Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Qualigen Therapeutics disclosed 25 risk factors in its most recent earnings report. Qualigen Therapeutics reported the most risks in the “Finance & Corporate” category.

Risk Overview Q3, 2024

Risk Distribution

44% Finance & Corporate

28% Tech & Innovation

16% Production

8% Legal & Regulatory

4% Macro & Political

0% Ability to Sell

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

S&P500 Average

Sector Average

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Qualigen Therapeutics Risk Factors

New Risk (0)

Risk Changed (0)

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No changes from previous report

The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q3, 2024

Main Risk Category

Finance & Corporate

With 11 Risks

Finance & Corporate

With 11 Risks

Number of Disclosed Risks

No changes from last report

S&P 500 Average: 31

No changes from last report

S&P 500 Average: 31

Recent Changes

0Risks added

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Since Sep 2024

0Risks added

0Risks removed

0Risks changed

Since Sep 2024

Number of Risk Changed

No changes from last report

S&P 500 Average: 1

No changes from last report

S&P 500 Average: 1

See the risk highlights of Qualigen Therapeutics in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 25

Finance & Corporate

Total Risks: 11/25 (44%)Above Sector Average

Share Price & Shareholder Rights2 | 8.0%

Share Price & Shareholder Rights - Risk 1

Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock.

If we fail to satisfy the continued listing requirements of Nasdaq, Nasdaq may take steps to delist our common stock. Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. On April 20, 2023, we received a notification letter from the Listing Qualifications Department of Nasdaq indicating that, as a result of our delay in filing the 2022 Annual Report, we were not in compliance with the timely filing requirements for continued listing under Nasdaq Listing Rule 5250(c)(1). The notification letter had no immediate effect on the listing or trading of our common stock on the Nasdaq Capital Market. On May 2, 2023, the Company filed the Form 10-K with the SEC and was subsequently notified by Nasdaq on May 4, 2023 that it had regained compliance with Nasdaq's listing rule 5250(c)(1) as a result thereof and that the matter was closed. On November 20, 2023, we received a letter (the "Bid Price Deficiency Notice") from The Nasdaq Stock Market ("Nasdaq") notifying the Company that, because the closing bid price for its common stock has been below $1.00 per share for 30 consecutive business days, it no longer complies with the minimum bid price requirement for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share (the "Minimum Bid Price Requirement"), and Listing Rule 5810(c)(3)(A) provides that a failure to meet the Minimum Bid Price Requirement exists if the deficiency continues for a period of 30 consecutive business days. The Bid Price Deficiency Notice has no immediate effect on the listing of the Company's common stock on The Nasdaq Capital Market. Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has been provided an initial compliance period of 180 calendar days, or until May 20, 2024 to regain compliance with the Minimum Bid Price Requirement. During the compliance period, the Company's shares of common stock will continue to be listed and traded on The Nasdaq Capital Market. To regain compliance, the closing bid price of the Company's common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days during the 180 calendar day grace period. In the event the Company is not in compliance with the Minimum Bid Price Requirement by May 20, 2024, the Company may be afforded a second 180 calendar day grace period. The Company intends to actively monitor the bid price for its common stock between now and May 20, 2024 and will consider available options to regain compliance with the Minimum Bid Price Requirement. On November 21, 2023, the Company also received a letter (the "Equity Deficiency Letter") from Nasdaq notifying the Company that, based on the Company's stockholders' deficit of ($1,640,552) as of September 30, 2023, as reported in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, it is no longer in compliance with the minimum stockholders' equity requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1), which requires listed companies to maintain stockholders' equity of at least $2.5 million (the "Minimum Stockholders' Equity Requirement"), or the alternative criteria of $35 million market value of listed securities or $500,000 in net income from continuing operations in the most recent fiscal year or two or the last three fiscal years-which alternatives, as noted in the Equity Deficiency Letter, the Company does not meet. The Company was given until January 5, 2024 to provide Nasdaq with a specific plan (the "Compliance Plan") to achieve and sustain compliance with the Minimum Stockholders' Equity Requirement or its alternatives. If the Company's Compliance Plan is accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the Equity Deficiency Letter for the Company to evidence compliance. The Company submitted a Compliance Plan to Nasdaq on January 5, 2024 to regain compliance with the Nasdaq Listing Rules. The Compliance Plan was accepted by Nasdaq and the Company was granted an extension of up to 180 calendar days from the date of the Equity Deficiency Letter (i.e., until May 20, 2024) for the Company to evidence compliance. If the Company does not regain compliance within the requisite time period, or if the Company fails to satisfy another Nasdaq requirement for continued listing, Nasdaq could provide notice that the Company's securities will become subject to delisting, which delisting determination the Company has the right to appeal. If we are unable to maintain compliance with Nasdaq's continued listing requirements, and in the event of a delisting, we would take action to restore our compliance with Nasdaq's listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq's other listing requirements. Losing our Nasdaq other listing would seriously harm us, by undermining our ability to raise capital and decreasing our attractiveness to possible merger partners.

Share Price & Shareholder Rights - Risk 2

We have a substantial amount of derivative securities outstanding.

As of December 31, 2023 there were 398,924 stock options outstanding under our equity incentive plans, 3,081,717 outstanding warrants, and 1,943,729 shares issuable upon voluntary conversion of principal amount of the 2022 Debenture issued to Alpha. (At December 31, 2023, such principal amount was $1,418,922) Due to antidilution adjustments occurring as a result of the 2024 Debenture transaction in February 2024, the outstanding principal balance of the 2022 Debenture (which at March 25, 2024 was $1,088,922) is now convertible upon voluntary conversions into 4,188,162 shares; and in addition the 2024 Debenture's principal amount is convertible upon voluntary conversions into 900,016 shares, and the warrants issued with the 2024 Debenture are exercisable for 900,016 shares. The 2022 and 2024 Debentures issued to Alpha are convertible, at any time, and from time to time, at Alpha's option, into shares of our common stock, subject to the terms and conditions described in the Debentures. Currently the conversion price for such optional conversions is $0.26 per share for the 2022 Debenture and $0.6111 per share for the 2024 Debenture. Furthermore, subject to certain terms and conditions described in the 2022 Debenture, we may elect to pay all or a portion of the Monthly Redemption Amount and/or interest required by the 2022 Debenture in shares of our common stock. The issuance of shares upon the exercise or conversion of outstanding stock options, warrants and the Debentures (or our election to pay amounts owed under the Debentures in shares of our common stock) could result in significant dilution to the holders of our existing outstanding common stock.

Accounting & Financial Operations2 | 8.0%

Accounting & Financial Operations - Risk 1

Our reported financial condition may fluctuate significantly from quarter to quarter and year to year, which makes them difficult to predict or understand.

We expect our financial condition and results of operations to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not blindly rely upon the results of any quarterly or annual periods as indications of future financial status or operating performance. Other investors may, however, attach undue significance to reported results which are heavily influenced by such distortions and variability, which in turn could cause our stock price to rise or fall despite there being no corresponding change in our prospects or position as a practical matter.

Accounting & Financial Operations - Risk 2

Any failure to develop or maintain effective internal controls over financial reporting or difficulties encountered in implementing or improving our internal controls over financial reporting could harm our operating results and prevent us from meeting our reporting obligations.

Effective internal controls, particularly those related to financial reporting, are necessary for us to produce reliable financial reports. If we cannot provide reliable financial reports, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could drop significantly. In addition, investors relying upon this misinformation could make an uninformed investment decision, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities or to stockholder class action securities litigation. As previously described in our annual report on Form 10-K for the year ended December 31, 2021, in connection with the audit of our financial statements as of and for the year ended December 31, 2021 (the "2021 audit"), our management identified a material weakness in our internal control over financial reporting related to the lack of accounting department resources and/or policies and procedures to ensure recording and disclosure of items in compliance with U.S. GAAP. This material weakness resulted in adjustments to our warrant valuations in connection with the 2021 audit. In response to the material weakness, we took a number of remediation steps to enhance our internal controls, including implementing additional procedures and utilizing external consulting resources with experience and expertise in U.S. GAAP and public company accounting and reporting requirements to assist management with its accounting and reporting of complex and/or non-recurring transactions and related disclosures. In connection with the audit of our financial statements as of and for the year ended December 31, 2022 (the "2022 audit"), our management determined that the material weakness identified in connection with the 2021 audit had not been fully remediated and resulted in adjustments to the accounting treatment related to convertible debt, the business combination and goodwill impairment during the 2022 audit, which resulted in the late filing of the 2022 Annual Report. In connection with the audit of our financial statements as of and for the year ended December 31, 2023, our management identified material weaknesses in our internal control over financial reporting related to limited accounting personnel and resources resulting in lack of segregation of duties, and to the fact that we have not designed and implemented effective Information Technology General Controls related to access controls to financing accounting systems. We intend to continue to take steps to enhance our internal controls, including implementing additional internal procedures and utilizing well-established external consulting resources with experience and expertise in U.S. GAAP and public company accounting and reporting requirements. If we are unable to remediate the material weaknesses and achieve and maintain effective internal control over financial reporting and effective disclosure controls, our business could be adversely affected.

Debt & Financing3 | 12.0%

Debt & Financing - Risk 1

Our minority-interest investment in NanoSynex is illiquid and has many risks associated with it.

Our investment in NanoSynex has been reduced to a 39% equity interest and has a number of risks associated with it, including, among others, the following: - a history of operating losses, with no assurance of future revenues or operating profits; - uncertainty as to the availability to NanoSynex of the cash resources it needs to execute its plans; - technological risk; - our inability, now that we are no longer a majority shareholder of NanoSynex, to control or veto NanoSynex's decisions; - risks associated with the development of medical devices and NanoSynex's ability to obtain the necessary regulatory approvals for the development and commercialization of its antimicrobial susceptibility test platform; - very limited manufacturing, marketing, distribution and sales capabilities; - competition from both public and private companies and academic collaborators, many of which have significantly greater experience and financial resources; - acceptance by life sciences research and diagnostic communities is not assured; - commercial development of its antimicrobial susceptibility test platform is not assured; - an inability to manufacture, market or sell its proposed products if it is unsuccessful in entering into strategic alliances or joint ventures with third parties; and - risks related to the political, economic and military conditions in Israel. In addition, NanoSynex is a privately-held company and its shares are illiquid, which means that we could not readily obtain cash in exchange for some or all of our equity interest. We no longer hold any NanoSynex debt instruments.

Debt & Financing - Risk 2

Servicing our debt will require a significant amount of cash, and we do not expect to have sufficient cash flow from our business to pay this debt.

Our ability to make payments to Alpha of principal or interest on the Debentures or to make any potential prepayments for the Debentures, to the extent applicable, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our cash resources currently on hand, plus any anticipated near-term cash flow from operations or dispositions, would not be sufficient to service our indebtedness and/or to make necessary expenditures. In December 2022, we entered into a Securities Purchase Agreement with Alpha and in exchange for $3,000,000 in cash (less $50,000 for expense reimbursement) issued to Alpha our 8% Senior Convertible Debenture with an original face amount of $3,300,000 due on December 22, 2025 (the "2022 Debenture"), plus 2,500,000 common stock warrants exercisable (from June 22, 2023 through June 22, 2028) at $1.65 per share. Commencing June 1, 2023 and continuing on the first day of each month thereafter until the earlier of (i) December 22, 2025 and (ii) the full redemption of the 2022 Debenture (each such date, a "Monthly Redemption Date"), we must redeem $110,000 plus accrued but unpaid interest, liquidated damages and any amounts then owing under the 2022 Debenture (the "Monthly Redemption Amount"). The Monthly Redemption Amount must be paid in cash; provided that after the first two monthly redemptions, we may (if the Equity Conditions, as defined in the 2022 Debenture, are then satisfied or have been waived) elect to pay all or a portion of a Monthly Redemption Amount in shares of our common stock, based on a conversion price equal to the lesser of (i) the then applicable conversion price of the 2022 Debenture and (ii) 85% of the average of the VWAPs (as defined in the 2022 Debenture) for the five consecutive trading days ending on the trading day that is immediately prior to the applicable Monthly Redemption Date. The 2022 Debenture accrues interest at the rate of 8% per annum, which began accruing on December 1, 2023, and will be payable on a quarterly basis. Interest may be paid in cash or shares of common stock or a combination thereof at our option; provided that the Equity Conditions have been satisfied. Alpha has waived the Equity Conditions for certain Monthly Redemption Amounts, but Alpha is not required to continue such waivers beyond May 2024. For the foreseeable future, we do not expect to be able to satisfy the Equity Conditions; as a result, where there is no waiver of the Equity Conditions we would not have the opportunity to make 2022 Debenture payments in the form of stock rather than in the form of cash, even for types of payments for which payment in the form of stock would have been allowed. The 2022 Debenture is convertible into our common stock at any time at the holder's option; the conversion price was originally $1.32 but pursuant to a Securities Purchase Agreement amendment in December 2023 it was reduced to $0.73 and then in February 2024 it was adjusted downward to $0.26 per share by virtue of the operation of a "ratchet" antidilution provision. (The exercise price of the warrants issued with the 2022 Debenture was originally $1.65 but pursuant to a Securities Purchase Agreement amendment in December 2023 it was reduced to $0.73 and then in February 2024 it was adjusted downward to $0.26 per share by virtue of the operation of a "ratchet" antidilution provision.) Other than the Monthly Redemption Amounts, the 2022 Debenture does not call for scheduled payments of principal before the scheduled maturity date. Both the 2022 Debenture and the accompanying warrants provide for "ratchet" antidilution adjustments to their conversion price and exercise price. Both the 2022 Debenture and the accompanying warrants include a beneficial ownership blocker of 9.99%, which may only be waived by Alpha upon 61 days' notice to the Company. We granted Alpha resale registration rights for the common shares underlying the 2022 Debenture and the accompanying warrants. The December 2023 amendment of the 2022 Debenture conversion price (and the accompanying warrants' exercise price) to be $0.73 per share resulted in the 2022 Debenture's then current $1,528,922 principal amount thereof becoming convertible into 2,094,414 shares of Company common stock (as opposed to the 1,158,274 shares into which such outstanding principal amount was convertible pre-adjustment). Also, the December 2023 amendment triggered a "ratchet" antidilution adjustment in the Company's outstanding "exploding" "Series C Warrants," resulting in such Series C Warrants becoming exercisable for 455,623 common shares (at an exercise price of $0.73 per share), as opposed to the 251,971 common shares into which such outstanding Series C Warrants would have been exercisable (at $1.32 per share) pre-adjustment. Finally, the $0.73 price triggered a "ratchet" antidilution adjustment in the exercise price of other outstanding Company common stock warrants, including 7,048 warrants held by Alpha and 67,620 warrants held by other persons, which were previously exercisable at $1.32 per share. In February 2024, we entered into a Securities Purchase Agreement with Alpha and in exchange for $500,000 in cash (less $25,000 for expense reimbursement) issued to Alpha an 8% Convertible Debenture with a face amount of $550,000 due on December 31, 2024 (the "2024 Debenture"), plus 900,016 5-year common stock warrants exercisable at $0.26 per share. In addition, per this Securities Purchase Agreement Alpha obtained an option to purchase additional 8% Convertible Debentures, of like tenor, with face amounts of up to an aggregate of $1,100,000 (and with a proportional number of accompanying common stock warrants of like tenor, up to a total of 1,800,032 additional warrants), which would (if and when Alpha exercises such option) provide us up to an additional $1.0 million in cash proceeds (less expense reimbursement, and not including any possible cash proceeds from any future exercise of the additional warrants). This option is valid through July 1, 2024. The 2024 Debenture has a maturity date of December 31, 2024 and is convertible, at any time, and from time to time, at Alpha's option, into shares of our common stock, at $0.6111 per share. The 2024 Debenture does not call for scheduled payments of principal or interest before the scheduled maturity date. Interest on the 2024 Debenture accrues on its outstanding principal balance at the rate of 8% per annum. Both the 2024 Debenture and the accompanying warrants provide for "ratchet" antidilution adjustments to the Conversion Price and Exercise Price. Both the 2024 Debenture and the accompanying warrants include a beneficial ownership blocker of 9.99%, which may only be waived by Alpha upon 61 days' notice to the Company. We granted Alpha "piggyback" registration rights for the common shares underlying the 2024 Debenture and the accompanying warrants. The $0.26 exercise price of the warrants issued with the 2024 Debenture triggered a "ratchet" antidilution adjustment in the 2022 Debenture, resulting in the then current $1,198,922 principal amount thereof becoming convertible into 4,611,238 shares of Company common stock (as opposed to the 1,642,359 shares into which such outstanding principal amount were convertible pre-adjustment). Also, the $0.26 exercise price of the warrants issued with the 2024 Debenture triggered a "ratchet" antidilution adjustment in the Company's outstanding "exploding" "Series C Warrants," resulting in such Series C Warrants becoming exercisable for 1,279,261 common shares (at an exercise price of $0.26 per share), as opposed to the 455,623 common shares into which such outstanding Series C Warrants would have been exercisable (at $0.73 per share) pre-adjustment. Finally, the $0.26 exercise price of the Warrant would trigger a "ratchet" antidilution adjustment in the exercise price of other outstanding Company common stock warrants, including 2,507,048 warrants held by Alpha and 67,620 warrants held by other persons, all of which were previously exercisable at $0.73 per share. If we continue to lack cash resources sufficient to service our indebtedness, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or issuing additional equity, equity-linked or debt instruments on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. If we are unable to engage in any of these activities or engage in these activities on desirable terms, we may be unable to meet our debt obligations, which would materially and adversely impact our business, financial condition and operating results or even put us out of business.

Debt & Financing - Risk 3

We do not currently have enough working capital to execute our strategic plan.

We have suffered recurring losses from operations, and we are now essentially a non-revenue company. We will need capital to maintain our operations and to support our intended development of our therapeutics business. Future financings will be necessary in order for us to survive as a going concern and to properly execute our strategic plan. However, there can be no assurance that such future financings will be available to us (or, if they are, that they can be consummated on desirable terms). We may, in the short and long-term, seek to raise capital through the issuance of equity securities or through other financing sources. To the extent that we seek to raise additional funds by issuing equity or equity-linked securities, our stockholders may (as has already occurred several times) experience significant dilution. Any debt financing, if available, may include financial and other covenants that could restrict our use of the proceeds from such financing or impose other business and financial restrictions on us. In addition, we may consider alternative approaches such as licensing, joint venture, or partnership arrangements to provide short term or long term capital. Additional funding may not be available to us on acceptable terms, or at all. In addition, any future financing (depending on the terms and conditions) may be subject to the approval of Alpha, a related party and the holder of our 8% Senior Convertible Debenture and of our 8% Convertible Debenture (together, the "Debentures"), and/or trigger certain adjustments to the conversion prices of the Debentures or to the exercise prices of warrants held by Alpha and/or by other persons. See Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional details regarding the Debentures.

Corporate Activity and Growth4 | 16.0%

Corporate Activity and Growth - Risk 1

Our business strategy is high-risk

We are focusing our resources and efforts on development of drug product candidates, which requires extensive cash needs for research and development activities. This is a high-risk strategy because there is no assurance that that our cash resources will be adequate to develop our product candidates, that our product candidates will ever be proven to be safe and effective or that any products will ever become commercially viable. This makes our stock an unsuitable investment for many investors.

Corporate Activity and Growth - Risk 2

We may engage in strategic transactions that could impact liquidity, increase expenses and present significant distractions to management.

From time to time, we may consider strategic transactions, such as acquisitions of companies, businesses or assets and out-licensing or in-licensing of products, drug candidates or technologies. Potential transactions that we may consider include a variety of different business arrangements, including spin-offs, in-licensing, strategic partnerships, joint ventures, restructurings, divestitures, business combinations and investments. Any such transaction may require us to incur non-recurring or other charges, may increase near term or long-term expenditures and may pose significant integration challenges or disrupt management or business, which could adversely affect our operations and financial results. These transactions may entail numerous operational and financial risks, including: - exposure to unknown liabilities; - disruption of business and diversion of management's time and attention in order to develop acquired products, drug candidates or technologies;- incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions; - higher than expected acquisition and integration costs; - write-downs of assets or impairment charges; - increased amortization expenses; - difficulty and cost in combining the operations, systems and personnel of any acquired businesses with our operations, systems and personnel; - impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and - inability to retain key employees of any acquired businesses.

Corporate Activity and Growth - Risk 3

We will need to rebuild our development and regulatory teams.

Due to rightsizing, voluntary departures and the disposition of Qualigen, Inc. and our former FastPackproducts business, we currently have only four employees. Although we outsource many drug development functions and may choose to continue to do so in the future, we expect that (resources allowing) to recruit and retain more employees in all areas, and particularly in the areas of clinical development, clinical operations, and regulatory affairs (and maybe, longer-term, in areas such as manufacturing, sales, marketing and distribution). We will also need to implement and improve our managerial, operational and financial systems, and obtain stage-appropriate facilities. We do not currently have the cash resources needed for any of the above. We currently rely, and for the foreseeable future will continue to rely, in substantial part, on certain third-party contract research organizations and consultants to provide certain services, including assuming substantial responsibilities for the conduct of our clinical trials. We cannot assure that the services of such third-party contract research organizations and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by our vendors or consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated. We cannot assure that we will be able to properly manage our existing vendors or consultants or find other competent outside vendors and consultants on economically reasonable terms, or at all.

Corporate Activity and Growth - Risk 4

We will need to seek and enter into out-licenses or collaborations with third parties for the development and commercialization of our products, resulting in a limitation of our upside potential.

We expect that we will need third-party out-licensees or collaborators for the development and commercialization of our products. Our likely collaborators for any collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. We face significant competition in seeking appropriate collaborators. Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator's resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator's evaluation of a number of factors. If we do enter into any such arrangements with any third parties, we will likely have limited control over the amount and timing of resources that such collaborators dedicate to the development or commercialization of our products. Our ability to generate revenues from these arrangements will depend on our collaborators' abilities and efforts to successfully perform the functions assigned to them in these arrangements. Any out-license or collaboration will necessarily result in a sharing of economics with the out licensee or collaborator, which might otherwise have been captured by us directly.

Tech & Innovation

Total Risks: 7/25 (28%)Above Sector Average

Innovation / R&D4 | 16.0%

Innovation / R&D - Risk 1

If we experience delays or difficulties enrolling patients in our ongoing or planned clinical trials, our receipt of necessary regulatory approval could be delayed or prevented.

We may not be able to initiate or continue our ongoing or planned clinical trials for our products if we are unable to identify and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA. In addition, some of our competitors may have ongoing clinical trials for products that would treat the same patients as QN-302 or Pan-RAS, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors' products. In addition, introduction of new drugs or devices to the marketplace may have an effect on the number of patients available or timing of the availability of the patients. Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether.

Innovation / R&D - Risk 2

Any delays in the commencement or completion, or termination or suspension, of our current clinical trial or our future clinical trials, if any, could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.

Before we can initiate clinical trials of a drug candidate, we must submit the results of preclinical studies to the FDA along with other information as part of an IND application or similar regulatory filing, and the FDA (or corresponding foreign regulatory body) must approve the application. Before obtaining marketing approval from the FDA for the sale of QN-302, Pan-RAS or any other future drug candidate, we must conduct extensive clinical studies to demonstrate safety and efficacy. Clinical testing is expensive, time consuming and uncertain as to outcome. The FDA may require us to conduct additional preclinical studies for any drug candidate before it allows us to initiate clinical trials under any IND application, which may lead to additional delays and increase the costs of our preclinical development programs. Any delays in the commencement or completion of our ongoing, planned or future clinical trials could significantly increase our costs, slow down our development and approval process and jeopardize our ability to commence product sales and generate revenues. We do not know whether our planned trials will begin on time or at all, or be completed on schedule, if at all. The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: - our ability to pay for the costs and expenses for the clinical trials; - the FDA disagreeing as to the design or implementation of our clinical trials or with our recommended dose for any of our pipeline programs; - obtaining FDA authorization to commence a trial or reaching a consensus with the FDA on trial design; - obtaining approval from one or more IRBs/ECs; - IRBs/ECs refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; - changes to clinical trial protocol; - clinical sites deviating from trial protocol or dropping out of a trial; - failing to manufacture or obtain sufficient quantities of drug candidate, or, if applicable, combination therapies for use in clinical trials; - patients failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up; - patients choosing an alternative treatment, or participating in competing clinical trials; - lack of adequate funding to continue the clinical trial; - patients experiencing severe or unexpected drug-related adverse effects; - occurrence of serious adverse events in trials of the same class of agents conducted by other companies; - selecting or being required to use clinical end points that require prolonged periods of clinical observation or analysis of the resulting data; - a facility manufacturing our drug candidates, or any of their components, including without limitation, our own facilities being ordered by the FDA to temporarily or permanently shut down due to violations of cGMP, regulations or other applicable requirements, or infections or cross-contaminations in the manufacturing process; - lack of stability of our clinical trial material or any quality issues that arise with the clinical trial material;- any changes to our manufacturing process that may be necessary or desired; - Our, or our third-party contractors, not performing data collection or analysis in a timely or accurate manner or improperly disclosing data prematurely or otherwise in violation of a clinical trial protocol; or - any third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications. We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs/ECs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using the product under investigation, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs/ECs for reexamination, which may impact the costs, timing or successful completion of a clinical trial.

Innovation / R&D - Risk 3

Drug development involves a lengthy and expensive process. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our drug product candidates.

Most drug candidates fail, and taking a drug candidate from concept through clinical trials and regulatory approval is not easy or guaranteed. We are unable to predict when or if our drug candidates, will prove effective or safe in humans or will obtain marketing approval. Before obtaining marketing approval from regulatory authorities for the sale of these products, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of these products for humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to the outcome. A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim or preliminary results of a clinical trial do not necessarily predict final results. We may experience numerous unforeseen events that could delay or prevent our ability to obtain marketing approval or commercialize our drug candidates, including: - we may not be able to obtain enough capital to begin clinical trials ort to complete any already-begun clinical trials, or to complete any necessary preclinical studies; - regulators or IRBs or ECs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; - we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; - clinical trials for our drug candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials, delay clinical trials or abandon product development programs; - the number of patients required for clinical trials for our drug candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or the duration of these clinical trials may be longer than we anticipate; - competition for clinical trial participants from investigational and approved therapies may make it more difficult to enroll patients in our clinical trials; - our third-party contractors may fail to meet their contractual obligations to us in a timely manner, or at all, or may fail to comply with regulatory requirements; - we may have to suspend or terminate clinical trials for our drug candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks; - our drug candidates may have undesirable or unexpected side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs/ECs to suspend or terminate the trials; - the cost of clinical trials for our drug candidates may be greater than we anticipate; and - the supply or quality of our drug candidates, or other materials necessary to conduct clinical trials may be insufficient or inadequate and result in delays or suspension of our clinical trials. Our product development costs will increase if we experience delays in preclinical studies or clinical trials or in obtaining marketing approvals. We do not know whether any of our planned preclinical studies or clinical trials will begin on a timely basis or at all, will need to be restructured or will be completed on schedule, or at all. For example, the FDA may place a partial or full clinical hold on any of our clinical trials for a variety of reasons. Significant preclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our drug candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our drug candidates.

Innovation / R&D - Risk 4

Our product candidates are still in the early stages of development. Although we have begun Phase 1a clinical trials for QN-302, we might be unable to obtain further regulatory approval for QN-302 or any other drug candidate. We may never obtain marketing approval for any of our drug candidates.

We are still early in our Pan-RAS development efforts and have not yet sought approval for, or begun enrollment, in any clinical trials evaluating Pan-RAS. There can be no assurance that any of our drug product candidates will achieve success in their clinical trials or obtain regulatory approval. Our ability to generate revenues from our drug product candidates will depend on the successful development and eventual commercialization of such drug candidates. The success of these products will depend on several factors, including the following: - successful completion of preclinical studies and clinical trials; - acceptance of an IND application by the FDA or other clinical trial or similar applications from foreign regulatory authorities for our future clinical trials for our pipeline; - timely and successful enrollment of patients in, and completion of, clinical trials with favorable results; - demonstration of safety, efficacy and acceptable risk-benefit profiles of our products to the satisfaction of the FDA and foreign regulatory agencies; - receipt and related terms of marketing approvals from applicable regulatory authorities, including the completion of any required post-marketing studies or trials; - obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our products; - developing and implementing marketing and reimbursement strategies; - establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; - acceptance of our drugs, if and when approved, by patients, the medical community and third-party payors; - effectively competing with other therapies; - obtaining and maintaining third-party payor coverage and adequate reimbursement; and - maintaining a continued acceptable safety profile of the products following approval. Many of these factors are beyond our control, and it is possible that none of our drug candidates will ever obtain regulatory approval even if we expend substantial time and resources seeking such approval. If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our drug candidates. For example, our business could be harmed if results of the clinical trials of QN-302, Pan-RAS or any other drug candidates vary adversely from our expectations.

Trade Secrets2 | 8.0%

Trade Secrets - Risk 1

The term of our in-licensed patents may be inadequate to protect our competitive position on our products.

Given the amount of time required for the development, testing and regulatory review of drug candidates, our in-licensed patents protecting such candidates might expire before or shortly after such candidates are commercialized. In such an event (and if we are unable to obtain patent term extension or the term of any such extension is less than we request), our competitors and other third parties may be able to obtain approval of competing products following patent expiration and take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case. Generic competition usually results in serious price erosion for the original drug brand.

Trade Secrets - Risk 2

If we are unable to obtain and maintain sufficient patent protection for our therapeutic product candidates, or if the scope of the patent protection is not sufficiently broad, third parties, including our competitors, could develop and commercialize products similar or identical to ours, and our ability to commercialize our product candidates successfully may be adversely affected.

Our commercial success depends significantly on our ability to protect our proprietary (and exclusively in-licensed) product candidates or technologies that we believe are important to our business, including pursuing, obtaining and maintaining patent protection in the United States and other countries intended to cover the composition of matter of our product candidates, the methods of use, related technologies, and other inventions that are important to our business. In addition to patent protection, we also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. If we do not adequately pursue, obtain, maintain, protect or enforce our intellectual property, third parties, including our competitors and/or collaborators, may be able to erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability. Moreover, depending on the terms of any license agreements to which we may become a party, we may not have the right to control the preparation, filing, and prosecution of patent applications, or to maintain or defend the patents, covering technology licensed from third parties. Therefore, these patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patents, whether any issued patents will be found invalid and unenforceable or will be threatened by third parties or whether any issued patents will effectively prevent others from commercializing competing technologies and product candidates. Our licensors have not filed patent applications in every jurisdiction, and some filings are only pending in the United States. Moreover, because the issuance of a patent, although presumptive, is not conclusive as to its inventorship, scope, validity or enforceability, our licensors' patents or pending patent applications may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or in the patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical products and technologies or limit the duration of the patent protection of our products and technologies. Such challenges also may result in substantial cost and require significant time from our scientists and management, even if the eventual outcome is favorable to us. Our licensors' pending and future patent applications may not result in patents being issued that protect our product candidates and technologies, in whole or in part, or that effectively prevent others from commercializing competitive products and technologies. Even if the patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us or otherwise provide us with any competitive advantage. Our competitors and other third parties may be able to circumvent our licensors' patents by developing similar or alternative products or technologies in a non-infringing manner. Our competitors and other third parties may also seek approval to market their own products and technologies similar to or otherwise competitive with our products and technologies. Alternatively, our competitors or other third parties may seek to market generic versions of any approved products by submitting abbreviated NDAs to the FDA during which process they may claim that patents owned by us are invalid, unenforceable or not infringed. In these circumstances, we may need to defend or assert our licensors' patents, or both, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our licensors' patents invalid or unenforceable, or that our competitors are competing in a non-infringing manner. Thus, even if we have in-licensed valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives.

Technology1 | 4.0%

Technology - Risk 1

We rely significantly upon information technology, and any failure, inadequacy, interruption or security lapse of that technology, including any cyber security incidents, could harm our ability to operate our business effectively and result in a material disruption of our product development programs.

We utilize information technology systems to transmit and store information, including sensitive personal information and proprietary or confidential information, and otherwise to support our business and process. In the future, our systems may prove inadequate to our business needs and necessary upgrades may not operate as designed, which could result in excessive costs or disruptions in portions of our business. In particular, any disruptions, delays or deficiencies from our enterprise resource planning systems could adversely affect our ability to, among other matters, process orders, procure supplies, manufacture and ship products, send invoices and track payments, fulfill contractual obligations or otherwise operate our business. We could also be subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of information maintained in the information systems and networks of our company. Outside parties may attempt to penetrate our systems or those of our partners or fraudulently induce our employees or employees of our partners to disclose sensitive information to gain access to our data. Like other companies, we may experience threats to our data and systems, including malicious codes and computer viruses, cyber-attacks or other system failures. Furthermore, a security breach could be facilitated by ineffective protection measures, employee errors or omissions, and malfeasance. Despite our efforts to protect against cyber-attacks and security breaches, hackers and other cyber criminals are using increasingly sophisticated and constantly evolving techniques, and we may need to expend substantial additional resources to continue to protect against potential security breaches or to remediate problems caused by such attacks or any breach of our safeguards. Any system failure, accident or security breach that causes interruptions in our operations, for us or our partners, could result in a material disruption of our product development programs and business operations, in addition to possibly requiring substantial expenditures of resources to remedy. For example, the loss of clinical trial data from completed clinical trials could result in delays in our regulatory approval efforts and we could incur significant increases in costs to recover or reproduce the data. The risk of cyber incidents could also be increased by cyberwarfare in connection with the ongoing war in Ukraine, including potential proliferation of malware from the conflict into systems unrelated to the conflict. To the extent that any disruption or security breach results in a loss of, or damage to, our data or applications, or inappropriate public disclosure of confidential or proprietary information, we may incur liabilities and the further development of our product candidates may be delayed.

Production

Total Risks: 4/25 (16%)Above Sector Average

Manufacturing2 | 8.0%

Manufacturing - Risk 1

Manufacturing pharmaceutical products is complex and subject to product loss for a variety of reasons. We contract with third parties for the manufacture of our product candidates for preclinical testing and clinical trials and expect to continue to do so for commercialization. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.

We rely, and expect to continue to rely, on third parties for the manufacture of our products for preclinical and any clinical testing, as well as for future commercial manufacture if any of our product candidates obtain regulatory approval. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts. We may be unable to establish any agreements with third-party manufacturers or to do so on favorable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: - reliance on the third-party for regulatory, compliance and quality assurance; - operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier or the issuance of an FDA Form 483 notice or warning letter; - the possible breach of the manufacturing agreement by the third-party; and - the possible termination or nonrenewal of the agreement by the third-party at a time that is costly or inconvenient for us. We do not have manufacturing agreements in place for any of our current drug candidates. We acquire many key materials on a purchase order basis. As a result, we do not have long-term committed arrangements with respect to our product candidates and other materials. If we obtain regulatory approval for any of our product candidates, we will need to establish an agreement for commercial manufacture with a third-party. Any performance failure on the part of our existing or future manufacturers could delay clinical development or regulatory approval. We do not currently have arrangements in place for redundant supply or a second source for bulk drug substance for QN-302 or Pan-RAS.

Manufacturing - Risk 2

Adverse side effects or other safety risks associated with our drug product candidates could delay or preclude approval, cause us to suspend or discontinue any clinical trials or abandon further development, limit the commercial profile of an approved label, or result in significant negative consequences following regulatory approval, if any.

Results of our current and planned clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable side effects caused by our products could result in the delay, suspension or termination of clinical trials by us or the FDA for a number of reasons. Moreover, if our products are associated with undesirable side effects in clinical trials or have characteristics that are unexpected, we may elect to abandon or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for our products, if approved. We may also be required to modify our study plans based on findings in our clinical trials. Many drug candidates that initially showed promise in early stage testing have later been found to cause side effects that prevented further development. In addition, regulatory authorities may draw different conclusions or require additional testing to confirm these determinations. It is possible that as we test our drug candidates in larger, longer and more extensive clinical trials, including with different dosing regimens, or as the use of our drug candidates becomes more widespread following any regulatory approval, illnesses, injuries, discomforts and other adverse events that were observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by patients.

Employment / Personnel1 | 4.0%

Employment / Personnel - Risk 1

Our future success depends on our ability to retain key employees and to attract, retain and motivate qualified personnel.

We are highly dependent on Michael Poirier, our Chief Executive Officer and Chairman, and Christopher Lotz, our Vice President and Chief Financial Officer. In addition, the rest of our team has been sharply reduced due to rightsizing, voluntary departures and the disposition of our Qualigen, Inc. diagnostics-products subsidiary – we currently have only two other employees. Our ability to compete depends upon our ability to attract, retain and motivate highly skilled and experienced personnel with scientific, clinical, regulatory, manufacturing and management skills and experience. We may not be able to attract or retain qualified personnel in the future. Many of the companies against which we compete have greater financial and other resources, different risk profiles and a longer history in the industry than we do. Our competitors may provide higher compensation, more diverse opportunities and/or better opportunities for career advancement. Any or all of these competing factors (as well as our own limited resources) may limit our ability to attract and retain high quality personnel, which could negatively affect our ability to successfully develop and commercialize our product candidates and to grow our business and operations as currently contemplated.

Supply Chain1 | 4.0%

Supply Chain - Risk 1

We rely, and intend to continue to rely, on third parties to conduct our preclinical studies and clinical trials and perform some of our research and preclinical studies. If these third parties do not satisfactorily carry out their contractual duties, fail to comply with applicable regulatory requirements or do not meet expected deadlines, our development programs may be delayed or subject to increased costs or we may be unable to obtain regulatory approval.

We are dependent on third parties to conduct our planned preclinical studies and clinical trials of our drug product candidates. The timing of the initiation and completion of these trials will therefore be partially controlled by such third parties and may result in delays to our development programs. We have relied heavily on UofL for preclinical studies related to Pan-RAS, and we expect to rely heavily on CROs and sponsored academic researchers for any further preclinical studies. As to any clinical trials, we expect to rely on CROs, sponsored academic researchers, clinical investigators and/or consultants to play a significant role in the conduct of these trials and the subsequent collection and analysis of data. However, we will not be able to control all aspects of their activities. Nevertheless, we are responsible for ensuring that each clinical trial is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, including GCP, requirements, and our reliance on the CROs and other third parties does not relieve us of our regulatory responsibilities. There is no guarantee that any such CROs, clinical trial investigators and/or other third parties on which we rely will devote adequate time and resources to our development activities or perform as contractually required. If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, otherwise perform in a substandard manner, or terminate their engagements with us, the timelines for our development programs may be extended or delayed or our development activities may be suspended or terminated. If one of our clinical trial site terminates for any reason, we may experience the loss of follow-up information on subjects enrolled in such clinical trial unless we are able to transfer those subjects to another qualified clinical trial site, which may be difficult or impossible. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for our drug product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our products.

Legal & Regulatory

Total Risks: 2/25 (8%)Below Sector Average

Regulation2 | 8.0%

Regulation - Risk 1

The development and commercialization of pharmaceutical and device products are subject to extensive regulation, and we may not obtain regulatory approvals for any product candidates, on a timely basis or at all.

The clinical development, manufacturing, labeling, packaging, storage, recordkeeping, advertising, promotion, export, import, marketing, distribution, adverse event reporting, including the submission of safety and other post-marketing information and reports, and other possible activities relating to drug product candidates such as ours are subject to extensive regulation.

Regulation - Risk 2

Our right to use our "shelf" Form S-3 registration statement is sharply limited.

We filed a Form S-3 "shelf" registration statement with the SEC for the issuance of up to $150,000,000 of securities, and the SEC declared the registration statement effective on August 5, 2022. However, due to the "baby shelf" rules adopted by the SEC, the maximum amount of securities we can sell under this registration is now limited to one-third of our public float. Because our public float is very modest (e.g., $2.9 million at December 31, 2023), the maximum amount we could sell using this registration statement was under $1.0 million at that time. Therefore, the registration statement no longer constitutes an important tool for accessing the public markets to satisfy our needs for capital.

Macro & Political

Total Risks: 1/25 (4%)Below Sector Average

Natural and Human Disruptions1 | 4.0%

Natural and Human Disruptions - Risk 1

We or the third parties upon whom we depend may be adversely affected by natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

We are located in southern California and are subject to risks posed by natural disasters, including wildfires, earthquakes and severe weather that may interfere with our operations. Extreme weather events and other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects. If a natural disaster, power outage or other event occurred that damaged critical infrastructure, such as the facilities of our third-party clinical sites or contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. Any disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event.

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?

Risk factors are any situations or occurrences that could make investing in a company risky.

The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.

They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.

It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.

How do companies disclose their risk factors?

Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.

Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.

Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.

According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.

How can I use TipRanks risk factors in my stock research?

Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.

You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.

Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.

A simplified analysis of risk factors is unique to TipRanks.

What are all the risk factor categories?

TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.

1. Financial & Corporate

Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.

2. Legal & Regulatory

Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
Regulation – risks related to compliance, GDPR, and new legislation.
Environmental / Social – risks related to environmental regulation and to data privacy.
Taxation & Government Incentives – risks related to taxation and changes in government incentives.

3. Production

Costs – risks related to costs of production including commodity prices, future contracts, inventory.
Supply Chain – risks related to the company’s suppliers.
Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.

4. Technology & Innovation

Innovation / R&D – risks related to innovation and new product development.
Technology – risks related to the company’s reliance on technology.
Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.

5. Ability to Sell

Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
Competition – risks related to the company’s competition including substitutes.
Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
Brand & Reputation – risks related to the company’s brand and reputation.

6. Macro & Political

Economy & Political Environment – risks related to changes in economic and political conditions.
Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
International Operations – risks related to the global nature of the company.
Capital Markets – risks related to exchange rates and trade, cryptocurrency.

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