QNTM.NASDAQQuantum Biopharma LTD
20-F/A: Quantum BioPharma Amends 20-F Filing to Include Audit Report and Financial Statement Index
Sentiment:
20-F/A Filing
Quantum BioPharma files an amendment to its 20-F annual report to include an audit report from MNP LLP and an index to the financial statements.
Capital raiseThe company entered into an at-the-market offering agreement (the ATM Agreement) to sell Class B Subordinate Voting Shares, having an aggregate offering price up to $11,154,232.During the year ended December 31, 2024, the Company issued 1,384,783 common shares for gross proceeds of $11,146,731.On January 20, 2025, the Company issued an additional 1,480 Debenture Units, raising a total amount of C$1,480,000 under the non-brokered private placement offering announced on December 5, 2024.On February 4, 2025, Celly Nutrition signed a letter of engagement with a leading New York Investment Bank to raise up to US$10,000,000 in capital and explore an initial public offering on a major U.S. exchange.On March 6, 2025, the Company closed the fourth tranche of the December 2024 Offering and issued 100 January 2025 Debenture Units for aggregate gross proceeds of C$100,000.
Worse than expectedThe company reported a net loss of $(14,915,529) for 2024, $(18,230,588) for 2023 and $(23,606,828) for 2022.
Summary
- Quantum BioPharma Ltd. filed an amendment to its annual report on Form 20-F for the fiscal year ended December 31, 2024.
- The amendment includes an audit report from MNP LLP for the financial statements for the fiscal years ended December 31, 2024, 2023, and 2022.
- An index to the financial statements has been added.
- Updated certifications by the CEO and CFO are included as exhibits.
- The company is amending and restating Item 8 in Part I and Item 18 in Part III of the Original Filing as set forth in this Amendment.
- The original filing continues to speak as of the dates described in the original filing, and the disclosures have not been updated to reflect any events that occurred subsequent to such dates.
- The company is engaged in certain legal proceedings, including the GBB Drink Lab Litigation and matters related to former CEO Dr. Raza Bokhari.
- The company is seeking damages of more than USD 700 million in a lawsuit against CIBC World Markets, RBC Dominion Securities, and John Does 1-10, alleging market manipulation through spoofing activities between January 1, 2020, and August 15, 2024.
- The company is also involved in employment litigation, including claims from former employees Kevin Cassidy and Dr. Sima Salahshor, which have been settled.
- The company had a total notes payable balance of $619,029 as of December 31, 2024.
- In December 2024, the company issued convertible debentures for gross proceeds of C$1,000,000.
- As of December 31, 2024, the company had 12 Class A Multiple Voting Shares and 2,299,502 Class B Subordinate Voting Shares outstanding.
- The company entered into a Prepaid Forward Purchase Agreement with Sports Coat LLC for US$1,000,000, recorded as deferred income.
- Subsequent to December 31, 2024, the company settled debt, issued additional Debenture Units, and expanded its cryptocurrency holdings.
Sentiment
Score: 4
Explanation: The sentiment is neutral to slightly negative due to ongoing legal challenges, continued losses, and reliance on capital raises. However, there are some positive developments, such as the settlement of certain legal matters and the expansion of cryptocurrency holdings.
Positives
- The company successfully settled employment litigation with former employees.
- The company secured a Prepaid Forward Purchase Agreement for US$1,000,000.
- Subsequent to year-end, the company settled debt and expanded its cryptocurrency holdings.
- The United States District Court for the Eastern District of Pennsylvania confirmed Quantums Petition to Confirm Arbitration Awards entered against Dr. Raza Bokhari.
- On June 27, 2024, the US District Court for the Eastern District of Pennsylvania confirmed Quantums motion for entry of judgment and granted judgment in favor of Quantum of approximately USD $3 million.
Negatives
- The company is involved in ongoing legal proceedings, including a lawsuit against CIBC and RBC for alleged market manipulation.
- The company is still engaged in certain legal proceedings, including the GBB Drink Lab Litigation and matters related to former CEO Dr. Raza Bokhari.
- The company has a significant accumulated deficit of $(172,110,884) as of December 31, 2024.
Risks
- Ongoing legal proceedings could be costly and time-consuming, diverting management's attention from business operations.
- The company's ability to meet its financial obligations depends on raising additional financing.
- The company's digital asset holdings are subject to significant price volatility and other risks.
- The company's success depends on the successful development and commercialization of its drug candidates.
Future Outlook
The company is focused on the research and development of Lucid-MS and a treatment for alcohol misuse, as well as managing its strategic investments portfolio.
Industry Context
The company operates in the biopharmaceutical industry, which is characterized by high research and development costs, regulatory hurdles, and competition from other companies developing similar products.
Comparison to Industry Standards
- The document does not provide enough information to make a detailed comparison to industry standards.
- Without specific details on clinical trial results, drug development timelines, and commercialization strategies, it's difficult to benchmark Quantum BioPharma against its peers.
- Comparable companies in the biopharmaceutical space include those focused on neurodegenerative, inflammatory, and metabolic disorders, such as Biogen, AbbVie, and Eli Lilly.
- However, a meaningful comparison would require a deeper dive into the specifics of Quantum's pipeline and financial performance relative to these larger players.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Board Member | Dr. Sanjiv Chopra | Terry Lynch | 2025-03-27 | Not specified |
Legal Proceedings
- The company is engaged in certain legal proceedings, including the GBB Drink Lab Litigation and matters related to former CEO Dr. Raza Bokhari.
- The company is seeking damages of more than USD 700 million in a lawsuit against CIBC World Markets, RBC Dominion Securities, and John Does 1-10, alleging market manipulation through spoofing activities between January 1, 2020, and August 15, 2024.
- The company is also involved in employment litigation, including claims from former employees Kevin Cassidy and Dr. Sima Salahshor, which have been settled.
Related Party Transactions
- The company entered into a secured loan agreement with the CEO for C$1,200,000, with monthly payments of C$6,000 based on an annual interest rate of 6%.
- The company reimbursed $145,081 to a related party of the CEO, President, and Executive Co-Chairman of the Board for legal expenses.
- During the year ended December 31, 2024, the Company granted the Co-Chairman of the board, the CEO and the current CFO total shares of 248,160 with a fair value of $1,017,456 as bonus for the year.
Next Steps
- Finalizing documents for discovery in the GBB Drink Lab litigation, with mediation expected by June 18, 2025.
- Continuing to defend against legal claims from Dr. Raza Bokhari.
- Pursuing the development of Lucid-MS and a treatment for alcohol misuse.
- Managing the strategic investments portfolio.
- Monitoring and managing digital asset holdings.
Key Dates
| Date | Description |
|---|---|
| 2020-08 | The Company issued 42,499 Class B Subordinate Voting Shares and 21,250 warrants. |
| 2020-10-01 | Change in functional currency. |
| 2021-01-21 | The Board authorized the issuance of an aggregate of 1,349,765 Class B Subordinate Voting Shares as share based awards. |
| 2021-02-10 | The Board authorized the issuance of an aggregate of 1,349,765 Class B Subordinate Voting Shares as share based awards. |
| 2021-05-14 | Shareholder meeting where Dr. Raza Bokhari was placed on administrative leave. |
| 2021-06-01 | The Board resolved to cancel the Contested Shares. |
| 2021-07-02 | Dr. Bokhari filed an action against the Corporation seeking to prevent the Corporation from cancelling his portion of the Contested States. |
| 2021-07-15 | Dr. Raza Bokhari, filed an arbitration notice seeking C$30.2 million for breach of contract, severance, and damages. |
| 2021-07-21 | The Corporation commenced a legal proceeding against Dr. Bokhari, former members of the Board, including James Datin, Robert Ciaruffoli, Stephen Buyer and Gerald Goldberg, Dr. Bokharis brokerages Haywood Securities Inc. and Haywood Securities (US) Inc., and the Corporations transfer agent. |
| 2021-07-27 | Dr. Bokhari was terminated for cause. |
| 2021-11-12 | Dr. Bokhari commenced an application in the ONSC seeking an order appointing an arbitrator to arbitrate his claim to be entitled to indemnification of his legal expenses. |
| 2022-03-08 | The court issued a mixed decision in the application, permitting the Contested Share grant to Dr. Bokhari until the date of his termination but cancelling 504,888 Contested Shares relating to services that were to be provided after the date of termination. |
| 2022-04-06 | Dr. Bokhari commenced an application in the Superior Court seeking an order appointing an arbitrator to arbitrate his claim to be entitled to indemnification of his legal expenses. |
| 2022-05-06 | The claim was dismissed by the court. |
| 2022-05 | The Company established a performance share unit plan (PSU Plan) and a restrictive unit plan (RSU Plan). |
| 2022-05-06 | The Company closed the sale of the Facility and the Facility Property for total consideration of $12,730,942 (C$16,400,000). |
| 2022-06-23 | The Company acquired 80,000 shares of A2Z for C$0.10 per share. |
| 2022-08 | The arbitration concluded in August 2022. |
| 2022-11 | The arbitrator issued his decision in November 2022. |
| 2022-12-09 | Dr. Bokhari filed an application in the Ontario Superior Court seeking to set aside the arbitral award of the court. |
| 2023-01-06 | The filing of the MS Phase 1 IND. |
| 2023-04-28 | The court ordered the case to be heard at the Commercial List on September 27, 2023. |
| 2023-05-12 | The Corporation announced receipt of a lawsuit filed in S.D. Fla. by GBB against the Corporation. |
| 2023-06 | Dr. Bokhari commenced an action against the Company and FSD Biosciences by way of notice of action issued out of the ONSC. |
| 2023-06-23 | The Corporation filed a motion to dismiss the complaint. |
| 2023-07-03 | GBB responded in opposition to the Corporations motion to dismiss the complaint. |
| 2023-07-07 | He subsequently filed a statement of claim. |
| 2023-07-08 | Parkway Clinical Laboratories, a company wholly owned by Dr. Bokhari, filed an action against the Company, which was subsequently settled following a conference between the parties on October 20, 2021. |
| 2023-07-18 | Kevin Cassidy, a former employee, sued the Company and Lucid. |
| 2023-07-31 | The Company entered into an exclusive intellectual property license agreement (the License Agreement) with Celly Nutrition Corp. (Celly). |
| 2023-08-01 | The loan was funded on August 1, 2023, and accrues interest at a rate of 10% per annum. |
| 2023-08-09 | The Company purchased a Guaranteed Investment Certificate (GIC) in the amount of C$744,500 from Royal Bank of Canada (RBC). |
| 2023-08-24 | The parties filed a proposed joint scheduling report with the S.D. Fla., which set forth various deadlines that would govern this action. |
| 2023-09-13 | Cassidy entered into a settlement agreement with the Company. |
| 2023-09-26 | By notice of application dated September 26, 2023, Dr. Bokhari applied to the ONSC for an order directing an assessment of the accounts/billing rendered by Justice Cunningham in the Wrongful Dismissal Arbitration noted above. |
| 2023-09-27 | On September 27 and 28, 2023, the application to set aside the award and cost of ground of unfairness was dismissed. |
| 2023-10-04 | The Company announced that the ONSC had dismissed Dr. Bokharis motion to set aside the arbitration award. |
| 2023-10-09 | Judge Melissa Damian denied Mr. Romanos motion to dismiss, finding that the Corporation plausibly alleged Romano breached fiduciary duties, including his duties of loyalty, confidentiality, and to act in the companys best interests. |
| 2023-10-12 | Dr. Sima Salahshor, a former employee, sued the Company and Lucid. |
| 2023-10-13 | Dr. Bokhari served notices of motion on the Company for leave to appeal the set aside and enforcement orders issued by the ONSC on October 4, 2023. |
| 2023-11 | In November 2023, through the Plan of Arrangement the Company distributed 45,712,529 of its 200,000,000 shares of Celly to its shareholders. |
| 2023-11-10 | Dr. Bokhari served the notice of action and statement of claim on an FSD director. |
| 2023-11-22 | We served a notice of intent to defend this action on November 22, 2023 but have not been required to serve a statement of defense. |
| 2023-12-01 | The Company filed a petition to confirm the arbitration award in the United States District Court for Eastern District of Pennsylvania. |
| 2023-12-15 | The Company submitted a responding partys factum to the ONCA. |
| 2023-12-19 | The action seeks USD $1.5 million in damages for intentional interference with economic relations, misrepresentation, negligence, and other causes of action to be specified in a statement of claim. |
| 2024-01-05 | We delivered a notice of intent to defend in the action on January 5, 2024, but thus far not been required to provide a statement of defense. |
| 2024-01-08 | The S.D. Fla. Dismissed the Corporations request for a motion to dismiss the lawsuit. |
| 2024-01-22 | The Corporation filed a third-party complaint against Joseph Romano (a former director of the Company), and a counterclaim against GBB. |
| 2024-01-24 | The Company sought a court order from the ONSC declaring Dr. Bokhari to be a vexatious litigant. |
| 2024-01-26 | Cassidys counsel served a motion for summary judgment. |
| 2024-02-06 | The Company announced that the ONSC affirmed judgment and awarded an additional C$5,000 in costs in light of Dr. Bokharis failed motion for leave to appeal. |
| 2024-02-09 | Dr. Bokhari filed a response. |
| 2024-02-23 | On February 23, 2024, the Company granted 846 RSUs pursuant to the shares for debt transaction. |
| 2024-03-01 | The Company filed a response. |
| 2024-03-31 | Mr. Bokhari requested a week-long extension, which pushed the Companys deadline of February 23, 2024, by a week. |
| 2024-04-03 | An amendment to the loan agreement was approved for additional gross proceeds of C$300,000. |
| 2024-05-07 | Mr. Bokhari decided to abandon his application to have his accounts assessed. |
| 2024-05-31 | The Company won the petition to confirm the arbitration awards against Dr. Raza Bokhari. |
| 2024-06-27 | The United States District Court for Eastern District of Pennsylvania granted judgement in favor of the Company in its case against Dr. Bokhari. |
| 2024-08-13 | Dr. Salashor entered into a settlement agreement with the Company. |
| 2024-08-15 | The Company consolidated its Class A Multiple Voting Shares and Class B Subordinate Voting Shares on a 65:1 basis and changed its name to Quantum BioPharma Ltd. |
| 2024-08-23 | On August 23, 2024, the Company granted an aggregate of 32,690 RSUs at a price of $4.21 per unit for a total value of $137,625 based on the share price at the date of issuance. |
| 2024-09-06 | On September 6, 2024, the Company cancelled an aggregate of 7,692 warrants with an exercise price of C$97.50 to purchase Class B Subordinate Voting Shares, which were previously granted to a board member. |
| 2024-09-06 | On September 6, 2024, the Company granted 7,500 RSUs at a price of $4.13 per unit for a total value of $31,009 based on the share price at the date of issuance, which was recognized as share-based compensation expense. |
| 2024-09-13 | On September 13, 2024, Cassidy entered into a settlement agreement with the Company. |
| 2024-10-09 | Judge Melissa Damian denied Mr. Romanos motion to dismiss, finding that the Corporation plausibly alleged Romano breached fiduciary duties, including his duties of loyalty, confidentiality, and to act in the companys best interests. |
| 2024-10-20 | On October 20, 2024, the Company filed a complaint in the U.S. District Court for the Southern District of New York against CIBC World Markets, Inc., RBC Dominion Securities Inc., and John Does 1-10. |
| 2024-11-28 | At a hearing on November 28, 2024, the ONSC awarded the Company C$13,000 for costs. |
| 2024-12-13 | On December 13, 2024, 80,000 warrants of the Company were issued as part of the issuance of Debentures. |
| 2024-12-24 | On December 24, 2024, the Company entered into a Prepaid Forward Purchase Agreement (the Purchase Agreement) with Sports Coat LLC (Buyer). |
| 2024-12-31 | The company has satisfied the terms of the settlement agreement reached, and this matter is now closed effective December 31, 2024. |
| 2025-01-06 | On January 6, 2025, the Company successfully settled its outstanding debt to a creditor, which was previously reported on the statement of financial position at approximately US$659,000. |
| 2025-01-20 | On January 20, 2025, the Company issued an additional 1,480 Debenture Units, raising a total amount of C$1,480,000 under the non-brokered private placement offering announced on December 5, 2024. |
| 2025-01-24 | On January 24, 2025, the Company sought a court order from the ONSC declaring Dr. Bokhari to be a vexatious litigant. |
| 2025-02-04 | On February 4, 2025, Celly Nutrition signed a letter of engagement with a leading New York Investment Bank to raise up to US$10,000,000 in capital and explore an initial public offering on a major U.S. exchange. |
| 2025-02-06 | On February 6, 2024, the Company announced that the ONSC affirmed judgment and awarded an additional C$5,000 in costs considering Raza Bokharis failed motion for leave to appeal. |
| 2025-02-10 | This award was released February 10, 2025, and the amount is currently outstanding. |
| 2025-02-18 | On February 18, 2025, the Company secured an additional loan facility of AU$700,000, through its subsidiary, Huge Biopharma. |
| 2025-03-04 | On March 4, 2025, the CEO repaid C$800,000 towards his outstanding loan, classified under FSD Strategic Investments portfolio of residential property investments, thereby fully settling the debt owed to the Company. |
| 2025-03-05 | On March 5, 2025, and March 11, 2025, the Company expanded its portfolio of residential mortgages by issuing two new mortgage loans, each with a principal amount of C$100,000 with a maturity of one year. |
| 2025-03-06 | On March 6, 2025, the Company closed the fourth tranche of the December 2024 Offering and issued 100 January 2025 Debenture Units for aggregate gross proceeds of C$100,000. |
| 2025-03-11 | On March 5, 2025, and March 11, 2025, the Company expanded its portfolio of residential mortgages by issuing two new mortgage loans, each with a principal amount of C$100,000 with a maturity of one year. |
| 2025-03-12 | The Company appeared before the registrar on March 12, 2025, to address the collection of the award. |
| 2025-03-20 | On March 20, 2025, the Company successfully expanded its cryptocurrency holdings to a total value of US$3,500,000. |
| 2025-03-25 | On March 25,2025, the investor converted this Debenture into an aggregate of 25,257 Class B Subordinate Voting Shares. |
| 2025-03-27 | On March 27, 2025, the Company appointed Terry Lynch to the Board to replace Dr. Sanjiv Chopra. |
| 2025-03-28 | Quantum BioPharma Ltd. (the Company, we or us) is filing this Amendment No. 1 (the Amendment) on Form 20-F to amend its Annual Report on Form 20-F for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (the SEC) on March 28, 2025 (the Original Filing), to update and address an omission in the Original Filing, which did not include an audit report from MNP LLP, the Companys independent registered public accounting firm, for the financial statements for the fiscal years ended December 31, 2024, 2023 and 2022 and to add an index to the Financial Statements. |
| 2025-03-31 | Date of report. |
Keywords
Quantum BioPharma, 20-F, amendment, audit report, financial statements, legal proceedings, convertible debentures, share capital, digital assets, biopharmaceutical, litigation, MNP LLP
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