ARDS.

MAN-01 and GDF15

There are over 60 million patients worldwide with primary open-angle glaucoma. MAN-01 aims to reduce the pressure build-up in the eye by assisting with, and correcting, drainage problems in tiny vessels in the eye called the Schlemm’s Canal. MAN-01 is being designed to target these unique and extremely important vessels, as over 70% of all fluid in the eye flows through the Schlemm’s Canal. Currently, the MAN-01 program is finalizing its preclinical lead candidate optimization by completing a series of ophthalmic in vivo studies to demonstrate efficacy. After successful completion of the in vivo studies, Mannin Research will begin preparing for preclinical toxicology and filing of its IND. Our research shows that the drug’s mechanism of action may ameliorate vessel damage in several other diseases such as: kidney disease, cardiovascular disease, and against infectious diseases, such as influenza and the current COVID-19 outbreak. We believe these programs comprise a multi-disease platform technology that has several valuable applications. Adding the GDF15 biomarker to our portfolio is a significant step to securing a unique product offering that put precision medicine and patient specific treatment in the hands of clinicians. Growth Differentiation Factor 15 (GDF15) is a companion diagnostic marker to the MAN-01 drug for determining the severity of glaucoma using the expression levels of GDF15. Determining the severity of glaucoma using this biomarker will aid in treatment decisions for patients diagnosed with, and being treated for, glaucoma. Recent buyouts in the Biotechnology space has us believing that large pharma companies could be looking for valuable assets like this with multiple downlines because of expiring patient protection on current drugs. Our collaborators at the Washington University in St. Louis are currently examining the effectiveness of GDF15 as a clinical biomarker in a clinical trial. In parallel, Q BioMed and Mannin Research are working with the Biointerfaces Institute at McMaster University in Ontario, Canada to develop a GDF15 biomarker diagnostic kit for monitoring glaucoma severity and progression. The aim is to develop a simple integrated diagnostic test that can be performed at a physician’s office with no external, expensive equipment.

The MAN Platform for other indications:

Mannin presented positive data on a potential new treatment for acute kidney injury (AKI) at the American Society of Nephrology’s annual meeting held on November 7, 2019 in Washington DC.

The data presented demonstrates the Ang-Tie2 signaling pathway as a promising therapeutic target for renal protection from acute kidney injury following ischemic reperfusion. Ischemia–reperfusion (IR) injury to the kidney occurs in a range of clinically important scenarios including hypotension, sepsis and in surgical procedures such as cardiac bypass surgery and kidney transplantation, leading to AKI. In-hospital mortality for patients with AKI has recently been estimated to be between 20 and 25% and mortality rates in excess of 50% have been reported in critically ill patients with AKI requiring dialysis. For those patients who survive, complications include chronic kidney disease (CKD) and end-stage renal disease (ESRD); cardiovascular events, and reduced quality of life. In the United States, AKI is associated with an increase in hospitalization costs that range from $5.4 to $24.0 billion.  No effective treatments have been approved by the FDA. This represents a very significant opportunity to advance a therapeutic in an underserved patient population.

ASD-002

On April 21, 2017, we entered into a License Agreement on Patent & Know-How Technology with ASDERA whereby we were granted a worldwide, exclusive, license on certain ASDERA intellectual property, which was previously referred to as ASD-002 in our pipeline, and was intended to treat Disruption of Active Language Development (DALD) in toddlers developing Autism Spectrum Disorders. Under that agreement, we paid ASDERA $50,000 and issued 125,000 shares of our Common Stock. On November 27, 2019, we notified ASDERA that we considered the agreement to have been rescinded retroactively as of April 21, 2017. As a result of such rescission, we believe that we have no continuing material obligations to ASDERA. However, we will continue to develop unique technologies for the benefit of underserved patient populations.

7

Table of Contents

QBM-001

Among the more than 60,000 US children who develop autism spectrum disorders, or ASD, every year, approximately 20,000 become nonverbal and will have to rely on assisted living for the rest of their lives. In parallel to ASD-002, we have been developing a product, QBM-001, intended to treat the rare condition - pediatric minimally verbal autism. Many of the children who miss this potential treatment window between the age of 2 and 5 years old may become non-verbal for the rest of their lives. Currently, there is no treatment for this rare disorder.

QBM-001 is not intended to treat other ASDs or to be used beyond the specific group and the estimated treatment window. The “treatment window” results from independent research that revealed a decreased density in the cortex region of the brain in minimally verbal children with autism, who were 7 years of age. A biomarker study performed by us has directed us to conclude that QBM-001 cannot be used for other autistic groups. The study analyzed over 2000 known autistic markers and found two distinct biomarkers for children with pediatric minimally verbal autism. The biomarkers did not overlap with the high functioning group of autistic children, nor the intermediate group, which struggles with, but develops limited language. The biomarkers gave us insight into what was wrong with the children and has given us unique insight on how to ameliorate their condition with the goal of helping them develop the ability to speak.

The biomarker study also led us to evaluate and identify a rat model that contains the biomarkers and is thus a good model to test QBM-001. In addition, we have access to cell lines from deceased children who had pediatric minimally verbal autism. QBM-001 consists of a combination of products that target different mechanisms of action. Having the cell lines and rat model available to us provides us with an excellent preclinical path to validate the safety and efficacy of QBM-001.

We filed an orphan drug application for our QBM-001 drug candidate in June 2019. We need to supplement our application with additional data and intend on refiling the supplemented application in 2022.

QBM-001 - Addressing Rare Pediatric Minimally Verbal Autism

Causes of non-verbal learning disorder have been linked to several complications that range from a specific mutated gene as with Fragile X Syndrome, Rett Syndrome, Phelan McDermid Syndrome or autoimmunity, where the body’s immune system is attacking parts of the brain. Trauma, microbial infections and environmental factors have also been linked to non-verbal learning disorder. Ongoing research is helping to further explain the root cause of why children become non-verbal or minimally verbal.

Cognitive intervention is the only form for treatment that has shown to help improve speech capability and social interaction in autistic children, however, with minimal benefit with children with pediatric minimally verbal autism. As intervention does not lead to speech progression, being minimally verbal carries a lifetime burden of over $5 million per person for cost of care. This is further compounded by additional expenses during the lifespan of the person due to loss in productivity in addition to severe emotional strain for the child and the parents.

As there are no treatment options for these patients, we believe there is a significant economic opportunity to bring a drug to market in this indication. The active ingredients in our compound are well known and have been approved by worldwide regulators for many years. Using a novel delivery and formulation for the ingredients, we intend to advance this drug through the 505(b)2 pathway.

RGCB and OMRF Intellectual Property

On June 15, 2017, we entered into a Technology License Agreement with RGCB and OMRF whereby they granted us a worldwide, exclusive, license on intellectual property related to Uttroside-B. Uttroside-B is a chemical compound derived from the plant Solanum nigrum Linn, also known as Black Nightshade or Makoi. We seek to use the Uttroside-B IP to create a chemotherapeutic agent against liver cancer.

The initial cost to acquire the exclusive license for Uttroside-B was $10,000. In addition to royalties based upon net sales of the product candidate, if any, we are required to make additional payments upon the following milestones:

the completion of certain preclinical studies;

8

Table of Contents

the filing of an investigational new drug application with the US Food and Drug Administration or the filing of the equivalent application with an equivalent governmental agency;
successful completion of each of Phase I, Phase II and Phase III clinical trials;
FDA approval of the product candidate;
approval by the foreign equivalent of the FDA of the product candidate;
achieving certain worldwide net sales; and
a change of control of our Company.

Subject to the terms of the exclusive license for Uttroside-B, we will be in control of the development and commercialization of the product candidate and are responsible for the costs of such development and commercialization. We are obligated to undertake a good-faith commitment to (i) fund the pre-clinical trials and (ii) to initiate a Phase II clinical trial within six years of the date of the Agreement. Failure to show a good-faith effort to meet those goals would mean that the exclusive license for Uttroside-B would revert to the licensors.

UTTROSIDE-B - A Novel Chemotherapeutic for Liver Cancer

The liver is the football-sized organ in the upper right area of the belly. Symptoms of liver cancer are uncommon in the early stages. Liver cancer treatments vary, but may include removal of part of the liver, liver transplant, chemotherapy, and in some cases radiation. Primary liver cancer (hepatocellular carcinoma) tends to occur in livers damaged by birth defects, alcohol abuse, or chronic infection with diseases such as hepatitis B and C, hemochromatosis (a hereditary disease associated with too much iron in the liver), and cirrhosis. In the United States, the average age at onset of liver cancer is 63 years. Men are more likely to develop liver cancer than women, by a ratio of 2 to 1.

There are currently few marketed drugs for the treatment of liver cancer. Sorafinib, a tryosine kinase inhibitor, is the first to market and market leader. Current sales of sorafinib are estimated at $1 billion per year.

Uttroside-B appears to affect phosphorylated JNK (pro survival signaling) and capcase activity (apoptosis in liver cancer). It is a natural compound fractionated Saponin derived from the Solarim Nigrum plant. It is a small molecule that showed in early investigation to increase the cytotoxicity of a variety of liver cancer cell types and importantly to be up to ten times more potent than Sorafenib in pre-clinical studies.

As it is not feasible to use the plant as the source for a drug, we successfully synthesized the molecule thereby creating an exact replica of the naturally occurring chemical compound. In a joint research program with India-based Chemveda Life Sciences in 2017, we initiated this very complex and challenging synthesis program. After 2 years, the exceptional chemists at Chemveda and our scientists, succeeded. The synthetic molecule has now been tested in comparison to the original plant molecule and the results confirm the same efficacy against the same liver cancer cell lines. We are now optimizing the synthesis of the molecule and are conducting free clinical testing on the initial output from that process and are preparing to advance this into a preclinical program. During the year ended November 30, 2021 and 2020, total fees paid to Chemveda Life Sciences was $65,000 and $0.2 million, respectively.

Note on COVID-19

To date, the COVID-19 pandemic has not materially affected our Strontium-89 supply chain or production schedule, although a slight delay in supply chain is probable and expected. The Pandemic has impacted how patients and physicians interact and our ability to connect with our physician customers and clinic administrators and various government regulators was severely limited and has delayed our entry into the market.

9

Table of Contents

With respect to COVID-19, we are working on developing a potential treatment. It is in the early stages of development but could prove to be an important tool in treating several infectious diseases that result in respiratory complications. Our technology partner and licensor, Mannin Research, has received requests from, and submitted responses to, governmental organizations worldwide and philanthropic groups for information about the potential use of its biologic treatment for COVID-19. The potential treatment is based on the understanding that vascular leakage is a key driver of organ injury in diseases such as Acute Respiratory Distress Syndrome (ARDS) caused by viruses, including COVID-19. The Angiopoietin-Tie2 signaling pathway for the treatment of vascular permeability associated with pulmonary edema from respiratory infections like COVID-19, but also ARDS, SARS, seasonal Influenzas and others. There were 45 million symptomatic flu cases, 810,000 hospitalizations and 61,000 deaths – in the United States alone during the 2017-2018 flu season, and that flu has resulted in 9 million – 41 million illnesses, 140,000 – 710,000 hospitalizations and 12,000 – 52,000 deaths annually between 2010 and 2020 according to the CDC. We are in the early stages of investigations and preclinical evaluation of this potential drug and hope to collaborate with others on a global basis to advance this program as rapidly as possible. COVID-19 variants continue to evolve and cause concern and demonstrate the need for a non-variant specific treatment. We also believe it could be utilized for seasonal influenzas and future similar pandemic viral threats

Patents and Intellectual Property Rights

If products we acquire do not have adequate intellectual protection, we will take the necessary steps to protect our proprietary therapeutic product candidate assets and associated technologies that are important to our business consisting of seeking and maintaining domestic and international patents. These may cover our products and compositions, their methods of use and processes for their manufacture and any other inventions that may be commercially important to the development of our business. We also rely on trade secrets to protect aspects of our business. Our competitive position depends on our ability to obtain patents on our technologies and our potential products, to defend our patents, to protect our trade secrets and to operate without infringing valid and enforceable patents or trade secrets of others. We seek licenses from others as appropriate to enhance or maintain our competitive position.

We hold a license to all intellectual property related to our licensed the drug candidates. We own the intellectual property for our SR89, our generic Strontium-89 Chloride product candidate for metastatic cancer bone pain therapy, and MetastronTM, our branded Strontium-89 Chloride product candidate for metastatic cancer bone pain therapy. We are not subject to a license for QBM-001, the combination drug candidate related to a nonverbal disorder associated with autism.

We have applied for some patents in our own right. Most patents and applications are held in the licensors’ or inventors’ names and are assignable under license agreements to us.

Competition

We operate in highly competitive segments of the biotechnology and biopharmaceutical markets. We face competition from many different sources, including commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies, and private and public research institutions. Our product candidates, if successfully developed and approved, will compete with established therapies, as well as new treatments that may be introduced by our competitors. Many of our competitors have significantly greater financial, product development, manufacturing and marketing resources than us. Large pharmaceutical companies have extensive experience in clinical testing and obtaining regulatory approval for drugs. In addition, many universities and private and public research institutes are active in the fields in which we research, some in direct competition with us. We also may compete with these organizations to recruit management, scientists and clinical development personnel. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. New developments, including the development of other biological and pharmaceutical technologies and methods of treating disease, occur in the pharmaceutical and life sciences industries at a rapid pace. Developments by competitors may render our product candidates obsolete or noncompetitive. We will also face competition from these third parties in recruiting and retaining qualified personnel, establishing clinical trial sites and patient registration for clinical trials and in identifying and in-licensing new product candidates.

Raw Materials and Third-Party Manufacturing

We began commercially producing our sole product, Strontium-89, in February 2020. To date, we have sourced all the raw material needed for Strontium-89 from Polatom in Poland. Due to the limited production of Strontium-89 to date, we do not consider it a substantial risk that we have only one supplier of this raw material. As we ramp up production, we are in the process of adding a US based supplier of the raw material, and are working through the regulatory approval required to formally add that raw material to our approved ANDA.

10

Table of Contents

Likewise, Strontium-89 has been manufactured solely by IsoTherapeutics in Houston, Texas. Although we will continue to rely on them for the manufacture of Strontium-89, we do not currently have any intention of finding an additional manufacturer. Were our relationship with IsoTherapeutics to terminate or they were otherwise unable to manufacture Strontium-89, we would not be able to produce more Strontium-89 until a replacement FDA approved manufacturer is found.

Government Regulation

The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of our product candidates are subject to extensive regulation by the FDA in the United States and by comparable health authorities in foreign markets. In the United States, we are not permitted to market our product candidates until we receive approval of a Biologics License Application (“BLA”) from the FDA. The process of obtaining BLA approval is expensive, often takes many years and can vary substantially based upon the type, complexity and novelty of the products involved. In addition to the significant clinical testing requirements, our ability to obtain marketing approval for these products depends on obtaining the final results of required non-clinical testing, including characterization of the manufactured components of our product candidates and validation of our manufacturing processes. The FDA may determine that our product manufacturing processes, testing procedures or facilities (or those of third parties upon which we rely) are insufficient to justify approval. Approval policies or regulations may change, and the FDA has substantial discretion in the pharmaceutical approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed.

The FDA or another regulatory agency can delay, limit or deny approval of a product candidate for many reasons, including, but not limited to:

the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;
we may be unable to demonstrate to the satisfaction of the FDA that a product candidate is safe and effective for any indication;
the FDA may not accept clinical data from trials which are conducted by individual investigators or in countries where the standard of care is potentially different from the United States;
the results of clinical trials may not meet the level of statistical significance required by the FDA for approval;
we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;
the FDA may disagree with our interpretation of data from preclinical studies or clinical trials;
the FDA may fail to approve our manufacturing processes or facilities or those of third-party manufacturers with which we or our collaborators contract for clinical and commercial supplies; or
the approval policies or regulations of the FDA may significantly change in a manner rendering our clinical data insufficient for approval.

With respect to foreign markets, approval procedures vary among countries and, in addition to the aforementioned risks, can involve additional product testing, administrative review periods and agreements with pricing authorities. In addition, recent events raising questions about the safety of certain marketed pharmaceuticals may result in increased cautiousness by the FDA and comparable foreign regulatory authorities in reviewing new pharmaceuticals based on safety, efficacy or other regulatory considerations and may result in significant delays in obtaining regulatory approvals. Any delay in obtaining, or inability to obtain, applicable regulatory approvals would prevent us from commercializing our product candidates.

Costs and Effects of Compliance with Environmental Laws

Federal, state, and international environmental laws may impose certain costs and restrictions on our business. We do not believe that we have spent or lost money due to these laws and regulations.

11

Table of Contents

Product Liability and Insurance

We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and the eventual sale and use of any product candidates, and claims could be brought against us if use or misuse of one of our product candidates causes, or merely appears to have caused, personal injury or death. While we have and intend to maintain product liability insurance relating to our clinical trials, our coverage may not be sufficient to cover claims that may be made against us and we may be unable to maintain such insurance. Any claims against us, regardless of their merit, could severely harm our financial condition, strain our management and other resources or destroy the prospects for commercialization of the product which is the subject of any such claim. We are unable to predict if we will be able to obtain or maintain product liability insurance for any products that may be approved for marketing. Additionally, we have entered into various agreements where we indemnify third parties for certain claims relating to our product candidates. These indemnification obligations may require us to pay significant sums of money for claims that are covered by these indemnifications. We have product liability insurance in place at the time of product launch.

Employees

As of February 10, 2022, we had nine employees and management consultants, three of whom we consider full time and six of whom we consider part time.

ITEM 1A. RISK FACTORS

Not required for smaller reporting companies.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The Company maintains a corporate office at 366 Madison Avenue, 3rd Floor, New York, NY 10017. Such office is solely for the purpose of maintaining a physical presence to receive correspondence, and it is at no cost as our Chief Legal Officer maintains his offices at that location. The company also maintains an office in Grand Cayman, where the Company’s President and Chairman, Mr. Denis Corin, resides, at the cost of $30,000 per annum.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any material pending legal proceedings, arbitration or governmental investigation, and to the best of our knowledge, no such proceedings have been initiated against us.

ITEM 4. MINE SAFETY DISCLOSURES

None.

12

Table of Contents

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Common Stock

Our common stock is listed on the Over the Counter QB (“OTCQB”) under the symbol “QBIO”. The market for our common stock is limited, volatile and sporadic. The following table sets forth, for the periods indicated, the high and low bid prices of our common stock on the OTCQB as reported by Google Finance. The following quotations reflect inter-dealer prices, without retail mark-up, markdown, or commissions, and may not reflect actual transactions.

    

High Bid

    

Low Bid

Fiscal Year 2022

 

  

 

  

February 28, 2022 (through February 25, 2022)

$

0.37

$

0.293

Fiscal Year 2021

 

  

 

  

November 30, 2021

$

0.90

$

0.45

August 31, 2021

$

0.99

$

0.66

May 31, 2021

$

1.25

$

0.89

February 29, 2021

$

1.59

$

0.90

Fiscal Year 2020

 

  

 

  

November 30, 2020

$

1.18

$

0.95

August 31, 2020

$

2.00

$

1.39

May 31, 2020

$

3.00

$

1.12

February 29, 2020

$

3.45

$

2.41

The last reported sales price for our shares on the OTCQB as of February 25, 2022, was $0.312 per share. As of February 14, 2022, we had approximately 69 shareholders of record and approximately 5,100 round lot shareholders.

Preferred Stock

We are authorized to issue shares of preferred stock. We currently have outstanding:

227,998 shares of Series A Preferred Shares with a nominal liquidation value of $10.00 that are convertible into shares of our common stock at $1.00 per share; and

400,000 shares of Series B Preferred Shares with a nominal liquidation value of $10.00 that are convertible into shares of our common stock at the lower of: (a) $2.70 or (b) 93% of the average of the four lowest daily VWAPs during the 10 consecutive trading days immediately preceding the conversion date, provided that the conversion price may not be less than $0.35.

There is no public market for our preferred shares. For a more complete summary of our preferred shares, see Note 9 “Stockholders’ Equity (Deficit)” in our audited financial statements included in this report.

Holders

As of February 25, 2022, we had 30,602,888 shares of $0.001 par value common stock issued and outstanding. Our Transfer Agent is VStock Transfer, LLC, 18 Lafayette Place, Woodmere, NY 11598, Phone: (212) 828-8436.

13

Table of Contents

Dividends

We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business and do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will depend upon then existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects and other factors that the board of directors considers relevant.

Unregistered Sales of Equity Securities and Use of Proceeds

On December 29, 2020, we issued 239,562 shares of Common Stock in exchange for services rendered by third parties.

On February 1, 2021, we issued 220,086 shares of Common Stock in exchange for services rendered by third parties, and 50,000 shares of Common stock for services provided by the related party.

On February 16, 2021, we issued 100,000 shares for $100,000 to accredited investors.

On February 26, 2021, we issued 32,225 shares of Common Stock in exchange for services rendered by third parties.

On February 28, 2021, we issued 11,103 shares of Common Stock in exchange for services rendered by third parties.

On May 20, 2021, we entered into a series of securities purchase agreements for the sale of 1,213,333 units at a $0.75 per unit sales price. We raised approximately $0.9 million in cash. Each unit consisted of one common share and one warrant to purchase one share of common stock at an exercise price of $1.25.

On August 27, 2021, we issued 85,628 shares of Common Stock in exchange for services rendered by third parties.

On November 30, 2021, we issued 49,200 shares of Common Stock in exchange for services rendered by third parties.

Between July and September 2021, we issued 777,851 shares of Common Stock upon the conversion of $0.5 million convertible notes and accrued interest.

During the year ended November 30, 2021, we issued 533,610 shares of Common Stock for dividends payment on preferred stock.

On December 2, 2021, we issued 277,877 shares of Common Stock for dividends payment on preferred stock.

Between January and February, 2022, we issued 1,577,648 shares of Common Stock upon the conversion of $0.7 million convertible notes and accrued interest.

On February 1, 2022, we issued 99,575 shares of Common Stock in exchange for services rendered by third parties.

The issuances of the securities mentioned above qualified for the exemption from registration contained in Section 4(2) of the Securities Act of 1933.

ITEM 6. [RESERVED]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. This discussion contains certain forward-looking statements that involve risk and uncertainties. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth under the Section entitled “Risk Factors”, and other documents we file with the Securities and Exchange Commission. Historical results are not necessarily indicative of future results.

14

Table of Contents

Overview

Q BioMed Inc. (or “the Company”) was incorporated in the State of Nevada on November 22, 2013 and is a commercial stage biomedical acceleration and development company focused on licensing, acquiring and providing strategic resources to life sciences and healthcare companies. We intend to mitigate risk by acquiring multiple assets over time and across a broad spectrum of healthcare related products, companies and sectors. We intend to develop these assets to provide returns via organic growth, revenue production, out-licensing, sale or spin out. Our mission is to solve problems by accelerating the development of important therapies and availability of those therapies to patients.

The focus for 2022 is to monetize the current pipeline and build a platform for future growth. There are 4 areas of focus: commercial product revenue growth, partnerships, joint venture equity value and future development platform.

Commercial Product

We believe that Strontium89 has great potential in the cancer palliation space. As a result of a world in which opioids were a treatment of choice for those patients unlucky enough to be diagnosed with painful metastatic cancers in the bone, we felt that Strontium89 had become a neglected and forgotten drug. We have stayed committed to our belief that Strontium89 was a valuable treatment and have focused on advancing that asset from concept, a neglected drug, to a fully approved, reimbursed commercial product. Since we acquired Strontium89, we have built an infrastructure to commercialize the product, including manufacturing, branding, pharmacovigilance, reporting, federal supply contract, and entering into distribution agreements in the United States and several other countries. We believe that our last remaining investment is now focused on a sales team to promote the drug both in federal and non-government institutions and clinics. Revenue has started to grow even without a sales force fully deployed. Our recent partnership with a sales organization is in place, and once funded we plan to capitalize on the groundwork in place. We expect revenues to grow steadily and over the next 12-18 months.

We are also assessing additional products in nuclear medicine that could complement our infrastructure and provide additional revenue opportunities.

Partnership Opportunities

UTTROSIDE B - Liver Cancer Chemotherapeutic

Along with our developmental partners, we are advancing an innovative treatment for liver cancer, a disease indication that currently has a high unmet need. This molecule was identified in India, traditionally used to treat liver ailments. Subsequent research on that isolated molecule showed promising data, indicating that the molecule was more cytotoxic, killing cancer cells more effectively, in liver cancer cells lines than the current first line liver cancer chemotherapeutic. We have advanced this from a naturally occurring unsustainable plant product to a commercially viable and scalable synthetic drug candidate. This provides an opportunity to partner this asset with a larger oncology focused institution. Currently, there are only two approved first-line liver cancer therapies. We have received Orphan Drug Designation, and we are now preparing to advance this toward clinical partnership.

Development Platform - Rare Disease Focus

During 2022 we will focus our future development platform on the Rare Disease Space. This focusses our resources on an area in which we already have a presence. Our liver cancer drug candidate, Uttroside B, has already received Orphan Drug Designation. We expect to partner this asset in mid-2022 and will grow our development platform through in-licensing or acquisition.

This rare disease platform will also complement our early-stage treatment for young minimally verbal children on the Autism Spectrum. While our immediate focus is on the above-mentioned assets, we are also developing a new drug candidate to treat young children with pediatric minimally verbal autism. The advancement of this program will depend on the availability of funds and resources as we prioritize our clinical development milestones. There is no effective treatment available to help an estimated 250,000 children born with the condition worldwide each year, 20,000 of them in the United States. We are working on a discovery and development program to address this highly unmet need.

15

Table of Contents

Corporate Strategic Goals

Our mission is to solve problems by accelerating the development of important therapies and the availability of those therapies to patients. We have been busy building a portfolio that we believe has significant value ranging from blockbuster potential drugs to revenue-producing opportunities.

On September 29, 2021, we entered into a securities purchase agreement with an accredited investor (“Lender”), pursuant to which we sold a convertible debenture (the “Debenture”) with a maturity date of 12 months after the issuance thereof for $2,000,000 gross proceeds. The closing date of the sale was on October 5, 2021. The Debenture in the aggregate principal amount of $2,200,000 which includes an original issue discount of $185,000 and $15,000 for the payment of the Lender’s legal fees and carries an interest rate of 6% per annum.

Deeper Pipeline Review

Strontium-89 - FDA Approved Drug Launched

In January 2021, we announced that treatment with Strontium-89 in the hospital out-patient setting is fully reimbursed by Medicare. In March 2021, we were approved as a federal supplier which allows us to sell into federal hospital systems, notably the U.S. Department of Veteran Affairs and the U.S. Department of Defense. We have deployed a VA sales force, and we are preparing to launch an institutional contract sales force to increase our presence and uptake in non-government hospitals Revenue for our fiscal 2021, while still fairly low, is up by over 600% over our fiscal 2020. In January 2021, we received full reimbursement from Medicare and Medicaid, were approved as a federal supplier in March 2021, and engaged a federal sales team working mostly with the U.S Departments of Veterans’ Affairs, the Department of Defense and Indian Health Services. We have recently retained Eversana to partner on the institutional sales efforts and expect to deploy in field sales reps in 2022.

In mid-2020, we began the regulatory registration process for full commercial access in the European Union. These efforts have seen some delay due to Brexit related regulatory requirements. In parallel, we are midway through the registration process in many other countries. Due to some legacy data from previous owners not being available in current reporting standards to complete the filings, we have begun the process of creating our own source documents to complete the filings in non-US jurisdictions. We expect this to be complete in the first half of our fiscal 2022. We have already identified and contracted with a few international distribution partners in anticipation of approval in those countries.

We are assessing several potential clinical trial programs that may expand the indication beyond palliation into a therapeutic use that may increase utilization in years to come.

Mannin Platform Drugs for ARDS, Glaucoma, Kidney Diseases and others

In March 2021, our technology partner Mannin Research Inc. (Mannin) was granted an additional CAD$1.7 million from the Canadian governments COVID response budget, adding to the approximate $7.7 million granted in Europe, which together will fund 65-75 percent of every dollar incurred to advance the Acute Respiratory Distress Syndrome therapy for COVID patients as well as a portfolio of therapeutic assets for vascular diseases currently in development at Mannin, including: glaucoma, cardiovascular diseases, acute kidney disease, and other infectious diseases.

With the uptake of vaccines for COVID-19 growing, the infection numbers are still soaring around the world due to new variants and communities growing apathy and resistance to mandates and social restrictions. Together with Mannin Research Inc., our technology partner, we are pursuing a treatment for Acute Respiratory Distress Syndrome, the condition that causes the most severe symptoms in COVID patients usually resulting in hospitalization and death. The treatment is not dependent on targeting any specific viral variant but rather is virus agnostic, which we believe makes it an invaluable treatment for Corona viruses and other viral diseases like influenza, pneumonia and any future viral pandemic outbreaks.

The MAN-19 therapeutic is a recombinant fusion protein that treats the patient, instead of targeting the virus. It is not a cure for COVID-19, but it strengthens a patient’s blood vessels and protects them against ARDS, breathing problems, sepsis and other infections that may cause the body’s organs to begin shutting down. It is designed to keep COVID-19 or other ARDS patients out of the ICU and off a ventilator. Pending upcoming toxicology testing, we believe that clinical trials for the drug will start in 2022. If the drug proves both safe and effective, our goal is to have it available for use by patients by early 2023.

16

Table of Contents

The market for this kind of treatment in the current pandemic climate is substantial and global. COVID-19 is not going away any time soon. As a result, there is a need to develop more effective treatments. We believe that this technology will play a role in the broader treatment landscape and not only for COVID-19, but also for other infectious diseases that cause ARDS.

GDF 15 Diagnostic for Glaucoma – In Clinical Trial and Product Development and FDA approval anticipated early 2022

In early 2019, we licensed a diagnostic biomarker known as GDF-15 for determining the severity of glaucoma from Washington University in St. Louis. . GDF15 is an attractive biomarker for glaucoma, with distinct advantages over conventional clinical tests and the potential to be a first-in-class diagnostic test. In collaboration with our development partners, we are developing a prototype for point of care In Vitro Diagnostic (IVD) device to detect GDF15 in clinical samples of aqueous humor. Our teams are generating, assessing, and applying DNA aptamers and DNAzymes to detect GDF15 in aqueous humor, to develop a prototype assay and diagnostic test strip for detection of GDF15 in clinical samples. This integrated and printable diagnostic will allow ophthalmologists to detect and monitor glaucoma progression in patients at their office without need for additional external or expensive equipment. In partnership with Mannin Research Inc. and McMaster University, we are nearing the completion of development of an IVD with both point-of-care (detection in a doctor’s office) as well as an external laboratory-based detection (i.e. for use in existing CLIA laboratories using existing diagnostic equipment). With appropriate funding, we anticipate completion of the IVD device and submission to the FDA (510K) for in vitro diagnostic approval in 2022.

UTTROSIDE B - Liver Cancer Chemotherapeutic

Along with our developmental partners, we are advancing an innovative treatment for liver cancer, a disease indication that currently has a high unmet need. Currently, there are only two approved first-line therapies. Uttroside-B was discovered in the leaf of the Black Nightshade plant in India. As it is not feasible to use the plant as the source for a drug, we successfully synthesized the molecule thereby creating an exact replica of the naturally occurring chemical compound. We have received Orphan Drug Designation and we are now preparing to advance this toward IND application with the FDA.

QBM-001 - Early Stage Treatment for young minimally verbal children on the Autism Spectrum

While our immediate focus is on the above-mentioned assets, we are also developing a new drug candidate to treat young children with pediatric minimally verbal autism. The advancement of this program will depend on the availability of funds and resources as we prioritize our clinical development milestones. There is no effective treatment available to help an estimated 250,000 children born with the condition worldwide each year, 20,000 of them in the United States.  We are working on a discovery and development program to address this highly unmet need.

Financial Overview

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our audited consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Intangible Assets

Intangible assets subject to amortization include acquired intellectual property for a marketable product acquired in November 2018.

The intellectual property is being amortized over the estimated life remaining at the time of acquisition, which is 10 years.

17

Table of Contents

Intangible assets are monitored for potential impairment whenever events or circumstances indicate that the carrying amount may not be recoverable and are also reviewed annually to determine whether any impairment is necessary. Management has assessed the economic life of our Metastron asset to be at least equal to its remaining use life of eight years. As such, management modelled the recoverability test using seven years of estimated future cash flows. Based on this projection, the $350,000 net carrying value of our Metastron asset is fully recoverable and therefore there was no impairment loss as of November 30, 2021 and 2020.

Derivative Financial Instruments

We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our 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 Statement of Operations. Depending on the features of the derivative financial instrument, we use either the Black-Scholes option-pricing model or a binomial model 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.

The Company evaluates embedded conversion features within convertible debt under ASC 815 Derivatives and Hedging to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings.  If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 Debt with

Conversion and Other Options for consideration of any beneficial conversion features.

As of November 30, 2021 and 2020, the fair value of embedded derivative liability measured at fair value on a recurring basis was approximately $0.9 million and $0, respectively.

Stock Based Compensation

Share-based payment awards are measured at grant-date fair value of the equity instruments that the Company is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. There was no cumulative effect of the adoption of this standard.

Share-based compensation cost is recorded for all option grants and awards of non-vested stock based on the grant date fair value of the award and is recognized over the service period required for the award.

Stock-based compensation expense is recognized in the consolidated financial statements based on the fair value of the awards granted. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period. We calculate the fair value of stock options using the Black-Scholes option-pricing model at grant date.

We recognized general and administrative expenses of approximately $2.3 million and $6.6 million as a result of the shares, outstanding warrants and options issued to consultants and employees during the years ended November 30, 2021 and 2020, respectively.

Research and Development

We expense the cost of research and development as incurred. Research and development expenses comprise costs incurred in funding research and development activities, license fees, and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made, in accordance with ASC 730, Research and Development. During the year ended November 30, 2021 and 2020, we incurred $1.1 million and $1.9 million in research and development expenses.

18

Table of Contents

Recent accounting pronouncements

For a summary of recent accounting pronouncements applicable to our consolidated financial statements, see Note 3, Summary of Significant Accounting Policies, in Part II, Item 8, Notes to Consolidated Financial Statements.

Results of Operation for the years ended November 30, 2021 and 2020

For the years ended

    

November 30,2021

    

November 30, 2020

    

Change

Net Sales

$

195,597

$

30,000

$

165,597

Cost of sales

 

246,846

 

326,009

 

(79,163)

Gross loss

 

(51,249)

 

(296,009)

 

244,760

Operating expenses:

 

  

 

  

 

  

General and administrative expenses

 

6,263,475

 

10,969,253

 

(4,705,778)

Research and development expenses

 

1,073,841

 

1,880,152

 

(806,311)

Total operating expenses

 

7,337,316

 

12,849,405

 

(5,512,089)

Loss from operations

 

(7,388,565)

 

(13,145,414)

 

5,756,849

Other (income) expenses:

 

  

 

  

 

  

Interest expense

 

506,922

 

296,215

 

210,707

Change in fair value of embedded derivatives

 

304,153

 

19,163

 

284,990

Loss on debt extinguishment

 

40,910

 

31,399

 

9,511

Total other expenses

 

851,985

 

346,777

 

505,208

Net loss

$

(8,240,550)

$

(13,492,191)

$

5,251,641

Net Sales

During the year ended November 30, 2021 and 2020, we recognized approximately $196,000 and $30,000 of revenue from sales of Strontium89, respectively. This increase was due to more doses being sold during the year ended November 30, 2021 compared to the prior year.

Cost of Sales

During the year ended November 30, 2021, we recognized approximately $247,000 in cost of sales. These costs were related to raw materials cost, manufacturing cost, distribution cost and write-offs of expired inventory.

During the year ended November 30, 2020, we recognized approximately $326,000 in cost of sales. These costs were related to raw materials cost, manufacturing cost and distribution cost and write-offs of expired inventory.

The decrease in cost of sales was due to less expired inventories being written-off during the year ended November 30, 2021 compared to the prior year.

Operating expenses

We incur various costs and expenses in the execution of our business. The decrease in operating expenses was mainly due to significantly less stock-based compensation recognized in the year ended November 30, 2021compared to the 2020 fiscal year. We recognized approximately $2.3 million and $6.6 million of stock-based compensation in general and administrative expense during year ended November 30, 2021and 2020, respectively. We had more common shares, options and warrants granted in 2020 compared to 2021. In addition, the common stock price traded relatively higher in 2020 compared to 2021.

19

Table of Contents

Interest expense

The following table summarizes interest expense incurred during the year ended November 30, 2021 and 2020, respectively (amounts are rounded to nearest thousand):

    

For the Years ended

November 30, 2021

November 30, 2020

Interest expense based on the coupon interest rate of the outstanding debt

$

96,000

$

158,000

Accretion of debt discount

 

408,000

 

139,000

Other

 

3,000

 

Total interest expense

$

507,000

$

297,000

Change in fair value of embedded derivatives

We recognized losses of approximately $304,000 and $19,000 resulting from the change in fair value of embedded contingent put options in convertible notes during the years ended November 30, 2021 and 2020 respectively. The fluctuation is mainly due to the change in stock price during the reporting periods.

Loss on debt extinguishment

We recognized a loss of approximately $41,000 and $31,000 due to the conversion of outstanding debentures into shares of common stock during the year ended November 30, 2021 and 2020, respectively.

Net loss

During the years ended November 30, 2021 and 2020, we incurred net losses of approximately $8.2 million and $13.5 million, respectively. Our management expects to continue to incur net losses for the foreseeable future, due to our need to continue to establish a broader pipeline of assets, expenditure on R&D and to implement other aspects of our business plan.

Liquidity and Capital Resources

We prepared the accompanying consolidated financial statements assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

We have not yet established a significant ongoing source of revenues and in both the short- and long-term, we must cover our operating through debt and equity financings to allow us to continue as a going concern. We had approximately $0.3 million in cash as of November 30, 2021. Our ability to continue as a going concern depends on our ability to obtain adequate capital to fund operating losses until we generate adequate cash flows from operations to fund our operating costs and obligations. If we are unable to obtain adequate capital, we could be forced to cease operations.

We depend upon our ability, and will continue to attempt, to secure equity and/or debt financing. We cannot be certain that additional funding will be available on acceptable terms, or at all. Our management determined that there was substantial doubt about our ability to continue as a going concern within one year after the consolidated financial statements were issued, and management’s concerns about our ability to continue as a going concern within the year following this report persist.

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

20

Table of Contents

Cash Flows

The following table sets forth the significant sources and uses of cash for the periods addressed in this report:

    

For the years ended

November 30, 2021

    

November 30, 2020

Net cash (used in) provided by:

 

  

 

  

Operating activities

$

(4,302,036)

$

(6,233,441)

Financing activities

 

4,468,900

 

6,237,950

Net increase in cash

$

166,864

$

4,509

Net cash used in operating activities was approximately $4.3 million for the year ended November 30, 2021 as compared to approximately $6.2 million for the year ended November 30, 2020. During the year ended November 30, 2021, operating activities used $4.3 million of cash, resulting from a net loss of $8.2 million, partially offset by $2.3 million of share-based compensation, change in fair value of embedded conversion options of $0.3 million, loss on debt extinguishment of $41,000, and non-cash interest expense resulting from accretion of debt discounts of $0.4 million and changes in our operating assets and liabilities of approximately $0.8 million. During the year ended November 30, 2020, net cash used in operating activities results from the net loss of approximately $13.5 million for the year ended November 30, 2020, partially offset by $6.6 million of share-based compensation, change in fair value of embedded conversion options of $19,000, and non-cash interest expense resulting from accretion of debt discounts of $0.1 million and changes in our operating assets and liabilities of approximately $0.8 million.

Net cash provided by financing activities was approximately $4.5 million for the year ended November 30, 2021 as compared to approximately $6.2 million for the year ended November 30, 2020. During the year ended November 30, 2021, net cash provided by financing activities relates to proceeds received from the issuance of common stock and debentures, and is offset by the repayment of notes to related parties. During the year ended November 30, 2020, net cash provided by financing activities relates to proceeds received from the issuance of preferred shares, shares of common stock and warrants, and convertible debentures.

Contractual Obligations and Commitments

Legal

Periodically, we review the status of significant matters, if any exist, and assesses its potential financial exposure. If the potential loss from any claim or legal claim is considered probable and the amount can be estimated, we accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation.

Advisory Agreements

We entered into customary consulting arrangements with various counterparties to provide consulting services, business development and investor relations services, pursuant to which we agreed to issue shares of common stock as services are received.

Lease Agreement

In December 2016, we entered into a lease agreement for office space located in Cayman Islands for $30,000 per annum. The initial term of the agreement ended in December 2019 and has been further renewed for another three years. This agreement does not identify a specific asset and does not convey the use of substantially all of the shared office capacity. As such, this agreement does not contain a lease under ASC 842. We recognize monthly license payments as incurred over the term of the arrangement.

Rent expense is classified within general and administrative expenses on a straight-line basis.

21

Table of Contents

License Agreements

Mannin

On October 29, 2015, we entered into a Patent and Technology License and Purchase Option Agreement (“Exclusive License”) with a vendor whereby we were granted a worldwide, exclusive, license on, and option to, acquire certain intellectual property (“Mannin IP”) which initially focused on developing a first-in-class eye drop treatment for glaucoma within the four-year term of the Exclusive License. Pursuant to the exclusive license from Mannin, we may purchase the Mannin IP within six years of entry into the agreement. During the years ended November 30, 2021 and 2020, we respectively incurred approximately $0.8 million and $1.0 million of research and development expenses under our license with Mannin. The purchase option under the license agreement has now expired.

On March 26, 2019, we entered into an amendment to the Patent and Technology License and Purchase Option Agreement that it initially entered into with Mannin Research Inc. on October 29, 2015 (the “Mannin Agreement”). Under such amendment, the term of the option granted under the Mannin Agreement was extended to October 29, 2021 in exchange for our issuing 100,000 shares to Mannin Research Inc. on April 9, 2019.

On September 1, 2020, we further amended the license agreement allowing Mannin to grant an exclusive license to Mannin GmbH (its wholly owned German subsidiary) in order fully take advantage of the German government grant to Mannin. The agreement also confirms our ongoing investment into the Tie2 platform to create, and therefore maintain economic value for us and our shareholders. We have agreed to contribute funds in Mannin GmbH. We paid Mannin $1.5 million in cash payable in three instalments. In addition, we paid to Mannin $0.75 million in shares of our common stock valued as of June 15, 2020, in full satisfaction of R&D payables, contracted by Mannin in development of the Tie2 platform. We continue to have the right to 100% of the revenues derived from the Mannin Tie2 technology platform, until such time that Mannin and its subsidiaries have independently raised at least $2 million in funds, expected to happen in 2022, at which time the parties have agreed to a profit share structure reducing our future capital commitments to Mannin R&D.

During the years ended November 30, 2021 and 2020, we incurred approximately $0.8 million and $1.0 million, respectively, in research and development expenses to fund the costs of development of the eye drop treatment for glaucoma pursuant to the Exclusive License.

Washington University

On March 9, 2019, we entered into an Exclusive License Agreement with Washington University for license of a diagnostic marker for determining the severity of glaucoma using the expression levels of Growth Differentiation Factor 15. The agreement calls for us to pay an initial fee of approximately $88,000, pay annual maintenance fees ranging from $15,000 to $75,000, make additional payments upon the following milestones:

·The first commercial sale of a companion diagnostic product;

·Initiation of a clinical trial for a diagnostic product to support FDA PMA or 510(k) regulatory approval or the foreign equivalent;

·PMA or 510(k) regulatory approval by the FDA or the foreign equivalent; and

·The first commercial sale of a diagnostic product.

In additional to the above payments, royalty payments based upon sales of a companion diagnostic product or diagnostic product are required.

Related Party Transactions

We entered into consulting agreements with certain management personnel and stockholders for consulting and legal services. Consulting and legal expenses resulting from such agreements were included within general and administrative expenses in the accompanying Consolidated Statements of Operations as follows:

For the Years ended

November 30,

November 30,

    

2021

    

2020

Consulting and legal expenses

$

420,000

$

420,000

22

Table of Contents

On February 1, 2021, the Company issued 35,000 shares to Mr. Rosenstadt, the Company’s Chief Legal Officer and director, for his services performed in connection with December 2020 financing. The fair value was approximate $35,000, which was recorded as part of debt issuance cost to the 2020 Debenture (see note 5).

On April 16, 2021, the Company entered into two unsecured promissory note agreements (the “Notes”) with certain management personnel for an aggregate principal amount of $30,000. The Notes bear interest at 5% per annum and are payable by August 31, 2021. During the quarter ended August 31, 2021, the Company made full repayment of $30,000 to the management personnel, including all outstanding interest.

During the year ended November 30, 2020, we issued 225,000 warrants at fair value of $0.4 million to Mr. Rosenstadt, our Chief Legal Officer and director, for his services performed in connection with preferred stock offering and S-1 registration filling.

On November 30, 2020, we modified an aggregate of 525,000 warrants that were originally granted to certain officers. The term of the warrants was extended for 3 years from the original expiration date. We immediately recognized approximately $0.4 million of incremental stock-based compensation for the modifications on November 30, 2020.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following documents (pages F-1 to F-23) form part of the report on the Consolidated Financial Statements

 

 

PAGE

Report of Independent Registered Public Accounting Firm (fiscal year ended in 2021) (PCAOB ID #688)

 

F-2

Consolidated Balance Sheets

 

F-4

Consolidated Statements of Operations

 

F-5

Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

 

F-6

Consolidated Statements of Cash Flows

 

F-7

Notes to Consolidated Financial Statements

 

F-8

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

We have not had any disagreements with our accountants or auditors that would need to be disclosed pursuant to Item 304 of Regulation S-K promulgated under the Securities Act of 1933.

23

Table of Contents

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management is required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, 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 chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As required by the SEC Rules 13a-15(b) and 15d-15(b), an evaluation is required to be carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.

To address these material weaknesses, management engaged financial consultants, performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Management’s Annual Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”) for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of November 30, 2021, management has completed a proper evaluation, risk assessment and monitoring of the Company’s internal controls over financial reporting based on the 2013 Committee of Sponsoring Organizations (COSO) framework. Management concluded that, during the period covered by this report, that our internal controls and procedures were effective to detect the inappropriate application of US GAAP. Management has identified the following material weaknesses set forth below in our internal control over financial reporting.

1.

Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible, however segregation of duties has been implemented, with regards to the initiation of transactions, the custody of assets and the recording of transactions performed by separate individuals.

2.

We do not have in-house personnel with sufficient experience with United States generally accepted accounting principles to address complex transactions. These functions have been outsourced.

3.

We have determined that oversight over our external financial reporting and internal control over our financial reporting is ineffective as we do not have an audit committee in place.

We have begun to take steps to remediate some of the weaknesses described above, including by engaging a financial reporting advisor with expertise in accounting for complex transactions. We have drafted a full set of compliance documents and will be rolling those out in due course. We intend to continue to address these weaknesses as resources permit.

24

Table of Contents

Notwithstanding the material weaknesses identified herein, we believe that our consolidated financial statements contained in this Annual Report fairly present our financial position, results of operations and cash flows for the years covered thereby in all material respects.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

Our internal control over financial reporting has not changed during the fourth quarter covered by this Annual Report on Form 10-K.

ITEM 9B. OTHER INFORMATION

Not Applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table sets forth information with respect to persons who are serving as directors and officers of the Company. Each director holds office until the next annual meeting of shareholders or until his successor has been elected and qualified.

Held

Position

Name

    

Age

    

Positions

    

Since

Denis Corin

 

49

 

Chief Executive Officer and Director (Chairman)

 

2015

William Rosenstadt

 

53

 

Chief Legal Officer and Director

 

2015

Rick Panicucci

 

61

 

Director

 

2018

Biography of Directors and Officers

Mr. Denis Corin has been the Chief Executive Officer and Chairman of the Board of the Company since April 21, 2015. Mr. Corin is a management consultant. He has worked for large pharmaceutical (Novartis) and diagnostic instrumentation companies (Beckman Coulter) in their sales organizations responsible for sales in multi-product disciplines including pharmaceuticals and diagnostics and diagnostic automation equipment. After Novartis and Beckman Coulter, he served as Director of Investor Relations in the small-cap biotech arena at MIV Therapeutics Inc, a company specializing in next generation drug delivery and drug eluting cardiovascular stents. Mr. Corin served as an executive and on the board of directors of TapImmune Inc. from July 2009 to May 2012. He received his Bachelor’s degrees in Economics and Marketing from the University of Natal, South Africa in 1996.

Mr. William Rosenstadt was appointed as the Company’s Chief Legal Officer and member of the Company’s board of directors on June 1, 2015. Mr. Rosenstadt is a practicing corporate and securities lawyer. He is also the founding member and the managing partner of Ortoli Rosenstadt LLP, a law firm, formed in 2006. Mr. Rosenstadt received his Juris Doctorate from Benjamin N. Cardozo School of Law in 1995 and his Bachelor of Arts from Syracuse University in 1990.

25

Table of Contents

Dr. Rick Panicucci was appointed as a member of the Company’s board of directors on February 13, 2018. Dr. Panicucci specializes in the early stages of drug discovery for various companies. His responsibilities include solid state chemistry and formulation development of all small molecule therapeutics in early development and developing novel drug delivery technologies for small molecules and large molecules including siRNA. Since September 2015, Dr. Panicucci has been working with one of our licensors, Mannin Research Inc., in the development plan for MAN-01, a novel drug candidate that we license for the topical treatment of open-angle glaucoma. Since February 2015, he has served as the Vice President of Pharmaceutical Development at WuXi AppTec, where he is responsible for providing scientific leadership in the areas of Developability, Formulation Development and GMP Manufacturing. Prior to WuXi he held the position of Global Head of Chemical and Pharmaceutical Profiling (CPP) at Novartis from 2004 to 2015, where he led the development and implementation of innovative dosage form designs and continuous manufacturing paradigms. He has also held positions as the Director of Formulation Development at Vertex Pharmaceuticals and Senior Scientist at Biogen.

Dr. Panicucci received his Ph.D. in Physical Organic Chemistry at the University of Toronto and has two postdoctoral fellowships at University of California at Santa Barbara and the Ontario Cancer Institute. Dr. Panicucci will continue advise on the scientific and commercial development of our MAN-01 glaucoma drug with Mannin Research Inc. He will also now provide insight and guidance on all our pipeline assets.

In connection with his service as a director, we have entered into an agreement with Dr. Panicucci pursuant to which he will earn options to acquire up to 50,000 shares of our common stock. The options will vest in quarterly installments of 12,500 each and are exercisable for 5 years at $3.00 per option.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of Forms 3, 4 and 5, we believe that those persons who, at any time during our most recent fiscal year, were either a director, officer or beneficial owner of more than ten percent of our common stock filed those reports required by section 16(a) of the Exchange Act. We do not believe that all of those reports were filed on a timely basis.

ITEM 11. EXECUTIVE COMPENSATION

Our directors do not receive any stated salary for their services as directors or members of committees of the board of directors, but have received stock options for director services and, by resolution of the board, a fixed fee may be allowed for attendance at each meeting. Directors may also serve the Company in other capacities as an officer, agent or otherwise, and may receive compensation for their services in such other capacity. No such fees have been paid to any director since incorporation. Reasonable travel expenses are reimbursed.

Summary Compensation Table

The following table sets forth information concerning all cash compensation awarded to, earned by or paid to all individuals serving as the Company’s principal executive officers during the last two completed fiscal years ended November 30, 2021 and 2020, respectively and all non-cash compensation awarded to those same individuals in those time periods.

    

    

    

    

Stock

    

Warrants

    

Option

    

All Other

    

Name and Principal Position

Year

    

Salary ($)

    

Bonus ($)

    

Awards ($) (4)

    

Awards ($) (5)

    

Awards ($) (6)

    

Compensations ($)(1)

    

Total ($)

Denis Corin (2)

2021

$

300,000

$

$

$

$

72,000

$

$

372,000

Chief Executive Officer

 

2020

$

295,000

$

$

$

1,410,000

$

768,000

$

$

2,473,000

William Rosenstadt (3)

 

2021

$

$

$

34,825

$

$

72,000

$

300,000

$

406,825

General Counsel and Director

 

2020

$

$

$

$

1,883,000

$

768,000

$

300,000

$

2,951,000

(1)The amounts represent fees paid or accrued by us to the executive officers during the past year pursuant to various employment and consulting services agreements, as between us and the executive officers, which are described below. Our executive officers are also reimbursed for any out-of-pocket expenses incurred in connection with corporate duties. We presently have no pension, health, annuity, insurance, profit sharing or similar benefit plans.

(2)Mr. Denis Corin was appointed as Chief Executive Officer and Director on April 21, 2015.

(3)Mr. William Rosenstadt was appointed as Chief Legal Officer and Director on June 5, 2015.

26

Table of Contents

(4)

Mr. Rosenstadt was granted 35,000 shares of Common Stock on February 1, 2021 with grant date fair value of $34,825.

(5)Mr. Corin was granted 750,000 warrants on February 10, 2020 with grant date fair value of $1,312,500. 150,000 warrants and 500,000 warrants held by Mr. Corin were amended on November 30, 2020 and October 1, 2019, respectively. The $97,500 in 2020 and $30,000 in 2019 represent the incremental value received by Mr. Corin.

Mr. Rosenstadt was granted 975,000 warrants between February and April 2020 with grant date fair value of $1,690,500. 250,000 warrants held by Mr. Rosenstadt was amended on November 30, 2020. The $192,500 represents the incremental value received by Mr. Rosenstadt. 173,641 warrants on October 15, 2019 with grant date fair value of $59,000. 800,000 warrants held by Mr. Rosenstadt was amended on October 1, 2019. The $40,000 represents the incremental value received by Mr. Rosenstadt.

(6)On November 26, 2021, Mr. Corin and Mr. Rosenstadt were each granted 200,000 stock options. The fair value on the grant date was $72,000.

On August 28, 2020, Mr. Corin and Mr. Rosenstadt were each granted 300,000 stock options. The fair value on the grant date was $348,000. On October 27, 2020, Mr. Corin and Mr. Rosenstadt were each granted 500,000 stock options. The fair value on the grant date was $420,000.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of February 10, 2022, certain information regarding the ownership of our common stock by (i) each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock, (ii) each of our directors, (iii) our Principal Executive Officer and (iv) all of our executive officers and directors as a group. Unless otherwise indicated, the address of each person shown is c/o Ortoli Rosenstadt LLP, 366 Madison Avenue 3rd Floor, New York, New York 10017. Beneficial ownership, for purposes of this table, includes options to purchase common stock that are either currently exercisable or will be exercisable within 60 days of the date of this annual report.

Amount

 

and

Nature of

Beneficial

Percent of

Name and Address of Beneficial Owner

    

Owner(1)

    

Class(2)

Directors and Officers:

 

Denis Corin (3)

4,991,800

15.1

%

William Rosenstadt (4)

3,925,371

11.6

%

Rick Panicucci (5)

 

475,000

 

1.5

%

Directors and Officers as a Group (3 persons)

 

9,392,171

 

28.2

%

Major Stockholders:

 

  

 

  

Ari Jatwes (6)

 

2,100,000

 

6.6

%

(1)Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (1) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares. In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon the exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding as of February 10, 2022.

27

Table of Contents

(2)This percentage is based upon 30,602,888 shares of common stock outstanding as of February 10, 2022 and any warrants exercisable by such person within 60 days of the date as of which the information is provided.

(3)In addition to 2,441,800 shares, includes shares underlying (i) 150,000 five-year warrants issued in July 2016 for director fees, (ii) 350,000 five-year warrants issued in June 5, 2017 as a bonus for officer services through the date thereof, (iii) 150,000 five-year options issued on June 5, 2017 for services as a director and officer through June 1, 2018, (iv) 150,000 five-year options issued in June 2018 for services as a director and officer through June 1, 2019, (v) 150,000 five-year options issued in June 2019 for services as a director and officer through June 1, 2020, all of which are exercisable within 60 days of the date as of which the information is provided, (vi) 750,000 five year warrants issued on February 2, 2020, (vii) 300,000 options issued on August 28, 2020, (viii) 500,000 options issued on October 27, 2020 and (ix) 50,000 options issued on November 26, 2021.

(4)In addition to 676,910 shares, includes shares underlying (i) 250,000 five-year warrants issued in January 2016 to the law firm where Mr. Rosenstadt is a partner, (ii) 50,000 five-year warrants issued in July 2016 which were issued to the law firm where Mr. Rosenstadt is a partner, (iii) 150,000 five-year warrants issued in July 15, 2016 for director fees through June 1, 2017, (iv) 350,000 five-year warrants issued in June 2017 as a bonus for officer services through the date thereof, (v) 150,000 five-year options issued on June 5, 2017 for services as a director and officer through June 1, 2018, (vi) 150,000 five-year options issued in June 2018 for services as a director and officer through June 1, 2019, (vii) 150,000 five-year options issued in June 2019 for services as a director and officer through June 1, 2020, all of which are exercisable within 60 days of the date as of which the information is provided, (vii) 173,641 options issued on October 16, 2019, (viii) 750,000 options issued on the February 10, 2020, (ix) 225,000 warrants issued on April 7, 2020, (x) 300,000 options issued August 28, 2020, (xi) 500,000 options issued on October 27, 2020 and (xii) 50,000 options issued on November 26, 2021.

(5)Includes (i) 50,000 five-year warrants issued in September 2019 for director fees, (ii) 50,000 options issued in February 2018, (iii) 150,000 options issued in December 2019, (iv) 200,000 options issued in October 2020, and (v) 25,000 options issued on November 26, 2021.

(6)

In addition to 665,000 shares, includes shares underlying (i) 75,000 warrants issued in July 2016, (ii) 85,000 warrants issued in June 2017, (iii) 150,000 options issued in June 2017, (iv) 50,000 options issued in July 2018, (v) 50,000 options issued in September 2019, (vi) 300,000 warrants issued in February 2020, (vii) 200,000 options issued in August 2020, (viii) 500,000 options issued in October 2020 and (ix) 25,000 options issued on November 26, 2021.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

We entered into consulting agreements with certain management personnel and stockholders for consulting and legal services. Consulting and legal expenses resulting from such agreements were approximately $420,000 and $420,000 for the year ended November 30, 2021 and 2020, respectively. In addition to the arrangements, discussed in the sections titled “Directors, Executive Officers & Corporate Governance” and “Executive Compensation”, we pay our securities counsel Ortoli Rosenstadt LLP, where our director William Rosenstadt serves as managing partner, a monthly fee of $25,000 and a per transaction fee on certain extraordinary transactions. We do not have any obligations outstanding to other persons who beneficially own more than 10% of our common stock.

On February 1, 2021, the Company issued 35,000 shares to Mr. Rosenstadt, the Company’s Chief Legal Officer and director, for his services performed in connection with December 2020 financing. The fair value was approximate $35,000, which was recorded as part of debt issuance cost to the 2020 Debenture (see note 5).

On April 16, 2021, the Company entered into two unsecured promissory note agreements (the “Notes”) with certain management personnel for an aggregate principal amount of $30,000. The Notes bear interest at 5% per annum and are payable by August 31, 2021. During the quarter ended August 31, 2021, the Company made full repayment of $30,000 to the management personnel, including all outstanding interest.

During the year ended November 30, 2020, we issued 225,000 warrants at fair value of $0.4 million to Mr. Rosenstadt, our Chief Legal Officer and director, for his services performed in connection with preferred stock offering and S-1 registration filling.

28

Table of Contents

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth fees billed to us by our independent auditors for the years ended November 30, 2021 and 2020 for (i) services rendered for the audit of our annual consolidated financial statements and the review of our quarterly consolidated financial statements, (ii) services rendered that are reasonably related to the performance of the audit or review of our consolidated financial statements that are not reported as Audit Fees, and (iii) services rendered in connection with tax preparation, compliance, advice and assistance.

Marcum LLP

SERVICES

    

2021

    

2020

Audit fees

$

106,000

$

97,000

Audit-related fees

 

 

Tax fees

 

 

All other fees

 

 

5,000

Total fees

$

106,000

$

102,000

Audit fees and audit related fees represent amounts billed for professional services rendered for the audit of our annual consolidated financial statements and the review of our interim consolidated financial statements. Before our independent accountants were engaged to render these services, their engagement was approved by our Directors.

29

Table of Contents

PART IV

ITEM 15. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS SCHEDULE

The following exhibits are filed as part of this registration statement. Exhibit numbers correspond to the exhibit requirements of Regulation S-K.

Exhibit No.

    

Description 

3.1

Articles of Incorporation filed as Exhibit 3 (a) to Form S-1 filed on January 13, 2014 and incorporated herein by reference

3.2

Amendment to Articles of Incorporation, dated July 20, 2015, filed as Exhibit 3.1 to our periodic report filed on Form 8-K on August 3, 2015 and incorporated herein by reference

3.3

Amendment to Articles of Incorporation, dated October 27, 2015, filed as Exhibit 3.1 to our periodic report filed on Form 8-K on October 29, 2015 and incorporated herein by reference

3.4

Articles of Incorporation filed as Exhibit 3 (b) to Form S-1 filed on January 13, 2014 and incorporated herein by reference

4.1

Form of Warrant in connection with our February 1, 2018 offering filed as Exhibit 4.1 to our registration statement on Form S-1 filed on January 12, 2018

4.2

Form of Warrant as filed as Exhibit 4.2 to our current report on Form 8-K filed on June 9, 2017 and incorporated herein by reference

4.3

Form of Warrant as filed as Exhibit 10.3 to our current report on Form 8-K filed on August 2, 2017 and incorporated herein by reference

10.1

Advisory Agreement, dated June 1, 2015, with Ari Jatwes filed as Exhibit 10.6 to our current report on Form 8-K filed on January 13, 2016 and incorporated herein by reference

10.3

Executive Services Agreement, dates June 1, 2017, between Denis Corin and Q BioMed Cayman SEZC filed as Exhibit 10.1 to our current report on Form 8-K filed on June 9, 2017 and incorporated herein by reference

10.4

Form of Non-Qualified Stock Option Agreement filed as Exhibit 4.1 to our current report on Form 8-K filed on June 9, 2017 and incorporated herein by reference

10.5

Patent and Technology License and Purchase Option Agreement, dated October 29, 2015, with Mannin Research Inc. filed as Exhibit 10.1 to our annual report on Form 10-K filed on March 11, 2016 and incorporated herein by reference +

10.6

Technology License Agreement, dated June 15, 2017, among Q BioMed Inc., Oklahoma Medical Research Foundation and Rajiv Gandhi Centre for BioTechnology filed as Exhibit 10.1 to our current report on Form 8-K filed on June 15, 2017 and incorporated herein by reference +

10.7

Securities Purchase Agreement, dated August 28, 2019, filed as Exhibit 10.1 to our current report on Form 8-K (as amended) on September 6, 2019 and incorporate herein by reference

10.8

Form of Debenture pursuant to the Securities Purchase Agreement entered into on August 28, 2019, filed as Exhibit 10.2 to our current report on Form 8-K (as amended) on September 6, 2019 and incorporate herein by reference

10.9

Securities Purchase Agreement, dated October 11, 2019, filed as Exhibit 10.1 to our current report on Form 8-K on October 15, 2019 and incorporate herein by reference

10.10

Form of Debenture pursuant to the Securities Purchase Agreement entered into on October 11, 2019, filed as Exhibit 10.2 to our current report on Form 8-K on October 15, 2019 and incorporate herein by reference

10.11

Securities Purchase Agreement, dated December 5, 2019, filed as Exhibit 10.1 to our current report on Form 8-K on December 12, 2019 and incorporate herein by reference

10.12

Form of Debenture pursuant to the Securities Purchase Agreement entered into on December 5, 2019, filed as Exhibit 10.2 to our current report on Form 8-K on December 12, 2019 and incorporate herein by reference

10.13

Securities Purchase Agreement in connection with our April 6, 2020 private placement of Preferred Shares filed as Exhibit 10.1 to our current report on Form 8-k filed on April 7, 2020

10.14

Registration Rights Agreement filed as Exhibit 10.2 to our current report on Form 8-k filed on April 7, 2020

10.15

Form of Securities Purchase Agreement entered into with the Selling Stockholders, filed as Exhibit 10.4 to our current report on Form 8-k filed on December 29, 2020

10.16

Securities Purchase Agreement, dated December 23, 2020, filed as Exhibit 10.1 to our current report on Form 8-k filed on December 29, 2020

10.17

Form of Debenture filed as Exhibit 10.2 to our current report on Form 8-k filed on December 29, 2020

10.18

Amendment Agreement, dated December 23, 2020, filed as Exhibit 10.3 to our current report on Form 8-k filed on December 29, 2020

30

Table of Contents

10.19

Form of Securities Purchase Agreement with Selling Stockholders, filed as Exhibit 10.4 to our current report on Form 8-k filed on December 29, 2020

10.20

Form of Resale Warrant filed as Exhibit 10.5 to our current report on Form 8-k filed on December 29, 2020

10.21

Securities Purchase Agreement, dated February 12, 2021, filed as Exhibit 10.1 to our current report on Form 8-k filed on February 16, 2021

10.22

Form of Debenture filed as Exhibit 10.2 to our current report on Form 8-k filed on February 16, 2021

10.23

Amendment To Patent and Technology License and Purchase Option Agreement, dated March 26, 2019, among the Company and Mannin Research Inc.

31

Certification of Principal Executive Officer and Acting Principal Accounting Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)*

32

Certification of Principal Executive Officer and Acting Principal Accounting Officer pursuant to 18 U.S.C. Section 1350*

101.INS*

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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 Labels Linkbase Document

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*

Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)

*Filed herewith

+ Portions of this exhibit have been omitted pursuant to a request for confidential treatment, and the SEC has granted confidential treatment pursuant to Rule 406 under the Securities Act. Confidential information has been omitted from the exhibit in places marked “****”and has been filed separately with the SEC.

ITEM 16. FORM 10-K SUMMARY

We have elected not to provide a summary of the information provided in this annual report on Form 10-K.

31

Table of Contents

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Q BioMed Inc.

 

 

Date: February 28, 2022

By:

/s/ Denis Corin

 

Name:

Denis Corin

 

Title:

President, Chief Executive Officer and Acting Principal Financial and Accounting Officer

SIGNATURES

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

Signature

    

Title

    

Date

/s/ Denis Corin

 

President, Chief Executive Officer and Director

 

February 28, 2022

Denis Corin

 

(Principal Executive Officer and Acting Principal Financial and Accounting Officer)

 

 

 

 

 

 

 

/s/ William Rosenstadt

 

Chief Legal Officer and Director

 

February 28, 2022

William Rosenstadt

 

 

 

 

 

 

 

 

 

/s/ Rick Panicucci

 

Director

 

February 28, 2022

Rick Panicucci

 

 

 

 

32

Table of Contents

Q BIOMED INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

Page No.

Report of Independent Registered Public Accounting Firm (PCAOB ID # 688)

F-2

Consolidated Financial Statements:

Consolidated Balance Sheets as of November 30, 2021 and 2020

F-4

Consolidated Statements of Operations for the years ended November 30, 2021 and 2020

F-5

Consolidated Statements of Changes in Stockholders’ Deficit for the years ended November 30, 2021 and 2020

F-6

Consolidated Statements of Cash Flows for the years ended November 30, 2021 and 2020

F-7

Notes to Consolidated Financial Statements

F-8

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Q BioMed, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Q BioMed, Inc. (the “Company”) as of November 30, 2021 and 2020, the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for each of the two years in the period ended November 30, 2021, and the related notes (collectively referred to as the “financial statements”).  In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended November 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-2

Table of Contents

Embedded Conversion Features

Description of the Matter

As more fully described in Note 3 and Note 6 of the consolidated financial statements, the Company evaluates embedded conversion features within convertible debt to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in the Statement of Operations. Certain redemption features within the convertible debt do not qualify for any of the exceptions from derivative accounting in ASC 815 and requires bifurcation from the host debt instrument with subsequent changes in fair value recorded in earnings each period. For redemption features within convertible debt instruments that require bifurcation from the host instrument the Company used a third party valuation specialist to assist them in determining the fair value of the derivative liability at inception and at the end of each subsequent reporting period. If the conversion feature does not require recognition of a bifurcated derivative, the convertible debt instrument is evaluated for consideration of any beneficial conversion feature (“BCF”) requiring separate recognition. When the Company records a BCF, the intrinsic value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid-in capital) and amortized to interest expense over the life of the debt.

How We Addressed the Matter in Our Audit

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included the following, among others:

·

We obtained and evaluated management’s accounting memo and management’s valuation.

·

We evaluated the authoritative guidance used by management for determining whether embedded conversion features were present within the convertible notes and required bifurcation.

·

With the assistance of our fair value specialists, (1) we developed independent estimates of the conversion liability component of the convertible debt and compared them to the management’s estimates; (2) we reviewed the valuation methods and assumptions utilized by the appraiser, which included the historical volatility; (3) we reviewed and evaluated the relevant metrics prepared by management; and (4) we tested the mathematical accuracy of the valuation model.

/s/ Marcum LLP

Marcum LLP

We have served as the Company’s auditor since 2015.

New York, NY

February 28, 2022

F-3

Table of Contents

Q BIOMED INC.

Consolidated Balance Sheets

As of November 30,

As of November 30,

    

2021

    

2020

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash

$

344,009

$

177,145

Accounts receivable

80,097

Prepaid expenses and other current assets

 

35,374

 

46,339

Total current assets

 

459,480

 

223,484

Intangible assets, net

 

350,000

 

400,000

Total Assets

$

809,480

$

623,484

 

  

 

  

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

1,345,319

$

721,744

Accrued expenses

954,309

837,660

Accrued expenses - related party

 

71,500

 

4,000

Accrued interest payable

 

70,677

 

43,376

Convertible notes payable, net

3,053,037

92,185

Total current liabilities

 

5,494,842

 

1,698,965

Total Liabilities

 

5,494,842

 

1,698,965

 

  

 

  

Commitments and Contingencies (Note 6)

 

  

 

  

 

  

 

  

Stockholders' Deficit:

 

  

 

  

Preferred stock, $0.001 par value; 100,000,000 shares authorized as of November 30, 2021 and 2020

Convertible Series A, 500,000 shares designated - 227,998 shares issued and outstanding at November 30, 2021 and 2020, respectively

2,161,195

2,161,980

Convertible Series B, 1,000,000 shares designated - 400,000 and 503,134 shares issued and outstanding at November 30, 2021 and 2020, respectively

 

3,915,512

 

4,968,368

Common stock, $0.001 par value; 250,000,000 shares authorized; 28,647,788 and 23,816,489 shares issued and outstanding as of November 30, 2021 and 2020, respectively

 

28,648

 

23,816

Additional paid-in capital

 

53,335,901

 

47,656,423

Accumulated deficit

 

(64,126,618)

 

(55,886,068)

Total Stockholders' Deficit

 

(4,685,362)

 

(1,075,481)

Total Liabilities and Stockholders' Deficit

$

809,480

$

623,484

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

F-4

Table of Contents

Q BIOMED INC.

Consolidated Statements of Operations

For the years ended 

    

November 30, 2021

    

November 30, 2020

Net Sales

$

195,597

$

30,000

Cost of sales

246,846

326,009

Gross loss

(51,249)

(296,009)

Operating expenses:

 

  

 

  

General and administrative expenses

6,263,475

10,969,253

Research and development expenses

 

1,073,841

 

1,880,152

Total operating expenses

 

7,337,316

 

12,849,405

Loss from operations

 

(7,388,565)

 

(13,145,414)

Other (income) expenses:

 

  

 

  

Interest expense

 

506,922

 

296,215

Change in fair value of embedded derivatives

 

304,153

 

19,163

Loss on debt extinguishment

40,910

31,399

Total other expenses

 

851,985

 

346,777

 

 

Net loss

(8,240,550)

(13,492,191)

Accumulated dividend on convertible preferred stock

(500,724)

(375,079)

Deemed dividend on convertible preferred stock due to beneficial conversion feature

(482,945)

Net loss attributable to common stockholders

$

(8,741,274)

$

(14,350,215)

Net loss per share - basic and diluted

$

(0.33)

$

(0.65)

Weighted average shares outstanding, basic and diluted

 

26,779,270

 

22,160,426

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

F-5

Table of Contents

Q BIOMED INC.

Consolidated Statement of Changes in Stockholders’ Deficit

Total 

Series A Preferred Stock

Series B Preferred Stock

Common Stock

Additional Paid 

Accumulated

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

in Capital

    

Deficit

    

Deficit

Balance as of December 1, 2019

 

$

 

$

 

19,709,068

$

19,709

$

37,328,827

$

(42,393,877)

$

(5,045,341)

Issuance of Series A and Series B preferred stock for cash

 

100,000

 

975,000

 

300,000

 

2,975,000

 

 

 

 

 

3,950,000

Issuance of Series A and Series B preferred stock to convert notes payable and accrued interest

 

127,998

 

1,279,980

 

203,134

 

2,031,340

 

 

 

 

 

3,311,320

Offering cost related issurance of Series A and Series B preferred stock

 

 

(138,600)

 

 

(138,600)

 

 

 

277,200

 

 

Beneficial conversion feature of Series A convertible preferred stock

 

 

(252,786)

 

 

 

 

 

252,786

 

 

Deemed dividends related to immediate accretion of beneficial conversion feature of Series A convertible preferred stock

 

 

252,786

 

 

 

 

 

(252,786)

 

 

Beneficial conversion feature of Series B convertible preferred stock

(230,159)

230,159

Deemed dividends related to immediate accretion of beneficial conversion feature of Series B convertible preferred stock

230,159

(230,159)

Accumulated dividend on convertible preferred stock

 

 

117,556

 

 

257,523

 

 

 

(375,079)

 

 

Issuance common stock for dividend payment on preferred stock

 

(71,956)

 

(156,895)

 

177,404

177

228,674

Issuance of common stock and warrants for cash

 

 

358,835

 

359

 

322,591

 

 

322,950

Issuance of common stock to convert notes payable

 

 

 

 

 

2,811,198

 

2,811

 

2,732,489

 

 

2,735,300

Issuance common stock for debt modification

 

 

7,042

 

7

 

9,993

 

 

10,000

Issuance common stock to settle outstanding invoice

416,667

417

557,917

558,334

Cashless warrants exercise

31,088

31

(31)

Share based compensation for services

305,187

305

5,834,334

5,834,639

Share based compensation related to warrants modification

 

 

 

 

 

 

 

739,508

 

 

739,508

Net loss

 

 

 

 

 

 

 

 

(13,492,191)

 

(13,492,191)

Balance as of November 30, 2020

 

227,998

2,161,980

 

503,134

4,968,368

 

23,816,489

23,816

47,656,423

(55,886,068)

(1,075,481)

Issuance of common stock for cash

100,000

100

99,900

100,000

Issuance of common stock and warrants for cash

1,213,333

1,213

908,787

910,000

Issuance common stock for dividend payment on preferred stock

(182,398)

(340,627)

533,610

534

522,491

Issuance of common stock to convert notes payable

945,631

946

702,668

703,614

Issuance of common stock to convert Series B preferred stock

(103,134)

(1,031,340)

1,245,089

1,245

1,030,095

Issuance cost related to issuance of convertible notes

35,000

35

34,790

34,825

Beneficial conversion feature related to convertible notes

290,967

290,967

Issuance of warrants in conjuction with convertible note

252,683

252,683

Accumulated dividend on preferred stock

181,613

319,111

(500,724)

Share based compensation for services

758,636

759

2,337,821

2,338,580

Net loss

(8,240,550)

(8,240,550)

Balance as of November 30, 2021

227,998

$

2,161,195

400,000

$

3,915,512

28,647,788

$

28,648

$

53,335,901

$

(64,126,618)

$

(4,685,362)

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

F-6

Table of Contents

Q BIOMED INC.

Consolidated Statement of Cash Flows

For the years ended

    

November 30, 2021

    

November 30, 2020

Cash flows from operating activities:

 

  

 

  

Net loss

$

(8,240,550)

$

(13,492,191)

Adjustments to reconcile net loss to net cash used in operating activities

 

  

 

  

Share based compensation for services

 

2,338,580

 

5,834,639

Share based compensation related to warrants modification

 

 

739,508

Change in fair value of embedded conversion option

 

304,153

 

19,163

Accretion of debt discount

 

408,009

 

138,794

Amortization expense

50,000

50,000

Loss on debt extinguishment

40,910

31,399

Inventory write-off

319,009

Gain from settlement of outstanding payable

 

 

(191,666)

Changes in operating assets and liabilities:

 

  

 

  

Accounts receivable

(80,097)

(89,677)

Prepaid expenses and other current assets

 

10,965

 

(319,009)

Accounts payable and accrued expenses

 

838,693

 

569,193

Accrued interest payable

 

27,301

 

157,397

Net cash used in operating activities

 

(4,302,036)

 

(6,233,441)

 

  

 

  

Cash flows from financing activities:

 

  

 

  

Proceeds from issuance of Series A and Series B convertible preferred stock, net of issuance costs

 

 

3,950,000

Proceeds received from issuance of convertible notes, net

 

3,458,900

 

1,965,000

Proceeds received from issuance of notes to related parties

30,000

Proceeds received for issuance of common stock and warrants

 

1,010,000

 

322,950

Repayment of notes to related parties

(30,000)

Net cash provided by financing activities

 

4,468,900

 

6,237,950

 

  

 

  

Net increase in cash

 

166,864

 

4,509

 

  

 

  

Cash at beginning of the year

 

177,145

 

172,636

Cash at end of the year

$

344,009

$

177,145

 

  

 

  

Supplemental disclosures:

 

  

 

  

Cash paid for interest to related parties

$

(441)

$

Cash paid for income taxes

$

$

Supplemental disclosures for noncash investing and financing activities:

Issuance of common stock to convert notes payable and accrued interest

$

703,614

$

2,735,300

Issuance of Series A and Series B preferred stock in exchange for outstanding convertible notes payable and accrued interest

$

$

3,311,320

Issuance of common stock to convert Series B preferred stock

$

1,031,340

$

Accumulated dividend on convertible preferred stock

$

500,724

$

375,079

Issuance of common stock for dividend payment on preferred stock

$

523,025

$

228,851

Issuance common stock to settle outstanding invoice

$

$

750,000

Cashless warrants exercise

$

$

31

Beneficial conversion feature related to convertible notes

$

290,967

$

Offering cost

$

69,825

$

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

F-7

Table of Contents

Q BIOMED INC.

Notes to Consolidated Financial Statements

Note 1 - Organization of the Company and Description of the Business

Q BioMed Inc. (“Q BioMed”), and its wholly owned subsidiaries Q BioMed Cayman SEZC and QBMG Q BioMed Germany UG (collectively, “the Company”), is a biomedical acceleration and development company focused on licensing, acquiring and providing strategic resources to life sciences and healthcare companies. Q BioMed intends to mitigate risk by acquiring multiple assets over time and across a broad spectrum of healthcare related products, companies and sectors. The Company intends to develop these assets to provide returns via organic growth, revenue production, out-licensing, sale or the spinoff of new public companies.

The accompanying consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Note 2 - Basis of Presentation and Going Concern

The accompanying consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).

The Company currently operates in one business segment focusing on licensing, acquiring and providing strategic resources to life sciences and healthcare companies. The Company is not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision maker, the Chief Executive Officer, who comprehensively manages the entire business. The Company does not currently operate any separate lines of business.

Going Concern

The accompanying consolidated financial statements are prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company has and is expected to incur net losses and cash outflows from operations in pursuit of extracting value from its acquired intellectual property. These matters, amongst others, raise doubt about the Company’s ability to continue as a going concern.

Management anticipates that the Company will have to raise additional funds and/or generate revenue from drug sales within twelve months to continue operations. Additional funding will be needed to implement the Company’s business plan that includes various expenses such as fulfilling our obligations under licensing agreements, legal, operational set-up, general and administrative, marketing, employee salaries and other related start-up expenses. Obtaining additional funding will be subject to a number of factors, including general market conditions, investor acceptance of our business plan and initial results from our business operations. These factors may impact the timing, amount, terms or conditions of additional financing available to us. If the Company is unable to raise sufficient funds, management will be forced to scale back the Company’s operations or cease its operations.

Management has determined that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the consolidated financial statements are issued. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

COVID 19

The impact of the worldwide spread of a novel strain of coronavirus (“COVID-19”) has been unprecedented and unpredictable, but based on the Company’s current assessment, the Company does not expect any material impact on its long-term strategic plans, operations and its liquidity due to the worldwide spread of COVID-19. However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus throughout the world and its assessment of the impact of COVID-19 may change.

Table of Contents

Q BIOMED INC.

Notes to Consolidated Financial Statements

Note 3 – Summary of Significant Accounting Policies

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates, and such differences may be material to the consolidated financial statements. The more significant estimates and assumptions by management include among others: the valuation allowance of deferred tax assets resulting from net operating losses, the valuation of warrants on the Company’s stock and the valuation of embedded derivatives within the Company’s convertible notes payable.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At November 30, 2021 and 2020, the Company had a cash balance that is insured by the FDIC limit. The Company had not experienced losses on these accounts.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the years ended November 30, 2021 and 2020. The respective carrying value of cash and accounts payable approximated their fair values as they are short term in nature.

Intangible Assets

Intangible assets subject to amortization include acquired intellectual property for a marketable product acquired in November 2018. The intellectual property is being amortized over the estimated life remaining at the time of acquisition, which is 10 years.

Intangible assets are monitored for potential impairment whenever events or circumstances indicate that the carrying amount may not be recoverable and are also reviewed annually to determine whether any impairment is necessary. Management has assessed the economic life of the Company’s Metastron asset to be at least equal to its remaining use life of eight years. As such, management modelled the recoverability test using seven years of estimated future cash flows. Based on this projection, the $350,000 net carrying value of the Company’s Metastron asset is fully recoverable and therefore there was no impairment loss as of November 30, 2021 and 2020.

F-9

Table of Contents

Q BIOMED INC.

Notes to Consolidated Financial Statements

Debt Issuance Costs

Direct costs incurred to issue non-revolving debt instruments are recognized as a reduction to the related debt balance in the accompanying Consolidated Balance Sheets and amortized to interest expense over the contractual term of the related debt using the effective interest method.

Embedded Conversion Features

The Company evaluates embedded conversion features within convertible debt to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in the Statement of Operations. If the conversion feature does not require recognition of a bifurcated derivative, the convertible debt instrument is evaluated for consideration of any beneficial conversion feature (“BCF”) requiring separate recognition. When the Company records a BCF, the intrinsic value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid-in capital) and amortized to interest expense over the life of the debt.

Derivative Financial Instruments

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 Statement of Operations. Depending on the features of the derivative financial instrument, the Company uses either the Black-Scholes option-pricing model or a binomial model 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.

Common Stock Warrants

The Company classifies as equity any warrants that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any warrants that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the Company’s control), (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement) or (iii) that contain reset provisions that do not qualify for the scope exception. The Company assesses classification of its common stock warrants at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company evaluated these warrants to assess their proper classification and determined that the common stock warrants meet the criteria for equity or liability classification in the balance sheet. The warrants classified as liability are initially recorded at fair value, with gains and losses arising from changes in fair value recognized in other income (expense) in the consolidated statements of operations at each period end while such instruments remain outstanding.

Revenue Recognition

The core principle of Topic 606 (FASB ASC 606) is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The revenue recognition guidance contained in Topic 606, to follow the five-step revenue recognition model along with other guidance impacted by this standard: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transportation price; (4) allocate the transportation price; (5) recognize revenue when or as the entity satisfies a performance obligation. Previous practices were broadly consistent with this approach, and the company determined the amount of revenue based on the amount customer paid or promised to pay.

F-10

Table of Contents

Q BIOMED INC.

Notes to Consolidated Financial Statements

The Company satisfies its performance obligation to deliver products when the customer has received the products, which is when title to the goods has transferred and the customer has control of the products. Payments from customers are generally received within 90 days of when the product is delivered.

Because the Company’s agreements have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.

Stock Based Compensation

Share-based payment awards are measured at grant-date fair value of the equity instruments that the Company is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.

Share-based compensation cost is recorded for all option grants and awards of non-vested stock based on the grant date fair value of the award, and is recognized over the service period required for the award.

Stock-based compensation expense is recognized in the consolidated financial statements based on the fair value of the awards granted. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period. The Company calculates the fair value of stock options using the Black-Scholes option-pricing model at grant date.

General and administrative expenses

The significant components of general and administrative expenses consist of stock-based compensation, investor relations fees, consulting and professional fees.

Research and development

The Company expenses the cost of research and development as incurred. Research and development expenses include costs incurred in funding research and development activities, license fees, and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made.

Income Taxes

Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

F-11

Table of Contents

Q BIOMED INC.

Notes to Consolidated Financial Statements

The Company applies a more-likely-than-not recognition threshold for all tax uncertainties, which only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities. As of November 30, 2021 and 2020, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positions with less than a 50% likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had a material effect on the Company.

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest during the years ended November 30, 2021 and 2020. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

Recent accounting standards

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company elected to early adopt this guidance on December 1, 2021, on a modified retrospective basis. The adoption resulted in a $291,000 decrease in additional paid in capital from the derecognition of the bifurcated equity component, $208,000 increase in debt from the derecognition of the discount associated with the bifurcated equity component and $83,000 decrease to the opening balance of accumulated deficit.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The adoption of ASU 2021-04 is not expected to have a material impact on our financial statements or disclosures.

Recent adopted standards

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. ASU 2019-12 is effective for the Company beginning September 1, 2021. Most amendments within ASU 2019-12 are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements.