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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: ~~August~~February 3128, ~~2022~~2023

☐ 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 as 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)

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

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


Title of each class	Symbol	Name of each exchange on which registered
None	None	None

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Common Stock, $0.001 par value	70145,~~318~~094,~~066~~531 shares
(Class)	(Outstanding at ~~October~~June 3115, ~~2022~~2023)

Table of Contents

CAUTIONARY NOTE

We note that this Quarterly report does not meet fully the requirements of quarterly reports as required by Form 10-Q. Particularly, we note that the financial statements included in this Form 10-Q have not been reviewed by an independent auditor. These are not the type of financial statement that an investor would expect to see from a company that has had its financial statements audited and reviewed by an independent accounting firm per the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. This quarterly report is non-reviewed, therefore incomplete and should not be relied upon as accurate, timely or fit for any purpose. Although the Company intends to amend this quarterly report as soon as practicable and invites any inquiries to be directed to Company management, it may not be able to ever amend it.

Table of Contents

Q BIOMED INC.

Table of Contents


		Page
PART I - FINANCIAL INFORMATION		1
Item 1. Condensed Consolidated Financial Statements (Unaudited)		1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2223
Item 3. Quantitative and Qualitative Disclosure About Market Risk		29
Item 4. Controls and Procedures		3029
PART II - OTHER INFORMATION		31
Item 1. Legal Proceedings		31
Item 1A. Risk Factors		31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3. Defaults Upon Senior Securities		3132
Item 4. Mine Safety Disclosures		3132
Item 5. Other Information		32
Item 6. Exhibits		33
SIGNATURES		34

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Q BIOMED INC.

Condensed Consolidated Balance Sheets


	As of ~~August~~February 3128,		As of November 30,
	~~2022~~2023		~~2021~~2022
	(Unaudited)		(Unaudited)
ASSETS
Current assets:
Cash	$	~~137~~23,~~827~~173	$	~~344~~49,~~009~~973
Accounts receivable		~~11,535~~—		8011,~~097~~535
Inventory		22,676		22,253
Prepaid expenses and other current assets		10,808		10,808
Prepaid expenses and other current assets		13,496		13,121
Total current assets		33,981		72,316
Total current assets		185,534		459,480
Investment		3,143,201		3,143,201
Intangible assets, net		~~312~~287,500		~~350~~300,000
Total Assets	$	~~498~~3,~~034~~464,682	$	~~809~~3,~~480~~515,517

LIABILITIES AND STOCKHOLDERS‘ DEFICIT
Current liabilities:
Accounts payable	$	2,~~079~~252,~~652~~619	$	12,~~345~~132,~~319~~063
Accrued expenses		13,~~216~~221,~~374~~201		~~954~~1,~~309~~545,052
Accrued expenses - related party		221,000		71,500
Accrued interest payable		257,297		254,686
Accrued interest payable		202,504		70,677
Debt		4,083,262		4,109,981
Debt		3,772,798		3,053,037
Derivative liabilities		91,158		91,158
Derivative liabilities		240,022		—
Total current liabilities		9,905,733		8,132,940
Total current liabilities		7,732,350		5,494,842
Total Liabilities		9,905,733		8,132,940
Total Liabilities		7,732,350		5,494,842

Commitments and Contingencies (Note 6)
Commitments and Contingencies (Note 8)

Stockholders' Deficit:
Preferred stock, $0.001 par value; 100,000,000 shares authorized as of August 31, 2022 and November 30, 2021		—		—
Preferred stock, $0.001 par value; 100,000,000 shares authorized as of February 28, 2023 and November 30, 2022		—		—
Convertible Series A, 500,000 shares designated - 227,998 shares issued and outstanding at August 31, 2022 and November 30, 2021, respectively		2,160,574		2,161,195
Convertible Series A, 500,000 shares designated - 227,998 shares issued and outstanding at February 28, 2023 and November 30, 2022, respectively		2,206,516		2,160,916
Convertible Series B, 1,000,000 shares designated - 318,000 and 400,000 shares issued and outstanding at August 31, 2022 and November 30, 2021, respectively		3,094,623		3,915,512
Convertible Series B, 1,000,000 shares designated - 296,000 shares issued and outstanding at February 28, 2023 and November 30, 2022, respectively		2,933,823		2,874,623
Common stock, $0.001 par value; 250,000,000 shares authorized; 57,364,746 and 28,647,788 shares issued and outstanding as of August 31, 2022 and November 30, 2021, respectively		57,365		28,648
Convertible Series C, 100,000,000 shares designated – 1,000,000 shares issued and outstanding at February 28, 2023 and November 30, 2022, respectively		50,000		50,000
Additional paid-in capital		55,851,395		53,335,901
Common stock, $0.001 par value; 250,000,000 shares authorized; 133,027,272 and 84,328,041 shares issued and outstanding as of February 28, 2023 and November 30, 2022, respectively		133,027		84,328
Accumulated deficit		(68,398,273)		(64,126,618)
Additional paid-in capital		56,552,997		56,308,513
Total Stockholders' Deficit		(7,234,316)		(4,685,362)
Accumulated deficit		(68,317,414)		(66,095,802)
Total Liabilities and Stockholders' Deficit	$	498,034	$	809,480
Total Stockholders' Deficit		(6,441,051)		(4,617,422)
Total Liabilities and Stockholders' Deficit	$	3,464,682	$	3,515,517

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

Table of Contents

Q BioMed Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


	For the ~~three~~Three ~~months~~Months ~~ended~~Ended				~~For the nine months ended~~
	~~August~~February 3128, ~~2022~~2023		~~August~~February 3128, ~~2021~~2022		~~August 31, 2022~~		~~August 31, 2021~~
Net Sales	$	~~26,271~~—	$	4575,~~675~~059	$	~~271,817~~	$	~~90,675~~
Cost of sales		662,~~442~~500		73,~~770~~945		~~213,138~~		~~160,763~~
Gross income (loss)		(402,~~171~~500)		~~(28~~1,~~095)~~114		~~58,679~~		~~(70,088)~~
Operating expenses:
General and administrative expenses		~~720~~439,~~075~~818		1,~~371~~096,~~676~~300		~~2,835,543~~		~~5,028,668~~
Research and development expenses		202,~~839~~691		~~202~~69,~~168~~268		~~103,159~~		~~667,538~~
Total operating expenses		~~740~~442,~~914~~510		1,~~573~~165,~~844~~568		~~2,938,702~~		~~5,696,206~~
Loss from operations		(~~781~~445,~~085~~010)		(1,~~601~~164,~~939~~454)		~~(2,880,023)~~		~~(5,766,294)~~
Other (income) expenses:
Other expenses:
Interest expense		~~239~~276,~~638~~602		99414,~~418~~377		~~1,108,372~~		~~234,752~~
Change in fair value of derivatives		(382,072)		101,247		(264,267)		128,720
Change in fair value of embedded derivatives		—		235,817
Loss on debt extinguishment		~~152,211~~—		~~(15~~232,~~212)~~100		~~384,311~~		~~40,910~~
Loss on issuance of convertible note		4,250		—		4,250		—
Settlement of registration liability		—		241,875
Settlement of registration liability		—		—		241,875		—
Total other expenses		276,602		1,124,169
Total other expenses		14,027		185,453		1,474,541		404,382
Net loss		(721,612)		(2,288,623)
Net loss		(795,112)		(1,787,392)		(4,354,564)		(6,170,676)
Accumulated dividend on convertible preferred stock		(104,800)		(122,808)
Accumulated dividend on convertible preferred stock		(114,257)		(125,485)		(364,289)		(375,517)
Net loss attributable to common stockholders	$	(826,412)	$	(2,411,431)
Deemed dividend for induced conversion of convertible preferred stock		(460,233)		—		(968,160)		—

Net loss attributable to common stockholders	$	(1,369,602)	$	(1,912,877)	$	(5,687,013)	$	(6,546,193)
Net income (loss) per share - basic and diluted	$	(0.02)	$	(0.08)

Weighted average shares outstanding, basic and diluted		108,730,450		29,594,999
Net loss per share - basic and diluted	$	(0.03)	$	(0.07)	$	(0.16)	$	(0.25)
Weighted average shares outstanding, basic and diluted		44,897,574		27,660,616		35,878,092		26,207,685

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

Table of Contents

Q BIOMED INC.

Condensed Consolidated Statements of Changes in Shareholders’ Deficit

(Unaudited)


	For the Three Months Ended ~~August~~February 3128, ~~2022~~2023
																~~Total~~				Total
	Series A Preferred Stock			Series B Preferred Stock			~~Common~~Series C Preferred Stock			~~Additional~~Common ~~Paid~~Stock			~~Accumulated~~		Additional Paid	~~Stockholders’~~		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		~~in Capital~~Shares		Amount	~~Deficit~~		in Capital	~~Deficit~~		Deficit		Deficit
Balance as of June 1, 2022	227,998	$	2,160,916	345,000	$	3,364,623	39,222,374	$	39,222	$	54,947,369		$	(67,603,161)		$	(7,091,031)
Balance as of November 30, 2022	227,998	$	2,160,916	296,000	$	2,874,623	1,000,000	$	50,000	84,328,041		$	84,328		$	56,308,513		$	(66,095,802)	$	(4,617,422)
Issuance of common stock for dividend payment on preferred stock	—		(45,599)	—		(69,000)	1,051,376		1,052		113,547			—			—
Issuance of common stock to convert notes payable	—		—	—		—	—		—	48,699,231			48,699			333,251			—		381,950
Issuance of common stock to convert Series B preferred stock	—		—	(27,000)		(270,000)	7,619,012		7,619		722,614			—			460,233
Accumulated dividend on preferred stock	—		45,600	—		59,200	—		—	—			—			(104,800)			—		—
Deemed dividend for induced conversion of Series B preferred stock	—		—	—		—	—		—		(460,233)			—			(460,233)
Share based compensation for services	—		—	—		—	—		—	—			—			16,033			—		16,033
Issuance of common stock to convert notes payable	—		—	—		—	7,423,424		7,423		533,091			—			540,514
Net loss	—		—	—		—	—		—	—			—			—			(721,612)		(721,612)
Issuance of common stock to settle commitment shares	—		—	—		—	300,000		300		8,400			—			8,700
Balance as of February 28, 2023 (Unaudited)	227,998	$	2,206,516	296,000	$	2,933,823	1,000,000	$	50,000	133,027,272		$	133,027		$	56,552,997		$	(68,317,414)	$	(6,441,051)
Accumulated dividend on preferred stock	—		45,257	—		69,000	—		—		(114,257)			—			—
Share based compensation for services	—		—	—		—	1,748,560		1,749		102,364			—			104,113
Share based compensation for options modification	—		—	—		—	—		—		3,000			—			3,000
Reclassification of options from equity to liability due to reassessment under ASC 815	—		—	—		—	—		—		(4,500)			—			(4,500)
Net loss	—		—	—		—	—		—		—			(795,112)			(795,112)
Balance as of August 31, 2022	227,998	$	2,160,574	318,000	$	3,094,623	57,364,746	$	57,365	$	55,851,395		$	(68,398,273)		$	(7,234,316)


	For the Three Months Ended ~~August~~February 3128, ~~2021~~2022
																~~Total~~				Total
	Series A Preferred Stock			Series B Preferred Stock			~~Common~~Series C Preferred Stock			~~Additional~~Common ~~Paid~~Stock			~~Accumulated~~		Additional Paid	~~Stockholders’~~		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		~~in Capital~~Shares		Amount	~~Deficit~~		in Capital	~~Deficit~~		Deficit		Deficit
Balance as of June 1, 2021	227,998	$	2,161,702	400,000	$	3,915,512	27,456,512	$	27,456	$	51,972,556		$	(60,269,352)		$	(2,192,126)
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)
Issuance common stock for dividend payment on preferred stock	—		(45,600)	—		(80,000)	130,833		131		125,469			—			—
Issuance of common stock and warrants for cash	—		—	—		—	—		—	400,000			400			99,630			—		100,030
Accumulated dividend on preferred stock	—		45,485	—		80,000	—		—		(125,485)			—			—
Cash proceeds from warrants modification	—		—	—		—	—		—	—			—			20,000			—		20,000
Beneficial conversion feature related to convertible notes	—		—	—		—	—		—		225,750			—			225,750
Issuance common stock for dividend payment on preferred stock	—		(45,600)	—		(80,000)	—		—	277,877			278			125,322			—		—
Issuance of warrants in conjunction with convertible note	—		—	—		—	—		—		252,683			—			252,683
Issuance of common stock to convert notes payable	—		—	—		—	—		—	1,577,648			1,578			1,052,369			—		1,053,947
Issuance of common stock to convert notes payable	—		—	—		—	301,372		301		213,532			—			213,833
Issuance of common stock to extinguish accrued liabilities	—		—	—		—	—		—	26,627			26			9,773			—		9,799
Share based compensation for services	—		—	—		—	85,628		86		290,687			—			290,773
Accumulated dividend on preferred stock	—		44,586	—		78,222	—		—	—			—			(122,808)			—		—
Net loss	—		—	—		—	—		—		—			(1,787,392)			(1,787,392)
Share based compensation for services	—		—	—		—	—		—	94,925			95			151,420			—		151,515
Balance as of August 31, 2021	227,998	$	2,161,587	400,000	$	3,915,512	27,974,345	$	27,974	$	52,955,192		$	(62,056,744)		$	(2,996,479)
Share based compensation for warrants modification	—		—	—		—	—		—	—			—			17,019			—		17,019
Adoption of ASU 2020-06	—		—	—		—	—		—	—			—			(290,967)			82,909		(208,058)
Net loss	—		—	—		—	—		—	—			—			—			(2,288,623)		(2,288,623)
Balance as of February 28, 2022 (Unaudited)	227,998	$	2,160,181	400,000	$	3,913,734	—	$	—	31,024,865		$	31,025		$	54,397,659		$	(66,332,332)	$	(5,829,733)

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

Table of Contents

Q BIOMED INC.

Condensed Consolidated Statements of ~~Changes~~Cash ~~in Shareholders’ Deficit~~Flows

(Unaudited)


	For the ~~Nine~~Three Months Ended ~~August 31, 2022~~
	February 28, 2023			February 28, 2022												~~Total~~
	Series A Preferred Stock					Series B Preferred Stock			Common Stock			Additional Paid		Accumulated		Stockholders’
Cash flows from operating activities:
	Shares		Amount			Shares	Amount		Shares	Amount		in Capital		Deficit		Deficit
Net loss	$	(721,612)		$	(2,288,623)
Balance as of December 1, 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)
Adjustments to reconcile net loss to net cash used in in operating activities
Issuance of common stock and warrants for cash	—			—		—		—	400,000		400		99,630		—		100,030
Share based compensation for services		16,033			151,515
Cash proceeds from warrants modification	—			—		—		—	—		—		20,000		—		20,000
Accretion of debt discount		195,582			351,805
Issuance common stock for dividend payment on preferred stock	—			(136,799)		—		(229,000)	1,731,816		1,732		364,067		—		—
Amortization expense		12,500			12,500
Issuance of common stock to convert Series B preferred stock	—			—		(82,000)		(820,000)	12,591,809		12,592		1,775,568		—		968,160
Settlement on registration liability		—			241,875
Deemed dividend for induced conversion of Series B preferred stock	—			—		—		—	—		—		(968,160)		—		(968,160)
Loss on debt extinguishment		—			232,100
Issuance of common stock to convert notes payable	—			—		—		—	10,890,765		10,891		1,866,367		—		1,877,258
Changes in operating assets and liabilities:
Issuance of common stock to extinguish accrued liabilities	—			—		—		—	676,627		676		73,223		—		73,899
Accounts receivable		11,535			52,389
Issuance of common stock to settle commitment shares	—			—		—		—	545,000		545		61,810		—		62,355
Prepaid expenses and other current assets		—			(661)
Accumulated dividend on preferred stock	—			136,178		—		228,111	—		—		(364,289)		—		—
Accounts payable and accrued expenses		296,705			583,974
Share based compensation for services	—			—		—		—	1,880,941		1,881		325,826		—		327,707
Accrued interest payable		50,873			33,434
Share based consideration for warrants modification	—			—		—		—	—		—		277,897		—		277,897
Net cash used in operating activities		(138,187)			(376,856)
Share based compensation for options modification	—			—		—		—	—		—		182,436		—		182,436

Adoption of ASU 2020-06	—			—		—		—	—		—		(290,967)		82,909		(208,058)
Cash flows from financing activities:
Reclassification of warrants and options from equity to liability due to reassessment under ASC 815	—			—		—		—	—		—		(907,914)		—		(907,914)
Proceeds received from issuance of convertible notes, net		111,387			—
Net loss	—			—		—		—	—		—		—		(4,354,564)		(4,354,564)
Proceeds received from issuance of common stock and warrants		—			100,030
Balance as of August 31, 2022	227,998		$	2,160,574		318,000	$	3,094,623	57,364,746	$	57,365	$	55,851,395	$	(68,398,273)	$	(7,234,316)
Cash advances		—			50,000
Proceeds received for warrants modification		—			20,000
Net cash provided by financing activities		111,387			170,030

Net decrease in cash		(294,036)			(206,826)

Cash at beginning of the year		344,009			344,009
Cash at end of the year	$	49,973		$	137,183

Supplemental disclosures for noncash investing and financing activities:
Issuance of common stock to convert notes payable and accrued interest	$	381,950		$	1,053,947
Accumulated dividend on convertible preferred stock	$	104,800		$	122,808
Issuance of common stock for dividend payment on preferred stock	$	—		$	125,600
Issuance of common stock to extinguish accrued liabilities	$	—		$	9,799
Adoption of ASU 2020-06	$	—		$	208,058


	For the Nine Months Ended August 31, 2021
														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, 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	—		(136,799)	—		(260,627)	385,846		386		397,040		—		—
Issuance of common stock to convert notes payable	—		—	—		—	469,152		469		416,378		—		416,847
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 conjunction with convertible note	—		—	—		—	—		—		252,683		—		252,683
Accumulated dividend on preferred stock	—		136,406	—		239,111	—		—		(375,517)		—		—
Share based compensation for services	—		—	—		—	709,436		710		2,243,646		—		2,244,356
Net loss	—		—	—		—	—		—		—		(6,170,676)		(6,170,676)
Balance as of August 31, 2021	227,998	$	2,161,587	400,000	$	3,915,512	27,974,345	$	27,974	$	52,955,192	$	(62,056,744)	$	(2,996,479)

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

Table of Contents

Q BIOMED INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	For the nine months ended
	August 31, 2022		August 31, 2021
Cash flows from operating activities:
Net loss	$	(4,354,564)	$	(6,170,676)
Adjustments to reconcile net loss to net cash used in operating activities
Share based compensation for services		327,707		2,244,356
Share based consideration related to warrants modification		299,883		—
Share based compensation related to stock options modification		211,936		—
Change in fair value of derivatives		(264,267)		128,720
Accretion of debt discount		920,925		188,118
Amortization expense		37,500		37,500
Settlement on registration liability		241,875		—
Loss on issuance of convertible note		4,250
Loss on debt extinguishment		384,311		40,910
Changes in operating assets and liabilities:
Accounts receivable		68,562		(38,875)
Prepaid expenses and other current assets		(798)		(2,628)
Accounts payable and accrued expenses		1,264,641		851,332
Accrued interest payable		131,827		(20,938)
Net cash used in operating activities		(726,212)		(2,742,181)

Cash flows from financing activities:
Proceeds received from issuance of convertible notes, net		350,000		1,706,250
Proceeds received from issuance of common stock and warrants		100,030		1,010,000
Proceeds received from issuance of notes to related parties		—		30,000
Cash advances		50,000		—
Proceeds received for warrants modification		20,000		—
Repayment of notes to related parties		—		(30,000)
Net cash provided by financing activities		520,030		2,716,250

Net decrease in cash		(206,182)		(25,931)

Cash at beginning of the year		344,009		177,145
Cash at end of the year	$	137,827	$	151,214

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	$	1,877,258	$	416,847
Issuance of common stock to convert Series B preferred stock	$	820,000	$	1,031,340
Deemed dividend for induced conversion of Series B preferred stock	$	968,160	$	—
Accumulated dividend on convertible preferred stock	$	364,289	$	375,517
Issuance of common stock for dividend payment on preferred stock	$	365,799	$	397,426
Issuance of common stock to extinguish accrued liabilities	$	73,899	$	—
Issuance of common stock to settle derivative liability	$	62,355	$	—
Reclassification of warrants and options from equity to liability due to reassessment under ASC 815	$	907,914	$	—
Adoption of ASU 2020-06	$	208,058	$	—
Beneficial conversion feature related to convertible notes	$	—	$	290,967
Offering cost	$	—	$	69,825

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

Table of Contents

Q BIOMED INC.

Notes to Condensed 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 condensed 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

Basis of Presentation

The accompanying interim period unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. These condensed consolidated financial statements are unaudited and should be read in conjunction with the ~~audited~~unaudited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended November 30, ~~2021~~2022 that was filed with SEC on ~~February~~May 2826, ~~2022~~2023. Certain disclosures included in the annual financial statements have been condensed or omitted from these financial statements as they are not required for interim financial statements under U.S. GAAP and the rules of the SEC. These unaudited condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year.

Certain prior period amounts related to Inventory within Prepaid expenses and other current assets in the accompanying unaudited condensed consolidated financial statements have been reclassified to conform to the current period presentation. There was no change to prior period current or total assets.

Going Concern

The accompanying condensed 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 substantial 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 futher 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 condensed consolidated financial statements are issued. The accompanying condensed 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.

6Risk and Uncertainties

COVID 19

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

~~Risk~~operations and ~~Uncertainties~~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.

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.

Note 3 - Summary of Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the ~~audited~~unaudited financial statements for the year ended November 30, ~~2021~~2022 included in the Company’s Form 10-K.

Modification of Equity Classified Awards

From time-to-time equity classified awards may be modified. On the modification date, the Company estimates the fair value of the awards immediately before and immediately after modification. The incremental increase in fair value is recognized as expense immediately to the extent the underlying equity awards are vested and on a straight-line basis over the same remaining amortization schedule as the unvested underlying equity awards. The classification of stock-based awards, including whether such instruments should be recorded as liabilities or as equity, is ~~re-assessed~~reassessed on the modification date.

Induced Conversion of Convertible Preferred Stock

The Company accounts for gains or losses on extinguishment of equity-classified preferred stock as deemed dividends, to be included in the net loss per common stockholder used to calculate earnings per share. The difference between (1) the fair value of the consideration transferred to the holders of the preferred stock and (2) the carrying amount of the preferred stock (net of issuance costs) is subtracted from (or added to) net loss to arrive at net loss available to common stockholders in the calculation of earnings per share.

Sequencing Policy

The Company adopted a sequencing policy under ASC 815-40-35 (“ASC 815”) whereby in the event that reclassification of contracts from equity to liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain financial instruments with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive financial instruments, with the earliest financial instruments receiving the first allocation of shares. Pursuant to ASC 815, issuance of stock-based awards to the Company’s employees, ~~nonemployees~~non-employees or directors recognized under ASC 718 are not subject to the sequencing policy. Any modifications of awards (e.g., options or warrants) that remain subject to vesting, or any modifications of awards that continue to be held by active employees, are not subject to the sequencing policy. Modifications of vested awards held by ~~nonemployees~~non-employees are subject to the sequencing policy.

7Recent Accounting Standards

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 Company is still evaluating the impact of adoption the ASU 2021-04 on its condensed consolidated financial statements.

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

Recent Accounting Standards

Recently Adopted 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 approximately $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.

Note 4 - Loss per share

Basic net loss per share was calculated by dividing net loss by the weighted-average shares of common stock outstanding during the period. Diluted net loss per share was calculated by dividing net loss by the weighted-average shares of common stock outstanding during the period using the treasury stock method or the two-class method, whichever is more dilutive. The table below summarizes potentially dilutive securities that were not considered in the computation of diluted net loss per share because they would be anti-dilutive (amounts are rounded to nearest thousand).


Potentially dilutive securities	~~August~~February 3128, ~~2022~~2023	November 30, ~~2021~~2022
Series A convertible preferred stock	2,280,000	2,280,000
Series B convertible preferred stock	98,~~086~~457,000	118,~~429~~457,000
Common stock purchase warrants	11,220,000	11,752,000
Series C convertible preferred stock	1,000,000	1,000,000
Stock Options	7,450,000	4,450,000
Common stock purchase warrants	11,752,000	11,752,000
Convertible Notes	84,670,000	4,898,000
Stock Options	4,450,000	4,450,000
Potentially dilutive securities	114,706,000	34,809,000
Convertible Notes	86,360,000	86,360,000
Potentially dilutive securities	114,299,000	114,299,000

Note 5 – Intangible Asset Acquisition

On November 23, 2018, the Company entered into an Asset Sale Agreement (“ASA”) with GE Healthcare Limited (“GE”) whereby the Company acquired GE’s radiopharmaceutical drug, Metastron® and all related intellectual property including, but not limited to sales and distribution data, market authorizations and trademarks for Metastron® in various countries in exchange for an upfront payment of $0.5 million, a one-time milestone payment based on future sales, and royalty payments based on future sales. The Company did not acquire any workforce, manufacturing, inventory, sales agreements, or distribution agreements associated with Metastron®. The first commercial sale of Metastron™ by the Company will occur only after the successful transfer or assignment of all intellectual property, material sales and distribution data, technical transfer, and the establishment of new manufacturing sites by the Company and under the appropriate regulatory filings required by the jurisdictions in which Metastron™ is sold.

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

The acquired assets are concentrated in a single asset and the set is not considered a business. As such, the transaction is recognized as the acquisition of a finite-lived intangible asset. The one-time milestone payment based on future sales, and royalty payments based on future sales will be recognized when the payments are probable and estimable, which is expected to be when the related sales targets are achieved and the payments payable to GE. The acquired asset is being amortized on a straight-line basis over its estimated 10-year life. Amortization expense for the three months ended February 28, 2023 and 2022 was $12,500, respectively. The estimated remaining amortization expense for each of the five succeeding fiscal year:


Three month ended February 28,
2023		37,500
2024		50,000
2025		50,000
2026		50,000
2027		50,000
Thereafter		50,000
	$	287,500

Note 6 – Investment

For the year ended November 30, 2022, $3.6 million was converted from Licensing fees and Share awards expensed in Research and Development in recognition of shares received in Investment in an Associate – Mannin. We incurred a $500k loss between the value of shares received and the amount expended in Research and Development.

Note 7 - Debt

The table below summarizes outstanding debt as of February 28, 2023 and November 30, 2022 (amounts are rounded to nearest thousand):


	February 28, 2023		November 30, 2022
Convertible Notes Payable:
Principal value of 2021 Debentures	$	2,408,000	$	2,408,000
Fair value of bifurcated contingent put option		1,099,000		1,099,000
Debt discount		(70,000)		(70,000)
2021 Convertible notes payable, net		3,437,000		3,437,000
Principal value of 2022 Debentures		560,000		560,000
Fair value of bifurcated contingent put option		333,000		333,000
Debt discount		(305,000)		(305,000)
2022 Convertible notes payable, net		588,000		588,000
Principal value of 2023 Debentures, net of conversions		(222,000)		—
Debt discount		196,000		—
2023 Convertible notes payable, net		(82,000)		—
Cash advances		85,000		85,000
Total carrying value of convertible notes payable	$	4,084,000	$	4,110,000

2023 Convertible Notes Payable

2023 Debentures

January 2023 Debenture

On January 12, 2023, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which the Company sold a convertible debenture (the “January Debenture”) in the principal amount of $49,000.

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Notes to Condensed Consolidated Financial Statements

Note 5 - Debt

The ~~table~~January ~~below~~Debenture ~~summarizes~~includes ~~outstanding~~an ~~debt~~original asissue discount of ~~August~~$5,250. 31The Company also incurred an additional $3,750 ~~2022~~of issuance cost resulting from the payment of the lender’s legal fees. The January Debenture has a maturity date of January 12, 2024, provided that in case of an event of default, the debenture may become at the holder’s election immediately due and ~~November~~payable. 30The January Debenture carries an interest rate of 12% per annum, ~~2021~~provided that any principal or interest which is not paid when due shall bear interest at the rate of 22% per annum from the due date until payment (~~amounts~~the ~~are~~“Default ~~rounded~~Interest”). The Company shall pay ten (10) mandatory monthly payments of $5,488 commencing on March 1, 2023. In the event of default the January Debenture shall become immediately due and payable and the Company shall pay to ~~nearest~~the ~~thousand~~lender an amount equal to 150% times the sum of (i): the then outstanding principal amount of the January Debenture plus (ii) accrued and unpaid interest on the unpaid principal amount to the date of payment plus (iii) default interest, if any, shall immediately become due and payable.


	August 31, 2022		November 30, 2021
Convertible Notes Payable:
Principal value of 2021 Debentures	$	2,547,000	$	3,506,000
Fair value of bifurcated contingent put option		1,073,000		867,000
Debt discount		(257,000)		(1,320,000)
2021 Convertible notes payable, net		3,363,000		3,053,000
Principal value of 2022 Debentures		395,000		—
Fair value of bifurcated contingent put option		137,000		—
Debt discount		(172,000)		—
2022 Convertible notes payable, net		360,000		—
Cash advances		50,000		—
Total debt	$	3,773,000	$	3,053,000

February 2023 Debenture

~~2022~~On ~~Convertible~~February ~~Notes~~13, ~~Payable~~2023, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which the Company sold a convertible debenture (the “February Debenture”) in the principal amount of $62,387.

July 2022 Debenture

On July 1, 2022, the Company entered into a Securities Purchase Agreement with an accredited investor (“DL”) pursuant to which the Company issued to DL a Convertible Promissory Note (the “DL Note”) in the aggregate principal amount of $119,888. The DL Note includes an original issue discount of $16,888 (includes $1,250 due diligence fee retained by DL). The Company also incurred additional $3,000 issuance cost resulting from the payment of the lender’s legal fees. The DL Note has a maturity date of July 1, 2023 and the Company has agreed to pay interest on the unpaid principal balance of the DL Note at the rate of 10.0% per annum from the date on which the DL Note is issued (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company has the right to prepay the DL Note, provided it makes a payment including a prepayment to DL as set forth in the DL Note. The outstanding principal amount of the DL Note may not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180th day, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 80% of the average of 3 lowest trading price with a 10-day look back immediately preceding the date of conversion.

The contingent share-settled redemption feature, contingent acceleration upon merger, acquisition, and event of default within the DL Note are all contingent put options that are required to be bifurcated as a single compound embedded derivative at fair value, with subsequent changes in fair value recognized in the Condensed Consolidated Statement of Operations. The fair value estimate is a Level 3 measurement. The Company estimated the fair value of put option on the merger, acquisition, and event of default by estimating the probability of the occurrence of triggering date (the “Probability factor”) and applying the probability to the discounted maximum redemption premium for any given payment with the following key inputs:


	July 1, 2022
Strike price	$	0.05
Terms (years)		1.0
Volatility		138	%
Risk-free rate		2.8	%
Dividend yield		0	%
Probability factor		20	%

The February Debenture includes an original issue discount of $8,137. The Company also incurred an additional $4,250 of issuance cost resulting from the payment of the lender’s legal fees. The February Debenture has a maturity date of February 14, 2024, provided that in case of an event of default, the debenture may become at the holder’s election immediately due and payable. The February Debenture carries an interest rate of 6% per annum, provided that any principal or interest which is not paid when due shall bear interest at the rate of 22% per annum from the due date until payment (the “Default Interest”). The lender shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of the February Debenture and ending on the later of: (i) the Maturity Date, or (ii) the date of payment of the default amount (the “Conversion Period”), all or any part of the outstanding and unpaid amount into fully paid and non-assessable shares of Common Stock.

~~The~~2022 ~~aggregate~~Convertible ~~fair~~Notes ~~value of the embedded put option on the issuance date was approximately $104,000, which exceed the net proceeds of $100,000, resulting approximately $4,000 loss on issuance of convertible note.~~Payable

2022 Debentures

July 2022 Debenture

On July 1, 2022, the Company entered into a Securities Purchase Agreement with an accredited investor (“DL”) pursuant to which the Company issued to DL a Convertible Promissory Note (the “DL Note”) in the aggregate principal amount of $119,888. The DL Note includes an original issue discount of $16,888 (includes $1,250 due diligence fee retained by DL). The Company also incurred an additional $3,000 of issuance cost resulting from the payment of the lender’s legal fees. The DL Note has a maturity date of July 1, 2023, and the Company has agreed to pay interest on the unpaid principal balance of the DL Note at the rate of 10.0% per annum from the date on which the DL Note is issued (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company has the right to prepay the DL Note, provided it makes a payment including a prepayment to DL as set forth in the DL Note. The outstanding principal amount of the DL Note may not be converted prior to the period beginning on the date that is 180 days following the Issue Date. Following the 180th day, DL may convert the DL Note into shares of the Company’s common stock at a conversion price equal to 80% of the average of 3 lowest trading price with a 10-day look back immediately preceding the date of conversion.

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Notes to Condensed Consolidated Financial Statements


	July 1, 2022
Strike price	$	0.05
Terms (years)		1.0
Volatility		138	%
Risk-free rate		2.8	%
Dividend yield		0	%
Probability factor		20	%

The aggregate fair value of the embedded put option on the issuance date was approximately $104,000, which exceeded the net proceeds of $100,000, resulting in an approximate loss of $4,000 upon the on issuance of the convertible note.

For the three months ended February 28, 2023, the Company issued 14,875,997 shares of common stock to convert approximately $120,000 of outstanding debt upon the conversion.

August 2022 Debenture

On August 10, 2022 (the “Effective Date’), the Company entered into a Securities Purchase Agreement with an accredited investor (“the Lender”) pursuant to which the Company issued to the Lender a Convertible Promissory Note (the “August Note”) in the aggregate principal amount of $275,000 for a purchase price of $250,000. The August Note has a maturity date of February 6, 2023, and the Company has agreed to pay interest on the unpaid principal balance of the August Note at the rate of 10.0% per annum. Upon the later of the date the obligations under this Note are satisfied or the 6-month anniversary and for 30 days thereafter, the Lender has the exclusive right to elect conversion of any original issue discount or interest amount due under this August Note, into shares of the Company’s common stock at a conversion price per share equal to $0.035. The conversion option does not apply to the principal amount. The conversion option and contingent put upon an event of default are required to be bifurcated as a single compound embedded derivative at fair value under ASC 815, because it is not considered to be classified in stockholders’ equity. The subsequent changes in fair value are recognized in the Condensed Consolidated Statement of Operations. The fair value estimate is a Level 3 measurement. The Company estimated the fair value with the following key inputs:


	August 10, 2022
Strike price	$	0.04
Terms (years)		0.5
Volatility		200	%
Risk-free rate		3.1	%
Dividend yield		0	%

The aggregate fair value of the conversion option on the issuance date was approximately $23,000, which was recognized as an additional debt discount.

As additional consideration for making the August Note, the Company agreed to issue 300,000 unregistered common shares within 10 business days to the Lender (the “Commitment shares”). The commitment to issue the shares was valued at the Effective Date fair value of approximately $11,000 and recognized as an additional debt discount. The commitment is a forward contract, recognized at fair value, as a result of applying the Company’s sequencing policy, and recognized at fair value with changes in fair value recognized in the Company’s Condensed Consolidated Statements of Operations until settled on August 24, 2022.

2021 Convertible Notes Payable

February 2021 Debenture

On February 12, 2021, the Company issued a debenture for $0.5 million (the “February Debenture”) pursuant to a securities purchase agreement with an accredited investor dated February 12, 2021. The February Debenture may be converted at any time on or prior to maturity at the lower of $1.15 or 93% of the average of the four lowest daily VWAPs during the 10 consecutive trading days immediately preceding the conversion date, provided that as long as we are not in default under the 2020 Debenture, the conversion price may never be less than $1.00. The debenture has a maturity date of February 12, 2022, provided that in case of an event of default, the debenture may become at the holder’s election immediately due and payable. The debenture bears interest at the rate of 5.5% per annum, and on issuance, the Company paid to the holder a commitment fee equal to 2% of the amount of the debenture.

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Notes to Condensed Consolidated Financial Statements

~~The~~September ~~contingent~~2022 ~~share-settled redemption feature and contingent prepayment provision within the February~~ Debenture are all contingent put options that are required to be bifurcated as a single compound embedded derivative at fair value, with subsequent changes in fair value recognized in the Condensed Consolidated Statement of Operations. The fair value estimate is a Level 3 measurement. The Company estimated the fair value with the following key inputs:


	February 12, 2021
Strike price	$	1.15
Terms (years)		1.0
Volatility		92	%
Risk-free rate		0.1	%
Dividend yield		0	%

On September 15, 2022, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which the Company sold a convertible debenture (the “September Debenture”) in the principal amount of $102,637.

The ~~aggregate~~September ~~fair~~Debenture ~~value~~has a maturity date of September 15, 2023, provided that in case of an event of default, the ~~contingent~~debenture ~~put~~may ~~options~~become onat the ~~issuance~~holder’s ~~date~~election ~~was~~immediately ~~approximately~~due ~~$28~~and payable. The September Debenture carries an interest rate of 6% per annum,~~000,~~ provided that any principal or interest which ~~was~~is ~~recognized~~not aspaid anwhen ~~additional~~due ~~debt~~shall ~~discount~~bear interest at the rate of 22% per annum from the due date until payment (the “Default Interest”). The Company may prepay the Debenture at 120% of the outstanding aggregate principal amount within the first 60 days of issuance and at 130% of the sum of the outstanding principal amount, the accrued and unpaid interest on the unpaid principal amount and any Default Interest from 61 to 180 days after issuance.

On January 21, 2022, the Company issued 1,055,000 shares of common stock to convert $0.5 million of outstanding debt and interest and extinguished $95,000 of embedded derivative liability upon the conversion. The conversion price was reduced to $0.50. The Company recognized a loss on debt extinguishment of approximately $232,000 as a result of the reduction of conversion price for the nine months ended August 31, 2022.

July 2021 Debenture

On July 26, 2021, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which the Company sold a convertible debenture (the “July Debenture”) in the principal amount of $806,250 and a warrant to purchase up to 645,000 shares of common stock (the “Warrant”) for a total purchase price of $750,000.

The July Debenture had a maturity date of April 26, 2022. The July Debenture carries an interest rate of 10% per annum, provided that any principal or interest which is not paid when due shall bear interest at the rate of 15% per annum from the due date until payment (the “Default Interest”).

The holder may convert the July Debenture in its sole discretion at any time on or prior to maturity at the lower of $1.00 or 85% of the average of the four (4) lowest VWAPs during the 20 Trading Days prior to the date of such calculation. The “Variable Conversion Price” shall equal, subject to an initial floor price of $0.35 (the “Floor Price”), the lower of $1.00 and 85% of the average of the four (4) lowest VWAPs during the 20 Trading Days prior to the date of such calculation. The initial Floor Price shall be readjusted to $0.10 if following the Issue Date, VWAP of the Company shall be less than $0.35 for a total of ten days.

The Warrant has an exercise price of $1.25 and may be exercised in cash or via cashless exercise, exercisable for five (5) years from issuance. The grant date relative fair value of the Warrant was estimated to be $253,000 as determined based on the relative fair value allocation of the proceeds received. The Warrant were valued using the Black-Scholes option pricing model using the following inputs:


	July 26, 2021
Strike price	$	1.25
Terms (years)		5.0
Volatility		112	%
Risk-free rate		0.7	%
Dividend yield		0	%

November 2022 Debenture

On November 22, 2022, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which the Company sold a convertible debenture (the “November Debenture”) in the principal amount of $62,387.

The November Debenture has a maturity date of November 22, 2023, provided that in case of an event of default, the debenture may become at the holder’s election immediately due and payable. The November Debenture carries an interest rate of 6% per annum, provided that any principal or interest which is not paid when due shall bear interest at the rate of 22% per annum from the due date until payment (the “Default Interest”). The Company may prepay the Debenture at 120% of the outstanding aggregate principal amount within the first 60 days of issuance and at 130% of the sum of the outstanding principal amount, the accrued and unpaid interest on the unpaid principal amount and any Default Interest from 61 to 180 days after issuance.

2021 Debenture

February 2021 Debenture

The aggregate fair value of the contingent put options on the issuance date was approximately $28,000, which was recognized as an additional debt discount.

July 2021 Debenture

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Notes to Condensed Consolidated Financial Statements

The July Debenture has a maturity date of April 26, 2022, provided that in case of an event of default, the debenture may become at the holder's election immediately due and payable. The July Debenture carries an interest rate of 10% per annum, provided that any principal or interest which is not paid when due shall bear interest at the rate of 15% per annum from the due date until payment (the “Default Interest”). The Company may prepay the Debenture at 120% of the outstanding aggregate principal amount within the first 60 days of issuance and at 130% of the sum of the outstanding principal amount, the accrued and unpaid interest on the unpaid principal amount and any Default Interest from 61 to 180 days after issuance.

The contingent share-settled redemption feature and contingent prepayment provision within the July Debenture are all contingent put options that are required to be bifurcated as a single compound embedded derivative at fair value, with subsequent changes in fair value recognized in the Condensed Consolidated Statement of Operations. The fair value estimate is a Level 3 measurement. The Company estimated the fair value with the following key inputs:


	July 1, 2022
Strike price	$	0.05
Terms (years)		1.0
Volatility		138	%
Risk-free rate		2.8	%
Dividend yield		0	%
Probability factor		20	%


	July 26, 2021
Strike price	$	1.00
Terms (years)		0.8
Volatility		62	%
Risk-free rate		0.1	%
Dividend yield		0	%

The aggregate fair value of the contingent put options on the issuance date was approximately $209,000, which was recognized as an additional debt discount.

On December 15, 2021, the Company and the holder entered into a Mutual Release Agreement pursuant to which the holder agreed to add the $241,875 to the outstanding principal balance of July Debenture, for no consideration received by the Company, in order to resolve a breach of certain registration provisions of the securities purchase agreement.

The July Debenture is past maturity and is currently in default. However, the Company has not received any default notice from the holder.

During the ~~three~~year ~~months~~ ended ~~August~~November 3130, 2022, the Company issued an aggregate 13,~~948~~633,~~424~~862 shares of common stock to convert approximately $68413,000 of outstanding debt, and extinguished approximately $15159,000 embedded derivative liability upon the conversion. The ~~conversion price was reduced to $0.03 as an inducement conversion. The~~ Company recognized a loss on debt extinguishment of approximately $152,000 as a result of the reduction of conversion price for the ~~three~~year ~~months~~ ended ~~August~~November 3130, 2022.

During the nine months ended August 31, 2022, the Company issued an aggregate 3,633,862 shares of common stock to convert approximately $413,000 of outstanding debt, and extinguished approximately $159,000 embedded derivative liability upon the conversion. The Company recognized a loss on debt extinguishment of approximately $152,000 as a result of the reduction of conversion price for the nine months ended August 31, 2022.

September 2021 Debenture

On September 29, 2021 ~~(the “Effective Date”)~~, the Company entered into a securities purchase agreement with an accredited investor (“Lender”), pursuant to which the Company sold a convertible debenture (the “September Debenture”) in the principal amount of $2,200,000 with twelve-months term. The September Debenture 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. The Company also incurred other issuance ~~cost~~costs of $247,350. On October 26, 2021, the September Debenture maturity date was extended for an additional 3 months to December 2920, 2022.

The Company may prepay the September Debenture at 105% of the outstanding aggregate principal amount plus accrued interest within the first 60 days of issuance, at 112% of the outstanding aggregate principal amount plus accrued interest from 61-120 days after issuance and at 124% of the outstanding aggregate principal amount plus accrued interest from 121-180 days after issuance. The Debenture may not be prepaid after 180 days.

The Lender has the right to convert all or any amount of the outstanding aggregate principal amount at any time at a fixed conversion price of $1.00 per share. The conversion price after six months shall be fixed to $0.50 per share.

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

~~trading~~The ~~days.~~Company Asmay aprepay ~~result~~the September Debenture at 105% of ~~entering~~the ~~into~~outstanding aggregate principal amount plus accrued interest within the ~~“September~~first ~~Debenture”~~60 days of issuance, ~~for~~at ~~which~~112% ~~such~~of ~~instruments~~the ~~contained~~outstanding aaggregate ~~variable~~principal ~~conversion~~amount ~~feature~~plus ~~with~~accrued nointerest ~~floor,~~from 61-120 days after issuance and at 124% of the ~~Company~~outstanding ~~has~~aggregate ~~adopted~~principal ~~sequencing~~amount ~~policy~~plus ~~(see~~accrued ~~Note~~interest 3)from 121-180 days after issuance. The Debenture may not be prepaid after 180 days.

However, in the event the Company’s Common Stock trades below $0.50 per share for more than ten (10) consecutive trading days, the Lender is entitled to convert all or any amount of the outstanding aggregate principal amount into shares of the Company’s Common Stock at a Conversion Price for each share of Common Stock equal to 85% of the average of the 4 lowest VWAP’s in the prior 20 trading days. As a result of entering into the “September Debenture”, for which such instruments contained a variable conversion feature with no floor, the Company has adopted sequencing policy (see Note 3).

The contingent share-settled redemption feature and contingent prepayment provision within the September Debenture are all contingent put options that are required to be bifurcated as a single compound embedded derivative at fair value, with subsequent changes in fair value recognized in the Condensed Consolidated Statement of Operations. The fair value estimate is a Level 3 measurement. The Company estimated the fair value with the following key inputs:


	September 29, 2021
Strike price	$	0.50
Terms (years)		1.0
Volatility		66	%
Risk-free rate		0.1	%
Dividend yield		—	%


	September 29, 2021
Strike price	$	0.50
Terms (years)		1.0
Volatility		66	%
Risk-free rate		0.1	%
Dividend yield		0	%

The aggregate fair value of the contingent put options on the issuance date was approximately $278,000, which was recognized as an additional debt discount.

On April 8, 2022, the Company issued 245,000 shares of common stock as commitment shares pursuant to the securities purchase agreement. The commitment to issue the shares was valued at the Effective Date fair value of approximately $177,000 and recognized as an additional debt discount. The commitment is a forward contract, recognized at fair value, as a result of applying the Company’s sequencing policy, and recognized at fair value with changes in fair value recognized in the Company’s Condensed Consolidated Statements of Operations until settled on April 8, 2022.

~~During~~For the three months ended ~~August~~February 3128, ~~2022~~2023, the Company issued 533,~~475~~823,~~000~~234 shares of common stock to convert approximately $~~228~~214,000 of outstanding debt and extinguished $~~115~~146,000 of embedded derivative liability upon the conversion.

~~During~~For ~~nine~~the ~~months~~year ended ~~August~~November 3130, 2022, the Company issued 621,~~201~~025,~~903~~054 shares of common stock to convert approximately $305,000 of outstanding debt and extinguished $146,000 of embedded derivative liability upon the conversion.

The fair value of the contingent put option in all outstanding debentures with the feature are revalued as of February 28, 2023 and November 30, 2022 based on the following weighted average key inputs:


	February 28, 2023			November 30, 2022
Strike price	$	0.55		$	0.55
Terms (years)		0.3			0.3
Volatility		200	%		200	%
Risk-free rate		2.9	%		2.9	%
Dividend yield		0	%		0	%

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

The following table presents changes in Level 3 liabilities measured at fair value for the period ended February 28, 2023 and for the year ended November 30, 2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs (amounts are rounded to nearest thousand:


Balance November 30, 2021	$	867,000
Issuance of convertible notes		271,000
Debt extinguishment		(425,000)
Change in fair value		721,000
Balance November 30, 2022	$	1,434,000
Issuance of convertible notes		—
Change in fair value		—
Balance February 28, 2023	$	1,434,000

Debt Conversion

The following table summarizes debt conversion during the period ended February 28, 2023 and the year ended November 30, 2022 (amounts are rounded to nearest thousand):

Debt Amendment

On October 26, 2021, the Company entered into an extension agreement with the holder of September 2021 Debenture (the "Holder") to extend the maturity date from September 30, 2022, to December 29, 2022. The amendment was recognized as a troubled debt restructuring.

On July 22, 2021, the Company entered into an amendment agreement to the securities purchase agreement with the Holder, pursuant to which, the floor price of the 2020 Debenture was reduced to $0.50 per share. Additionally, the maturity date of the 2020 Debenture was extended to December 31, 2021. The amendment was recognized as a debt extinguishment, resulting in a gain on debt extinguishment of approximately $15,000.

Interest expense

Interest expense, included in the accompanying Condensed Consolidated Statements of Operations, is comprised of the following for each period presented (amounts are rounded to nearest thousand):


	For the ~~three~~Three ~~months~~Months ~~ended~~Ended				~~For the nine months ended~~
	~~August~~February 3128, ~~2022~~2023		~~August~~February 3128, ~~2021~~2022		~~August 31, 2022~~		~~August 31, 2021~~
Interest expense based on the coupon interest rate of the outstanding debt	$	5751,000	$	2161,000	$	~~177,000~~	$	~~46,000~~
Accretion of debt discount		~~178~~217,000		78352,000		~~921,000~~		~~188,000~~
Other		59,000		—1,000		~~10,000~~		—
Total interest expense	$	~~240~~277,000	$	99414,000	$	~~1,108,000~~	$	~~234,000~~

Cash Advances

Cash advances include cash provided by vendors that is subject to repayment on demand.

1314

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Notes to Condensed Consolidated Financial Statements

Note 68 - Commitments and Contingencies

Equity Financing

On May 5, 2021, the Company entered into an agreement with Aedesius Holdings Ltd. ("Aedesius") pursuant to which the Company has agreed with Aedesius that the Company would sell it up to 16,000,000 units (the "Units") for a total aggregate of up to $20,000,000.

Aedesius failed to perform on its obligation and to date has not invested any monies in the Company. As a result, the Company has terminated any and all rights with respect to future fundings and will pursue whatever rights and remedies the Company has at its disposal for breach of contract and damages.

Legal

Periodically, the Company reviews 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, the Company accrues 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, the Company reassesses the potential liability related to pending claims and litigation.

As previously reported, on July 12, 2022, the Company was notified that WSI PBG, LLC (“WSI”) filed a complaint against the Company seeking to recover $196,216 in unpaid consulting fees, plus costs and expenses of litigation. The Company elected not to litigate this suit so as not to increase its liability exposure. Not unexpectedly, on August 24, 2022, WSI obtained a judgment against the Company in the amount of $203,784. The Company is exploring its options in addressing this judgment, including terms of settlement that would result in a satisfaction of this Judgment over a limited period of time.

On July 19, 2022, wethe Company received notice that the Activus Group (“Activus”) filed a complaint for fees it alleges are due in the amount of $129,600 plus fees and expenses for consulting services provided by Activus as a result of an agreement between the parties. WeThe ~~have~~Company has not filed an answer and ~~are~~is currently determining ~~our~~their next steps in settlement.

On August 15, 2022, the Company received notice that another of its unpaid contractors, Diligent Health Solutions, LLC. (“DHS”), had filed suit against the Company seeking $106,000 in unpaid consulting fees. Here, too, the Company elected not to litigate this suit so as not to increase its liability exposure. As a result of the foregoing, DHS obtained a default judgment against the Company in the amount of $111,000. The company is exploring its options in addressing this judgment, including terms of settlement that would result in a satisfy of this Judgment over a limited period of time.

Advisory Agreements

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

On March 11, 2022, the Company entered into an engagement letter agreement (“Agreement”) with EF Hutton, division of Benchmark Investments, LLC (“EF Hutton”) to effectuate the Corporation’s Firm Commitment Public Offering and Uplisting and to engage EF Hutton to act as the placement agent for a bridge or other private offering consisting of approximately $2 million. The Company shall be responsible for EF Hutton’s external counsel’s legal costs irrespective of whether the Offering is consummated or not, subject to a maximum of $50,000 in the event that there is not a Closing. The Company incurred $15,000 of expense during ~~the~~year ~~nine months~~ ended ~~August~~November 3130, 2022, and no payment was made as of ~~August~~February 3128, ~~2022~~2023.

Lease Agreement

In December 2016, one of our subsidiaries entered into a lease agreement for its office space located in Cayman Islands for $30,000 per annum. The initial term of the agreement ended in December 2019, and the Company has renewed its office lease agreement for another three years with the same terms. 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. The Company recognizes 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.~~15

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Notes to Condensed Consolidated Financial Statements

three years with the same terms. 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. The Company recognizes monthly license payments as incurred over the term of the arrangement.

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

14License Agreements

Mannin

On October 29, 2015, the Company entered into a Patent and Technology License and Purchase Option Agreement (“Exclusive License”) with a vendor whereby the Company was 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.

On March 26, 2019, the Company 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 the Company issuing 100,000 shares to Mannin Research Inc. on April 9, 2019.

On September 1, 2020, the Company 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. The Company has agreed to contribute funds in Mannin GmbH. We shall pay Mannin $1.5 million in cash payable in three instalments, thereof $0.7 million of which has been paid, $0.4 million of which was due on December 31, 2020, and $0.4 million to be paid by June 30, 2021. In addition, we paid 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 $2.0 million in funds, at which time the parties have agreed to a profit share structure reducing our future capital commitments to Mannin R&D.

During the period ended February 28, 2023 and year ended November 30, 2022, the Company incurred approximately $0.0 and $0.1 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.

For year ended November 30, 2022, $3.6 million was converted from Licensing fees and Share awards expensed in Research and Development in recognition of shares received in Investment in an Associate - Mannin. We incurred a $500k loss between the value of shares received and the amount expended in Research and Development.

Washington University

On March 9, 2019, the Company 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 the Company 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

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Notes to Condensed Consolidated Financial Statements

Note 7 - Related Party Transactions

The Company 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 Condensed Consolidated Statements of Operations as follows (amounts are rounded to nearest thousand):


	For the three months ended				For the nine months ended
	August 31, 2022		August 31, 2021		August 31, 2022		August 31, 2021
Consulting and legal expenses	$	117,500	$	105,000	$	327,500	$	315,000

●

The first commercial sale of a diagnostic product.

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

Note 89 - ~~Stockholders’~~Related ~~Deficit~~Party Transactions

AsThe ofCompany ~~August~~entered ~~31,~~into ~~2022~~consulting ~~and~~agreements ~~November~~with ~~30,~~certain ~~2021,~~management ~~the~~personnel ~~Company~~and isstockholders ~~authorized~~for toconsulting ~~issue~~and uplegal toservices. ~~250,000,000~~Consulting ~~shares~~and oflegal ~~its~~expenses ~~$0.001~~resulting ~~par~~from ~~value~~such ~~common~~agreements ~~stock~~were included within general and upadministrative toexpenses ~~100,000,000~~in ~~shares~~the accompanying Condensed Consolidated Statements of ~~its~~Operations ~~$0.001~~as ~~par~~follows ~~value~~(amounts ~~preferred~~are ~~stock.~~rounded to nearest thousand), but have not been paid to date:

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 approximately $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.

On May 29, 2022 the company issued 250,000 shares at a nominal value of 10c per share to Mr. Rosenstadt, the company's Chief Legal Officer and director, in lieu of cash for his monthly services.

On May 29, 2022, the company issued 200,000 shares at a nominal value of 10c per share to Mr Corin, the company's Chief Executive Officer, as partial payment of his monthly salary in lieu of cash.

Note 10 - Stockholders’ Deficit

As of February 28, 2023 and November 30, 2022, the Company is authorized to issue up to 250,000,000 shares of its $0.001 par value common stock and up to 100,000,000 shares of its $0.001 par value preferred stock.

Preferred Shares

The original issue price and the liquidation value per share, as of ~~August~~February 3128, ~~2022~~2023, of each class of preferred stock is as follows:


	Original Issue Price		Liquidation Value
	Per Share		Per Share
Series A Preferred Share	$	10.00	$	10.20
Series B Preferred Share	$	10.00	$	10.25
Series C Preferred Share	$	0.05	$	0.05

During the ~~three~~year ~~and nine months~~ ended ~~August~~November 3130, 2022, the Company issued ~~total~~ 1,~~051~~000,~~376~~000 ~~and~~of ~~1,731,816~~Series ~~shares~~C ofpreferred ~~common~~ stock asin ~~dividend~~the ~~payment~~amount onof ~~Series~~$50,000 Afor ~~and~~settlement ~~Series~~of Ban ~~preferred~~amount ~~stock,~~due ~~respectively~~to officers and directors.

During the three and nine months ended August 31, 2022, the Company issued 7,619,012 and 12,591,809 shares of common stock to convert 27,000 and 82,000 shares of Series B preferred stock, respectively. The Company ~~recognized~~had ~~deemed~~accumulated ~~dividend~~dividends ~~for~~payable ~~the~~on ~~difference between~~ the ~~carrying~~Preferred ~~amount~~Shares of ~~the preferred stock and the fair value of the common stock exchanged for such preferred stock, totaled~~ approximately $~~0.5~~105,000 ~~million~~as ~~and~~of $1February ~~million for the three and nine months ended August 31~~28, ~~2022 in the Condensed Consolidated Statements of Operations~~2023.

~~The Company had accumulated dividends payable on the Preferred Shares of approximately $123,000 as of August 31, 2022.~~17

Common Shares

On February 14, 2022, the Company entered into a series of securities purchase agreements for the sale of 400,000 units at a $0.25 per unit sales price. The Company raised $100,000 in cash. Each unit consisted of one common share and one warrant to purchase one share of common stock at an exercise price of $0.50. The common warrants issued on February 22, 2022 have a fair value of $0.28 per share, see Note 9.

During the three months ended August 31, 2022, the Company issued 7,619,012 shares of common stock to convert approximately $296,000 of outstanding debt and interest, and extinguished approximately $131,000 of embedded derivative liabilities. Additionally, the Company reversed approximately $38,000 unamortized debt discount upon the conversion. During the nine months ended August 31, 2022, the Company issued 10,890,765 shares of common stock to convert approximately $1,246,000 of outstanding debt and interest, and extinguished approximately $365,000 of embedded derivative liabilities. Additionally, the Company reversed approximately $118,000 unamortized debt discount upon the conversion. The Company recognized approximately $384,000 debt extinguishment loss for the nine months ended August 31, 2022.

During the three months ended August 31, 2022, the Company issued 1,748,560 shares of the Company’s common stock to various vendors for advisory services, valued at approximately $35,000 based on the estimated fair market value of the stock on the date of

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

~~grant.~~Common The Company also recognized approximately $69,000 related to the vesting of stock options and restricted awards. The $69,000 was recognized within general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations for the three months ended August 31, 2022.Shares

~~During~~Issuance ~~the nine months ended August 31, 2022, the Company issued 1,880,941 shares~~ of ~~the Company’s~~ common ~~stock~~shares ~~to various vendors~~ for ~~advisory~~ services, valued at approximately $88,000 based on the estimated fair market value of the stock on the date of grant The Company also recognized approximately $240,000 related to the vesting of stock options and restricted awards. The $240,000 was recognized within general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations for the nine months ended August 31, 2022.

The Company recognized approximately $16,000 related to the vesting of stock options and restricted awards. The $16,000 was recognized within general and administrative expenses in the accompanying Consolidated Statement of Operations for the three months ended February 28, 2023.

Issuance of common shares for cash

On February 14, 2022, the Company entered into a series of securities purchase agreements for the sale of 400,000 units at a $0.25 unit sales price. The Company raised $100,000 in cash. Each unit consisted of one common share and one warrant to purchase one share of common stock at an exercise price of $0.50. The common warrants issued on February 22, 2022, have a fair value of $0.28 per share, see Note 11.

Issuance of common shares for debt conversion

During the three months ended February 28, 2023, the Company issued 33,823,234 shares of common stock to convert approximately $238,000 of outstanding debt and interest. and extinguished approximately $146,000 of embedded derivative liabilities Additionally, the Company reversed approximately $118,000 of unamortized debt discount upon the conversion.

Note 911 - Warrants and Options

Summary of warrants

The following represents a summary of all outstanding warrants to purchase the Company’s common stock, including warrants issued to vendors for services, ~~warrants issued in conjunction with debt offering,~~ and warrants issued as part of the units sold in the private placements, at ~~August~~February 3128, ~~2022~~2023 and November 30, ~~2021~~2022 and the changes during the period then ended (warrants amount and intrinsic value are rounded to nearest thousand):


				Weighted Average
				Remaining
		Weighted Average		Contractual
	Warrants	Exercise Price		Life (years)	Intrinsic Value
Outstanding at November 30, 2021	11,752,000	$	1.97	2.60	$	—
Outstanding at November 30, 2022	11,220,000	$	1.01	3.8	$	—
Issued	~~400,000~~—		0.50	2.4823		—
Forfeited/expired	~~(932,000)~~—		—	—		—
Outstanding at August 31, 2022	11,220,000	$	1.01	4.0	$	—
Outstanding and exercisable at February 28, 2023	11,220,000	$	1.01	3.8	$	—
Exercisable at August 31, 2022	11,220,000	$	1.01	4.0	$	—

~~Warrants~~Grant ~~issued~~date ~~on February 22, 2022 were classified as liabilities. The~~ fair value of ~~the~~all outstanding warrants ~~on grant date~~ was based on the following key inputs:


	As of February 2228, ~~2022~~2023			As of November 30, 2022
Strike price	$	01.5025		$	1.25
Terms (years)		3.0
Term (years)		5.0			5.0
Volatility		~~126~~114	%		114	%
Risk-free rate		10.74	%		0.8	%
Dividend yield		0.0	%		0.0	%

~~Modification of Warrants~~18

On February 1, 2022, the Company modified an aggregate of 245,625 warrants (the “Warrants”) that were originally granted to certain investors and consultants. The exercise price of the Warrants was reduced to $0.65 per share and the maturity dates of the Warrants were extended until August 1, 2024.

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

Modification date fair value of all outstanding warrants was based on the following key inputs:


	After Modification			Before Modification
Strike price	$	1.77		$	2.51
Term (years)		3.5			0.8
Volatility		123	%		77	%
Risk-free rate		0.5	%		0.4	%
Dividend yield		0.0	%		0.0	%

Warrants issued on February 22, 2022, were classified as liabilities. The fair value of the warrants on grant date was based on the following key inputs:


	February 22, 2022
Strike price	$	0.50
Terms (years)		3.0
Volatility		126	%
Risk-free rate		1.7	%
Dividend yield		0.0	%

Modification of Warrants

The Company received $20,000 cash from one of the investors as consideration for this modification. The Company immediately recognized approximately $17,000 incremental stock-based compensation on February 1, 2022 based on the following weighted average assumptions:


	After Modification			Before Modification
Strike price	$	0.65		$	2.33
Term (years)		2.5			2.1
Volatility		135	%		127	%
Risk-free rate		1.0	%		1.0	%
Dividend yield		0.0	%		0.0	%

Between April and May 2022, the Company modified an aggregate of 4,765,807 warrants (the “Warrants”) that were originally granted to certain investors and officers during 2017 and 2021. The exercise price of the Warrants was reduced to between $0.50 and $0.65 per share and the maturity date of the Warrants were extended for an additional 5 years.

The Company immediately recognized approximately $261,000 incremental stock-based compensation during the quarter ended May 31, 2022 based on the following weighted average assumptions:


	After Modification			Before Modification
Strike price	$	0.51		$	1.76
Term (years)		6.9			2.1
Volatility		118	%		128	%
Risk-free rate		2.7	%		2.2	%
Dividend yield		0.0	%		0.0	%

On August 31, 2022, the Company modified an aggregate of 3,608,641 warrants (the “Warrants”) that were originally granted to certain officers during 2017 and 2021. The exercise price of the Warrants was reduced to $0.10 per share.

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Notes to Condensed Consolidated Financial Statements

The Company immediately recognized approximately $22,000 incremental stock-based compensation during the quarter ended August 31, 2022 based on the following weighted average assumptions:


	After Modification			Before Modification
Strike price	$	0.10		$	0.50
Term (years)		2.7			2.7
Volatility		151	%		151	%
Risk-free rate		3.5	%		3.5	%
Dividend yield		0.0	%		0.0	%

The new warrants issued in February 2022 and warrant modifications, described above, resulted in reclassifying such modified warrants to purchase an aggregate of 5,461,432 common shares from equity to liability as a result of applying the reassessment under ASC 815. The warrants are subsequently recognized at fair value with changes in fair value recognized in the Company’s Condensed Consolidated Statements of Operations.

17Options issued for services

~~Table~~The following represents a summary of ~~Contents~~all outstanding options to purchase the Company’s common stock at February 28, 2023 and November 30, 2022 and the changes during the period then ended (options amount and intrinsic value are rounded to nearest thousand):

Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

Summary of Options

The following represents a summary of all outstanding options to purchase the Company’s common stock at May 31, 2022:


				Weighted Average
		Weighted Average		Remaining Contractual
	Options	Exercise Price		Life (years)	Intrinsic Value
Outstanding at November 30, 2021	4,450,000	$	1.13	4.0	$	1,000
Outstanding at November 30, 2022	5,200,000	$	0.10	7.5	$	—
Issued	3,000,000		0.10	5.0		—
Forfeited/expired	—		—	—		—
Outstanding at August 31, 2022	7,450,000	$	0.10	6.5	$	—
Outstanding at February 28, 2023	7,450,000	$	0.10	6.5	$	—
Exercisable at August 31, 2022	4,300,000	$	0.10	7.5	$	—
Exercisable at February 28, 2023	5,200,000	$	0.10	7.5	$	—

OnThe ~~August~~fair ~~31,~~value ~~2022,~~of ~~the~~options ~~Company~~ granted ~~3.0~~on ~~million~~February ~~stock~~28, ~~options~~2023 atwas anbased ~~exercise~~on ~~price of $0.10 per share (~~the ~~“Options”)~~following tokey ~~certain officers and board of directors as compensation for services provided. The Options will vest over one year in equal quarterly installments. The Options will expire in 5 years.~~inputs:

The fair value of options granted on August 31, 2022 was $60,000 based on the following key inputs:


	~~August~~February 3128, ~~2022~~2023
Strike price	$	0.10
Term (years)		5.0
Volatility		136	%
Risk-free rate		3.3	%
Dividend yield		0.0	%

Modification of Options

On May 25, 2022, the Company modified an aggregate of 4,450,000 options (the “Options”) that were originally granted to officers, directors and certain consultants for services provided to the Company. The exercise price of the Options was reduced to $0.50 per share and the maturity date of the Options were extended for an additional 5 years. As of the modification date, 4,150,000 options were fully vested.

On August 31, 2022, the Company further modified an aggregate of 4,400,000 options (the “Options”) that were modified on May 25, 2022 as described the above. The exercise price of the Options was reduced from $0.50 to $0.10 per share. As of the modification date, an additional 150,000 options were fully vested.

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Notes to Condensed Consolidated Financial Statements

During the three and nine months ended August 31, 2022, the Company recognized aggregate incremental stock-based compensation related to the modifications of approximately $33,000 and $212,000, based on the following weighted average assumptions.


May 25, 2022	After Modification			Before Modification
Strike price	$	0.49		$	1.13
Term (years)		7.8			2.8
Volatility		117	%		127	%
Risk-free rate		2.7	%		2.4	%
Dividend yield		0.0	%		0.0	%


August 31, 2022	After Modification			Before Modification
Strike price	$	0.10		$	0.49
Term (years)		7.6			7.6
Volatility		131	%		131	%
Risk-free rate		3.3	%		3.3	%
Dividend yield		0.0	%		0.0	%

The May and August 2022 options modifications, described above, resulted in reclassifying such modified vested options to purchase an aggregate of 4,300,000 common shares from equity to liability as a result of applying the Company’s sequencing policy. The options are subsequently recognized at fair value with changes in fair value recognized in the Company’s Condensed Consolidated Statements of Operations.

Stock-based Compensation

~~During~~The ~~the three months ended August 31, 2022, the~~ Company recognized general and administrative expenses of approximately $0.102 million as a result of the shares, outstanding warrants and options issued to consultants and employees. ~~Approximately~~during the three months ended February 28, 2022, respectively.

During the three and nine months ended August 31, 2022, the Company recognized general and administrative expenses of approximately $104,000 and $328,000 as a result of the shares, outstanding warrants and options issued to consultants and employees, respectively.

During the three and nine months ended August 31, 2021, the Company recognized general and administrative expenses of approximately $291,000 and $2,244,000 as a result of the shares, outstanding warrants and options issued to consultants and employees, respectively.

As of August 31, 2022, the estimated unrecognized stock-based compensation associated with these agreements is approximately $62,000 and will be fully recognized by August 31, 2023.

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

Note 1012 – Fair Value Measurements

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of ~~August~~February 3128, ~~2022~~2023 and November 30, ~~2021~~2022 (amounts are rounded to nearest thousand):

Fair value measured at ~~August~~February 3128, ~~2022~~2023

Quoted prices in active

Significant other

Significant

Fair value at

markets

observable inputs

unobservable inputs

~~August~~February 3128, ~~2022~~2023

(Level 1)

(Level 2)

(Level 3)

Embedded derivative liabilities

1,~~210~~434,000

—

1,~~210~~434,000

Derivative liabilities

~~240~~91,000

—

~~240~~91,000


	Fair value measured at November 30, ~~2021~~2022
			Quoted prices in active		Significant other		Significant
	Fair value at		markets		observable inputs		unobservable inputs
	November 30, ~~2021~~2022		(Level 1)		(Level 2)		(Level 3)
Embedded derivative liabilities	$	~~867~~1,434,000	$	—	$	—	$	~~867~~1,434,000
Derivative liabilities	$	91,000	$	—	$	—	$	91,000

Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. There were no transfers between levels in the three ~~or nine~~ months ended ~~August~~February 3128, ~~2022~~2023.

The Level 1 derivative liability is related to commitment to issue common shares pursuant to the September Debenture which was settled in April 2022 and the August Debenture which was settled in August 2022 (see Note 57). ~~During the three and nine months ended August 31, 2022, the Company recognized $126,000 change in fair value related to Level 1 liability.~~

The following table presents changes in Level 3 liabilities measured at fair value for the three ~~and nine~~ months ended ~~August~~February 3128, ~~2022~~2023. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs (amounts are rounded to nearest thousand).


	Embedded Derivative		Derivative
	Liabilities		Liabilities
Balance – Level 3, at December 1, 2021	$	867,000	$	—
Balance – Level 3, at December 1, 2022	$	1,434,000	$	91,000
Debt extinguishment		(127,000)		—
Issuance of convertible notes		—		—
Change in fair value		236,000		—
Balance – Level 3, at February 28, 2023	$	1,434,000	$	91,000
Balance – Level 3, at February 28, 2022		976,000		—
Reclassification of options from equity to liability due to reassessment under ASC 815		—		903,000
Debt extinguishment		(107,000)		—
Change in fair value		134,000		(129,000)
Balance - Level 3, at May 31, 2022		1,003,000		774,000
Reclassification of options from equity to liability due to reassessment under ASC 815		—		5,000
Issuance of convertible notes		127,000		—
Warrants and option modification		—		51,000
Debt extinguishment		(131,000)		—
Change in fair value		211,000		(590,000)
Balance - Level 3, at August 31, 2022	$	1,210,000	$	240,000

20The fair value of the contingent put option in all outstanding debentures with the feature and derivative liabilities, comprised of warrant liabilities, are revalued as of February 28, 2023 and November 30, 2022 based on the following weighted average key inputs:

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

The fair value of the contingent put option in all outstanding debentures with the feature and derivative liabilities, comprised of warrant liabilities, are revalued as of August 31, 2022 and November 30, 2021 based on the following weighted average key inputs:


	~~August~~February 3128, ~~2022~~2023						November 30, ~~2021~~2022
	Embedded Derivative			Derivative			Embedded Derivative
	Liabilities			Liabilities			Liabilities
Strike price	$	0.55		$	0.12		$	0.7155
Terms (years)		0.3			4.3			0.83
Volatility		200	%		85	%		71200	%
Risk-free rate		2.9	%		2.1	%		0.2.9	%
Dividend yield		0	%		0	%		0	%
Probability factor(1)		20	%		0	%		0	%

(1)The probability factor for DL Note as of ~~August~~February 3128, ~~2022~~2023 was 20%.

~~Note 11 – Subsequent Events~~21

OnTable ~~September 6, 2022, the Company issued 3,765,517 shares~~ of ~~common stock as dividend payments on Series A and Series B preferred stock.~~Contents

OnQ ~~September~~BIOMED ~~12, 2022, the Company issued 3,042,552 shares of common stock to convert $62,000 outstanding debt and interest~~INC.

OnNotes ~~October 4, 2022, the Company issued 6,145,251 shares of common stock~~ to ~~convert~~Condensed ~~$110,000~~Consolidated ofFinancial ~~Series B preferred stock.~~Statements

Note 13 – Subsequent Events

On March 31, 2023, the company entered into a 12 month convertible note with an accredited investor in aggregate principal face amount of One Hundred Fifty Thousand Dollars (U.S. $150,000.00) including $15,000.00 original issue discount such that the net receipt was $135,000.00.

On May 26, 2023, the Company filed an annual report on Form 10-K and noted that that annual report does not meet fully the requirements of annual reports as required by Form 10-K. Particularly, the Company noted that the financial statements included in that annual report have not been audited and no audit report regarding such financial statements was included therein. The financial statements included in the annual report are not the type of financial statement that an investor would expect to see from a company that has had its financial statements audited by an independent accounting firm per the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. The recently filed annual report is unaudited, incomplete and should not be relied upon as accurate, timely or fit for any purpose. Although the Company intends to amend that annual report as soon as practicable and invites any inquiries to be directed to Company management, it may not be able to ever amend that annual report.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

Forward-Looking Statements

This unreviewed Quarterly Report contains forward-looking statements about our business, financial condition and prospects that reflect management’s assumptions and beliefs based on information currently available. The expectations indicated by such forward-looking statements might not be realized. If any of our management’s assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, our actual results may differ materially from those indicated by the forward-looking statements.

The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to create and expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.

There may be other risks and circumstances that management may be unable to predict. When used in this Quarterly Report, words such as, “believes,” “expects,” “intends,” “plans,” “anticipates,” “estimates” and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.

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~~Our ~~focus~~intent ~~for 2022~~ is to monetize the current pipeline and build a platform for future growth. There are ~~three~~4 areas of focus:. commercial product revenue growth, partnerships, orjoint ~~collaborations~~venture equity value and future development platform. This quarter has been solely focused on maintaining our pipeline and looking for strategic capital or business partnerships and merger opportunities. The microcap biotechs have all been under pressure and we are one of many that have a capital requirement that is challenging to service given our debt and current lack of resources. We are determined to find a solution for the benefit of all our stakeholders.

Commercial Product

~~Although,~~We ~~the~~believe ~~Company~~that isStrontium89 ~~pleased~~has ~~with~~great potential in the ~~ongoing~~cancer ~~adoption~~palliation ofspace. ~~Strontium~~As ina ~~additional~~result ~~hospital~~of ~~systems~~a ~~and~~world ~~2022~~in ~~revenue~~which isopioids ~~far~~were ~~exceeding~~a ~~that~~treatment of ~~2021~~choice ~~year~~for those patients unlucky enough to ~~date,~~be diagnosed with painful metastatic cancers in the ~~capital~~bone, ~~market~~we ~~conditions~~felt ~~are~~that ~~making~~Strontium89 ~~additional~~had ~~investment~~become ~~into~~a ~~the~~neglected ~~sales~~and ~~effort~~forgotten ~~challenging~~drug. AsWe have stayed committed to our belief that Strontium89 was a ~~result~~valuable treatment and have focused on advancing that asset from concept, wea ~~continue~~neglected drug, to ~~make~~a ~~efforts~~fully approved, reimbursed commercial product. Since we acquired Strontium89, we have built an infrastructure to ~~broaden~~commercialize the ~~penetration~~product, ofincluding ~~the~~manufacturing, ~~targeted~~branding, ~~market~~pharmacovigilance, ~~with~~reporting, ~~minimal~~federal ~~additional~~supply ~~capital~~contract, ~~investments~~and entering into distribution agreements in the United States and several other countries.

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. We have planned a top down marketing and sales program that we will implement once funded and believe this effort will yield the results we are striving toward.23

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Partnership ~~or Collaboration~~ 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. InWe ~~the~~have ~~light~~been ofsuccessfully ~~the~~prosecuting ~~recently~~our ~~announced~~patent ~~data,~~portfolio ~~the~~and ~~company~~have ~~has~~received ~~been~~patents ~~approached~~or ~~and~~notice isof ~~assessing~~allowance ~~partnership~~in ~~opportunities~~several ~~for~~countries ~~Uttroside~~including BJapan, ~~its~~Canada, ~~chemotherapeutic~~USA ~~drug~~and ~~candidate~~just ~~for~~recently ~~liver cancer~~Europe. ~~There~~We are ~~very~~looking ~~few options~~ for ~~these~~clinical ~~patients~~partnerships ~~and~~to ~~the~~advance ~~company believes~~ this isproduct atowards ~~very~~the ~~promising~~patients ~~drug~~that ~~and~~need ~~looks forward to working with potential partners to bring~~ it ~~to the clinic~~.

~~Drug~~Development Platform ~~Development~~- Rare Disease Focus

~~Mannin~~During 2023 we will focus our future development platform on the Rare Disease Space. This focuses 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 2023 and will grow our development platform through in-licensing or acquisition once we have the capital to do so.

~~Our~~This ~~Mannin~~rare ~~drug~~disease platform development program is making good progress and aims to have a clinical trial in ARDS (acute respiratory disease syndrome), one of three initial indications, completed in the next 8 months. Data from this trial will ~~support~~also ~~the~~complement filings for further indications, including kidney disease and glaucoma. Combined, the addressable market for these therapies is over $150 billion. The Company has an agreement in principle to convert its current royalty agreement with Mannin into an equity position that will add significant asset value to the balance sheet. This amendment is expected during our ~~fourth quarter of 2022. The Company expects this value to grow as the asset progresses through the near and mid~~early-~~term~~stage ~~milestones~~treatment ~~that~~for ityoung ~~expects~~minimally ~~over~~verbal ~~the~~children ~~next~~on ~~3 to 18 months requiring little capital from QBioMed. The Mannin programs are substantially supported now by non-dilutive funding from~~ the ~~governments~~Autism ~~of Canada and Germany underpinning the value and importance of this platform to provide much needed drugs~~Spectrum.

Strategic Pipeline Development

During the remaining months of 2022 we will focus our future development platform on the Rare Disease Space and other areas where no successful treatments are available. 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 or advance this asset toward the clinic in 2022 and will grow our development platform through in-licensing or acquisition as part of a strategic roll-up. We have several target transactions and look forward to updating our shareholders and other stakeholders in the near term.

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. ~~Since~~Lack ~~Q BioMed’s inception 5 years ago, the Company has brought a product to market, started generating revenue, supported the development~~ of acapital ~~drug~~is ~~platform~~our ~~that~~rate ~~addresses~~limiting ~~major~~factor ~~therapeutic markets~~ and ~~developed~~we ~~a new liver cancer chemotherapeutic previously believed to be impossible to synthesize. We~~ are ~~now~~engaging ~~focused~~in onefforts ~~monetizing~~along with our ~~current~~bankers ~~portfolio~~ and ~~actively~~consultants ~~growing~~to ~~our~~find ~~asset~~both ~~value~~capital ~~through joint venture~~ and ~~acquisition~~strategic ~~strategies~~opportunities ~~that~~to ~~will~~unlock ~~roll-up~~the ~~into~~potential ain ~~high~~our ~~value asset portfolio addressing multi-billion-dollar markets~~pipeline.

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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 condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities at the date of our condensed 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. Other than as set out in Note 3 to our accompanying unaudited condensed consolidated financial statements, if anything, we believe there have been no significant changes in our critical accounting policies as described in the Form 10-K.

Unaudited Results of Operations for the three months ended August 31, 2022 and 2021:


	For the three months ended
	August 31, 2022		August 31, 2021		Change
Net Sales	$	26,271	$	45,675	$	(19,404)
Cost of sales		66,442		73,770		(7,328)
Gross loss		(40,171)		(28,095)		(12,076)
Operating expenses:
General and administrative expenses		720,075		1,371,676		(651,601)
Research and development expenses		20,839		202,168		(181,329)
Total operating expenses		740,914		1,573,844		(832,930)
Loss from operations		(781,085)		(1,601,939)		820,854
Other (income) expenses:
Interest expense		239,638		99,418		140,221
Change in fair value of derivatives		(382,072)		101,247		(483,319)
Gain on debt extinguishment		152,211		(15,212)		167,423
Loss on issuance of convertible note		4,250		—		4,250
Total other expenses		14,027		185,453		(171,425)
Net loss	$	(795,112)	$	(1,787,392)	$	992,279

Net Sales

During the three months ended August 31, 2022 and 2021, we recognized approximately $26,000 and $46,000, respectively, of revenue from sales of Strontium89. The decrease was due to less vials were sold during the three months ended August 31, 2022 compared to the same period in the prior year.

Cost of Sales

During the three months ended August 31, 2022 and 2021, we recognized approximately $66,000 and $74,000, respectively, in cost of sales. These costs were related to raw materials cost, manufacturing cost, handling cost and write-offs of expired inventory.

The decrease in cost of sales was due to less handling cost during the three months ended August 31, 2022 compared to the same period in the prior year. However, the cost related to raw materials and fixed manufacturing cost were similar compared to the same period in the prior year, which resulted in an increase in negative gross margin.

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~~Operating~~Unaudited ~~expenses~~Results of Operations for the three months ended February 28, 2023 and 2022:

We incur various costs and expenses in the execution of our business. The decrease in operating expenses was mainly due to a lower burn and scaled back operations due to lack of available capital. We had an approximate $372,000 less costs from marketing, $236,000 less costs from legal and other professional services during the three months ended August 31, 2022 compared to the same period in the prior year.

Interest expense

The following table summarizes interest expense incurred during the three months ended August 31, 2022 and 2021, respectively (amounts are rounded to nearest thousand):


	For the ~~three~~Three ~~months~~Months ~~ended~~Ended
	~~August~~February 3128, ~~2022~~2023		~~August~~February 3128, ~~2021~~2022		Change
Interest expense based on the coupon interest rate of the outstanding debt	$	57,000	$	21,000
Net Sales	$	—	$	75,059	$	(75,059)
Accretion of debt discount		178,000		78,000
Cost of sales		2,500		73,945		(71,445)
Other		5,000		—
Gross income (loss)		(2,500)		1,114		(3,614)
Total interest expense	$	240,000	$	99,000
Operating expenses:
General and administrative expenses		439,818		1,096,300		(656,482)
Research and development expenses		2,691		69,268		(66,577)
Total operating expenses		442,510		1,165,568		(723,058)
Loss from operations		(445,010)		(1,164,454)		719,444
Other (income) expenses:
Interest expense		276,602		414,377		(137,775)
Change in fair value of derivatives		—		235,817		(235,817)
Loss on debt extinguishment		—		232,100		(232,100)
Settlement of registration liability		—		241,875		(241,875)
Total other expenses (income)		276,602		1,124,169		(847,567)
Net loss		(721,612)		(2,288,623)		1,772,142
Accumulated dividend on convertible preferred stock		(104,800)		(122,808)		18,008
Net loss attributable to common stockholders	$	(826,412)	$	(2,411,431)	$	1,585,019

We sold additional convertible debentures since September 2021, which resulted in the embedded derivative liabilities and corresponded debt discount increased during the three months ended August 31, 2022. Due to the increased amount of debt discount, the change in the accretion of the debt discount was significantly increased as well during the three months ended August 31, 2022 compared to the same period in the prior year.

Change in fair value of derivatives

We recognized a gain and a loss of approximately $382,000 and $101,000, resulting from the change in fair value of embedded contingent put options in convertible notes and derivative liabilities during the three months ended August 31, 2022 and 2021, respectively. The fluctuation is mainly due to the increased amount of outstanding convertible notes in 2022 and derivative liabilities due the sequencing policy, and change of our stock price during the reporting periods.

Net loss

During the three months ended August 31, 2022 and 2021, we incurred net losses of approximately $0.8 million and $1.8 million, respectively. We expect 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.

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Unaudited Results of Operations for the nine months ended August 31, 2022 and 2021:


	For the Nine months ended
	August 31, 2022		August 31, 2021		Change
Net Sales	$	271,817	$	90,675	$	181,142
Cost of sales		213,138		160,763		52,375
Gross income (loss)		58,679		(70,088)		128,767
Operating expenses:
General and administrative expenses		2,835,543		5,028,668		(2,193,125)
Research and development expenses		103,159		667,538		(564,379)
Total operating expenses		2,938,702		5,696,206		(2,757,504)
Loss from operations		(2,880,023)		(5,766,294)		2,886,271
Other expenses:
Interest expense		1,108,372		234,752		873,620
Change in fair value of derivatives		(264,267)		128,720		(392,987)
Loss on debt extinguishment		384,311		40,910		343,401
Loss on issuance of convertible note		4,250		—		4,250
Settlement of registration liability		241,875		—		241,875
Total other expenses		1,474,541		404,382		1,070,159
Net loss	$	(4,354,564)	$	(6,170,676)	$	1,816,112

Net Sales

During the ~~nine~~three months ended ~~August~~February 3128, ~~2022~~2023 and ~~2021~~2022, we recognized approximately ~~$272,000~~no sales and $9175,000, respectively, of revenue from sales of Strontium89. The ~~increase~~decrease was due to ~~more~~less vials were sold during the ~~nine~~three months ended ~~August~~February 3128, ~~2022~~2023 compared to the same period in the prior year.

Cost of Sales

During the ~~nine~~three months ended ~~August~~February 3128, ~~2022~~2023 and ~~2021~~2022, we recognized approximately ~~$213~~3,000 and $~~161~~74,000, respectively, in cost of sales. These costs were related to raw materials cost, manufacturing cost, handling cost and write-offs of expired inventory ~~due to the short life of the drug~~.

The increase in cost of sales was due to more production and sales during the nine months ended August 31, 2022 compared to the same period in the prior year.

The gross margins increased dramatically due to the increased sales and less inventory written off during the nine months ended August 31, 2022 compared to the same period in the prior year. We expect our gross margins to remain robust in 2022 and 2023 but the net margin will continue to be affected by write offs due to the inherent short shelf life of radiopharmaceutical drugs.

Operating expenses

We incur various costs and expenses in the execution of our business. The decrease in operating expenses was mainly due to ~~significantly~~a ~~less~~lower ~~stock-based~~burn ~~compensation~~and ~~recognized~~scaled inback ~~the~~operations ~~nine~~due ~~months ended August 31, 2022 compared~~ to ~~the~~lack ~~same~~of ~~period~~available ~~in the prior year~~capital. We ~~recognized~~had ~~approximately~~an ~~$0.8~~approximate ~~million and~~ $~~2.4~~62,000 ~~million~~less ofcosts ~~stock-based~~from ~~compensation in general and administrative expense during the nine months ended August 31~~marketing, ~~2022 and 2021~~$465,000 ~~respectively. Additionally, we incurred~~ less costs from ~~marketing,~~ legal and other professional services during the ~~nine~~three months ended ~~August~~February 3128, ~~2022~~2023 compared to the same period in the prior year.

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Interest expense

The following table summarizes interest expense incurred during the ~~nine~~three months ended ~~August~~February 3128, ~~2022~~2023 and ~~2021~~2022, respectively (amounts are rounded to nearest thousand):


	For the ~~nine~~Three ~~months~~Months ~~ended~~Ended
	~~August~~February 3128, ~~2022~~2023		~~August~~February 3128, ~~2021~~2022
Interest expense based on the coupon interest rate of the outstanding debt	$	~~177~~51,000	$	4661,000
Accretion of debt discount		~~921~~217,000		~~188~~352,000
Other		109,000		—1,000
Total interest expense	$	1277,~~108,~~000	$	~~234~~414,000

The Company sold additional convertible debentures since September 2021, which resulted in the embedded derivative liabilities and corresponded debt discount increased during the nine months ended August 31, 2022. Due to the increased amount of debt discount, the change in the accretion of the debt discount was significantly increased as well during the nine months ended August 31, 2022 compared to the same period in the prior year.25

~~Change~~Table ~~in fair value~~ of ~~derivatives~~Contents

WeChange ~~recognized a gain and loss of approximately $264,000 and $129,000, resulting from the change~~ in fair value of embedded contingent put options in convertible notes and warrant liability during the nine months ended August 31, 2022 and 2021, respectively. The fluctuation is mainly due to the increased amount of outstanding convertible notes in 2022 and derivative liabilities due the sequencing policy, and change of our stock price during the reporting periods.derivatives

We recognized loss of approximately $236,000 resulting from the change in fair value of embedded contingent put options in convertible notes during the three months ended February 28, 2022, 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 $~~384~~232,000 ~~and $41,000~~ due to the ~~exchange~~conversion of outstanding debentures ~~for~~into shares of common stock during the ~~nine~~three months ended ~~August~~February 3128, 2022 ~~and 2021~~, respectively.

Settlement of registration liability

During the nine months ended August 31, 2022, we entered into a Mutual Release Agreement with a holder of our convertible note, pursuant to which, the holder agreed to add the $241,875 registration payment liability to the outstanding principal amount. We recognized a loss of $241,875 in settlement of the registration liability for the nine months ended August 31, 2022.

Net loss

During the ~~nine~~three months ended ~~August~~February 3128, ~~2022~~2023 and ~~2021~~2022, we incurred net losses of approximately $40.47 million and $6.2.3 million, respectively. WeOur ~~expect~~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 ~~condensed~~ 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 ana significant ongoing source of ~~significant~~ revenues and must cover our operating ~~costs~~ through debt and equity financings to allow us to continue as a going concern. We had approximately $~~138~~23,000 in cash as of ~~August~~February 3128, ~~2022~~2023. Our ability to continue as a going concern depends on ~~the~~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.

27We 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.

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

Our primary requirements for liquidity are to fund our working capital needs, capital expenditures and general corporate needs. Our ongoing capital expenditures are principally related to expanding revenue generating sales efforts and ongoing research and development costs. We estimate our capital expenditures will be approximately $7.7 million for the next 18 months period.

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 condensed 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 condensed 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.

Cash Flows

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


	For the ~~nine~~Three ~~months~~Months ~~ended~~Ended
	~~August~~February 3128, ~~2022~~2023		~~August~~February 3128, ~~2021~~2022
Net cash (used in) provided by:
Net Cash provided by (used in)
Operating activities	$	(~~726~~138,~~212~~187)	$	(2376,~~742,181~~856)
Financing activities		520,030		2,716,250
Investing activities		—		—
Net decrease in cash	$	(206,182)	$	(25,931)
Financing Activities		111,387		170,030
Net increase (decrease) in cash		(26,800)		(206,826)

Net Cash Provided by (Used in) Operating Activities

During the ~~nine~~three months ended ~~August~~February 3128, ~~2022~~2023, operating activities used $0.71 million of cash, resulting from a net loss of $~~4.4 million and gain from change in fair value of derivatives of $~~0.37 million, partially offset by $0.802 million of share-based compensation, ~~settlement on registration liability of approximately $0.2 million, loss on debt extinguishment of approximately $0.4 million,~~ and non-cash interest expense resulting from accretion of debt discounts of $0.902 million and changes in our operating assets and liabilities of approximately $10.54 million.

During the nine months ended August 31, 2021, operating activities used $2.7 million of cash, resulting from a net loss of $6.2 million, partially offset by $2.2 million of share-based compensation, change in fair value of embedded conversion options of $128,000, loss on debt extinguishment of $41,000, and non-cash interest expense resulting from accretion of debt discounts of $188,000 and changes in our operating assets and liabilities of approximately $0.8 million.26

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the nine months ended August 31, 2022 and 2021 was $0.5 million and $2.7 million, respectively. The net cash provided in the 2022 period relates to proceeds received from the issuance of common stock and warrant, debentures, warrants modification and cash advances. The net cash provided in the 2021 period relates to proceeds received from the issuance of common stock and debentures.

Commitments and Contingencies

Legal

Periodically, we review the status of significant matters, if any exist, and assess their 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.

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AsDuring ~~previously~~the ~~reported,~~three onmonths ~~July~~ended 12February 28, 2022, weoperating ~~were~~activities ~~notified~~used ~~that~~$0.4 ~~WSI~~million ~~PBG~~of cash, ~~LLC~~resulting ~~(“WSI”)~~from ~~filed~~ a ~~complaint~~net ~~against~~loss usof ~~seeking to recover~~ $~~196,216~~2.3 ~~in unpaid consulting fees~~million, ~~plus~~partially ~~costs~~offset ~~and~~by ~~expenses of litigation~~$0. We2 ~~elected~~million ~~not~~of toshare-based ~~litigate~~compensation, ~~this~~change ~~suit~~in sofair asvalue ~~not~~of toembedded ~~increase~~conversion ~~its~~options ~~liability~~of ~~exposure~~$0. ~~Not~~2 ~~unexpectedly~~million, settlement on ~~August~~registration ~~24,~~liability ~~2022,~~of ~~WSI~~approximately ~~obtained~~$0.2 amillion, ~~judgment~~loss ~~against~~on usdebt inextinguishment ~~the amount~~ of approximately $~~203,784~~0. We2 ~~are~~million, ~~exploring~~and ~~its~~non-cash ~~options~~interest inexpense ~~addressing~~resulting ~~this~~from ~~judgment,~~accretion ~~including~~of ~~terms~~debt discounts of ~~settlement~~$0.4 ~~that~~million ~~would~~and ~~result~~changes in aour ~~satisfaction~~operating ofassets ~~this~~and ~~Judgment~~liabilities ~~over~~of aapproximately ~~limited~~$0.7 ~~period of time~~million.

OnNet ~~July~~Cash ~~19,~~Provided ~~2022,~~by ~~we received notice that the Activus Group~~ (~~“Activus”)~~Used ~~filed a complaint for fees it alleges are due~~ in) ~~the~~Investing amount $129,600 plus fees and expenses for consulting services provided by Activus as a result of an agreement between the parties. We have not filed an answer and are currently determining our next steps in settlement.Activities

OnDuring ~~August 15, 2022, we received notice that another of its unpaid contractors, Diligent Health Solutions, LLC. (“DHS”), had filed suit against~~ the ~~Company~~three ~~seeking~~months ~~$106,000~~ended inFebruary ~~unpaid consulting fees. Here~~28, ~~too~~2023, wethere ~~elected~~were ~~not~~no tocash ~~litigate~~activity ~~this~~related ~~suit so as not~~ to ~~increase its liability exposure~~investing. As a result of the foregoing, DHS obtained a default judgment against us in the amount of $111,000. We are exploring its options in addressing this judgment, including terms of settlement that would result in a satisfy of this Judgment over a limited period of time.

During the three months ended February 28, 2022, there were no cash activity related to investing.

Net Cash (Used in) Provided by Financing Activities

Net cash provided by financing activities for the three months ended February 28, 2023 was $0.1 million. The net cash provided in the 2023 period relates to proceeds received from the issuance of convertible notes.

Net cash provided by financing activities for the three months ended February 28, 2022 was $0.2 million. The net cash provided in the 2022 period relates to proceeds received from the issuance of common stock and warrant, warrants modification and cash advances.

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.

On March 11, 2022, the Company entered into an engagement letter agreement (“Agreement”) with EF Hutton, division of Benchmark Investments, LLC (“EF Hutton”) to effectuate the Corporation’s Firm Commitment Public Offering and Uplisting and to engage EF Hutton to act as the placement agent for a bridge or other private offering consisting of approximately $2 million. The Company shall be responsible for EF Hutton’s external counsel legal costs irrespective of whether the Offering is consummated or not, subject to a maximum of $50,000 in the event that there is not a Closing.

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 in 2023 for another three years, at a reduced rate of $15000 per year. 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.

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

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three months ended Fe, 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.

Washington University

●

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 addition 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 Condensed Consolidated Statements of Operations as follows (amounts are rounded to nearest thousand):

For the ~~three~~Three ~~months~~Months ~~ended~~Ended

~~For the nine months ended~~

~~August~~February 3128, ~~2022~~2023

~~August~~February 3128, ~~2021~~2022

~~August 31, 2022~~

~~August 31, 2021~~

Consulting and legal expenses

~~117~~106,~~500~~000

105,000

~~327,500~~

~~315,000~~

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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Item 3. Quantitative and Qualitative Disclosure About Market Risk

~~This~~We ~~item~~are isa ~~not~~smaller ~~applicable~~reporting company as wedefined by Rule 12b-2 of the Exchange Act and are ~~currently~~not ~~considered~~required ato ~~smaller~~provide ~~reporting~~the ~~company~~information required under this item.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~Under~~Management ~~the~~is ~~supervision~~required ~~and~~to ~~with~~maintain ~~the~~disclosure ~~participation~~controls ofand ~~our~~procedures ~~management,~~that ~~including~~are ~~our~~designed ~~principal~~to ~~executive~~ensure ~~officer~~that ~~and~~information ~~principal~~required ~~financial~~to ~~and~~be ~~accounting~~disclosed ~~officer,~~in weour ~~conducted~~reports, anfiled ~~evaluation~~under of the ~~effectiveness~~Securities Exchange Act of ~~our~~1934, ~~disclosure~~is ~~controls~~recorded, ~~and~~processed, ~~procedures~~summarized asand ofreported within the ~~end~~time ofperiods ~~the~~specified ~~fiscal~~in ~~quarter~~the ~~ended~~SEC’s ~~August~~rules ~~31,~~and ~~2022~~forms, asand that such ~~term~~information is ~~defined~~accumulated ~~in Rules 13a-15(e)~~ and ~~15d-15(e)~~communicated ~~under~~to ~~the~~our ~~Exchange Act. Based on this evaluation~~management, including our ~~principal~~chief executive officer and ~~principal~~chief financial officer, ~~has~~as ~~concluded~~appropriate, ~~that~~to ~~during~~allow ~~the~~timely ~~period~~decisions ~~covered~~regarding byrequired ~~this~~disclosure. ~~report,~~In ~~our~~designing and evaluating the disclosure controls and procedures, ~~were~~management ~~not~~recognized ~~effective~~that asany ofcontrols ~~August~~and 31procedures, ~~2022,~~no ~~because~~matter ofhow awell ~~material~~designed ~~weakness~~and inoperated, ~~our~~can ~~internal~~provide ~~control~~only ~~over~~reasonable ~~financial~~and ~~reporting.~~not Aabsolute ~~material~~assurance ~~weakness is a deficiency, or a combination~~ of ~~deficiencies,~~achieving inthe ~~internal~~desired control ~~over~~objectives. ~~financial~~In ~~reporting,~~reaching ~~such that there is~~ a reasonable ~~possibility~~level ~~that a material misstatement~~ of ~~the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically~~assurance, ~~the Company’s~~ management ~~has~~necessarily ~~concluded~~was ~~that~~required ~~our~~to ~~lack~~apply ofits ~~segregation~~judgment ofin ~~duties,~~evaluating ~~lack~~the ~~of in~~cost-~~house~~benefit ~~personnel~~relationship ~~with~~of ~~sufficient~~possible ~~experience~~controls ~~with~~and Uprocedures.S. ~~GAAP~~In toaddition, ~~address~~ the ~~accounting~~design ~~for~~of ~~complex~~any ~~financial~~system ~~instruments, and lack~~ of ~~oversight over our external financial reporting and internal~~ controls ~~are~~also ~~deficiencies~~is ~~which,~~based in ~~combination,~~part ~~could~~upon ~~reasonably~~certain ~~result~~assumptions inabout athe ~~material~~likelihood ~~misstatement~~ of ~~the~~future ~~Company’s~~events, ~~annual~~and orthere ~~interim~~can ~~financial~~be ~~statements~~no assurance that ~~may~~any ~~not~~design bewill ~~prevented~~succeed orin ~~detected~~achieving onits astated ~~timely~~goals ~~basis.~~under Inall ~~light~~potential offuture ~~these~~conditions. ~~material~~Over ~~weaknesses~~time, wea ~~performed~~control ~~additional~~may ~~analysis~~become asinadequate ~~deemed~~because ~~necessary~~of tochanges ~~ensure~~in ~~that~~conditions ~~our~~or ~~unaudited~~the ~~interim~~degree ~~financial~~of ~~statements~~compliance ~~were~~with ~~prepared~~policies inor ~~accordance~~procedures ~~with~~may Udeteriorate.S. ~~GAAP.~~Because ~~Accordingly,~~of ~~management believes that~~ the ~~unaudited~~inherent ~~condensed~~limitations ~~financial statements included~~ in ~~this~~a ~~Quarterly Report on Form 10~~cost-Qeffective ~~present~~control ~~fairly~~system, inmisstatements ~~all~~due ~~material~~to ~~respects~~error ~~our~~or ~~financial~~fraud ~~position,~~may ~~results~~occur ~~of operations~~ and ~~cash~~not ~~flows~~be ~~for the period presented~~detected.

~~Disclosure~~As ~~controls~~required ~~and~~by ~~procedures~~the ~~are~~SEC ~~controls~~Rules 13a-15(b) and ~~other~~15d-15(b), ~~procedures~~an ~~that~~evaluation ~~are~~is ~~designed to ensure that information~~ required to be ~~disclosed~~carried inout ~~our~~under ~~reports~~the ~~filed~~supervision orand ~~submitted~~with ~~under~~ the ~~Exchange~~participation ~~Act~~of isour ~~recorded~~management, ~~processed,~~including ~~summarized~~our ~~and~~principal ~~reported~~executive ~~within~~officer ~~the~~and ~~time~~principal ~~periods~~financial ~~specified~~officer, inof the ~~SEC’s~~effectiveness ~~rules~~of ~~and~~the ~~forms.~~design ~~Disclosure controls~~ and ~~procedures~~operation ~~include,~~of ~~without~~our ~~limitation,~~disclosure controls and procedures ~~designed~~as toof ~~ensure~~the ~~that~~end ~~information~~of ~~required~~the toperiod becovered ~~disclosed~~by inthis ~~company~~report. ~~reports~~Our ~~filed~~principal orexecutive ~~submitted~~officer ~~under~~and ~~the~~principal ~~Exchange~~financial ~~Act~~officer isconcluded ~~accumulated~~that ~~and~~our ~~communicated~~disclosure tocontrols ~~management,~~and ~~including~~procedures ~~our~~were ~~chief~~not ~~executive~~effective ~~officer~~at ~~and~~the ~~chief~~reasonable ~~financial~~assurance ~~officer,~~level due to ~~allow~~the ~~timely~~material ~~decisions~~weaknesses ~~regarding~~described ~~required disclosure.~~below:

We1. doDue ~~not~~to ~~have~~our ansize ~~Audit~~and ~~Committee;~~nature, ~~our~~segregation ~~board~~ of ~~directors~~all ~~currently~~conflicting ~~acts~~duties asmay ~~our~~not ~~Audit~~always ~~Committee.~~be ~~Only~~possible ~~one~~and ofmay ~~our~~not ~~three~~be ~~directors~~economically ~~is an independent director~~feasible, ~~and~~however ~~none~~segregation of ~~our~~duties ~~directors~~has isbeen ~~considered~~implemented, awith ~~“Financial~~regards ~~Expert,”~~to ~~within~~ the ~~meaning~~initiation of ~~Section~~transactions, ~~407 of~~ the ~~Sarbanes-Oxley~~custody ~~Act.~~of Weassets ~~have~~and ~~interviewed~~the ~~additional~~recording ~~potential~~of ~~independent~~transactions ~~directors,~~performed ~~but~~by ~~have~~separate ~~not engaged any~~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.

4.	We have not had our independent accountants audit our financial statements for the year ended November 30, 2022 and provide us with a report for such audit.

5.	We have not had our independent accountants review our financial statements for the three months ended February 28, 2023.

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.

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Changes in internal controls over financial reporting

There were no changes in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. We plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. We have engaged accounting and compliance consultants to review our internal controls over financial reporting and other compliance requirements.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

As previously reported, on July 12, 2022 the Company was notified that WSI PBG, LLC (“WSI”) filed a complaint against the Company seeking to recover $196,216 in unpaid consulting fees, plus costs and expenses of litigation. The Company elected not to litigate this suit so as not to increase its liability exposure. Not unexpectedly, on August 24, 2022, WSI obtained a judgment against the Company in the amount of $203,784. The Company is exploring its options in addressing this judgment, including terms of settlement that would result in a satisfaction of this Judgment over a limited period of time.

On July 19, 2022, we received notice that the Activus Group (“Activus”) filed a complaint for fees it alleges are due in the amount $129,600 plus fees and expenses for consulting services provided by Activus as a result of an agreement between the parties. We have not filed an answer and are currently determining our next steps in settlement.

Item 1A. Risk Factors

AsAlthough arisk ~~Smaller~~factors ~~Reporting Company, we~~ are not required tofor ~~provide~~smaller ~~this~~reporting ~~information.~~companies, we stress the following risk:

We note that neither this quarterly report on Form 10-Q (“Quarterly Report”) nor our annual report on Form 10-K for the year ended November 30, 2022 (“Annual Report”) fully meets the requirements of their respective forms. Particularly, we note that the financial statements included in the Annual Report were not audited and no audit report regarding such financial statements was included therein. Additionally, we note that the financial statements included in the Quarterly Report have not been reviewed and approved by an independent public accounting firm. Although we believe that the financial statements in the Annual Report and Quarterly Report satisfy the current public information requirements of Rule 144(c)(2), the financial statements in the Annual Report are not the type of financial statements that an investor would expect to see from a company that has had its financial statements audited by an independent public accounting firm per the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder and the financial statements in the Quarterly Report are not the type of financial statements that an investor would expect to see from a company that has had its financial statements reviewed by an independent public accounting firm per the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. Neither the Annual Report nor the Quarterly Report is complete and neither should not be relied upon as accurate, timely or fit for any purpose. Although the Company intends to amend its Annual Report and this Quarterly Report as soon as practicable and invites any inquiries to be directed to Company management, it may not be able to ever amend the Annual Report or this Quarterly Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On ~~June~~December 1312, 2022, we issued 14,~~051~~077,~~376~~094 shares of ~~Common~~common ~~Stock~~stock ~~for~~upon ~~dividends~~the ~~payment~~conversion onof ~~preferred~~$44,348 ~~stock~~of convertible notes and accrued interest.

On ~~August~~December 242, 2022, we issued ~~300~~3,~~000~~564,832 ~~commitment~~ shares toof ancommon ~~accredited~~stock ~~investor~~upon the conversion of $39,569 of convertible notes and accrued interest.

~~During~~On ~~August~~January ~~2022~~4, 2023 we issued 72,~~619~~817,~~012~~039 shares of ~~Common~~common ~~Stock~~stock upon the conversion of $~~270~~26,~~000~~769 ~~Series~~of Bconvertible ~~preferred~~notes ~~stock~~and accrued interest.

~~Between~~On ~~July~~January ~~and August 2022~~6, 2023 we issued 63,~~447~~048,~~571~~780 shares of ~~Common~~common ~~Stock~~stock upon the conversion of ~~approximately~~ $~~218~~25,000 of convertible notes and accrued interest.

~~On August 24, 2022, we issued 1,748,560 shares of Common Stock in exchange for services rendered by third parties.~~31

OnTable ~~September 2, 2022, we issued 3,765,517 shares~~ of ~~Common Stock for dividends payment on preferred stock.~~Contents

On ~~September~~January 1213, ~~2022,~~2023 we issued 3,~~042~~174,~~552~~603 shares of common stock toupon ~~convert~~the conversion of $6220,000 ~~outstanding~~of ~~debt~~convertible notes and accrued interest.

On ~~October~~January 420, ~~2022,~~2023 we issued 64,~~145~~679,~~251~~501 shares of ~~Common~~common ~~Stock~~stock upon the conversion of $~~110~~32,~~000~~288 ~~Series~~of Bconvertible ~~preferred~~notes ~~stock~~and accrued interest.

On January 24, 2023 we issued 4,111,8429 shares of common stock upon the conversion of $25,082 of convertible notes and accrued interest.

On January 26, 2023 we issued 5,084,746 shares of common stock upon the conversion of $30,000 of convertible notes and accrued interest.

On February 3, 2023 we issued 4,540,772 shares of common stock upon the conversion of $25,882 of convertible notes and accrued interest.

On February 7, 2023 we issued 2,639,237 shares of common stock upon the conversion of $16,100 of convertible notes and accrued interest.

On February 13, 2023 we issued 5,869,163 shares of common stock upon the conversion of $27,000 of convertible notes and accrued interest.

On February 13, 2023 we issued 5,982,513 shares of common stock upon the conversion of $32,305 of convertible notes and accrued interest.

On February 14, 2023 we issued 5,212,174 shares of common stock upon the conversion of $24,000 of convertible notes and accrued interest.

On February 22, 2023 we issued 4,964,194 shares of common stock upon the conversion of $18,860 of convertible notes and accrued interest.

The issuance of the Securities mentioned above, if any, qualified for the exemption from registration continued in section 4(a) of the securities act of 1933.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit Number		Name and/or Identification of Exhibit
31.1		Rule 13a-14(a)/15d-14(a) Certifications
32.1		Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)
101		Interactive Data File
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)

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SIGNATURES

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

	Q BIOMED INC.
Dated: November 3, 2022	By:	/s/ Denis Corin

Dated: June 16, 2023	By:	/s/ Denis Corin
		Denis Corin
		President, Chief Executive Officer, Acting Principal Accounting Officer, Principal Financial Officer

For the Three Months Ended

February 28, 2023

February 28, 2022

Consulting and legal expenses

Filing Compare · Q BioMed Inc.