Quantum Biopharma Announces Closing of First Tranche

Rhea-AI Summary

Quantum BioPharma (NASDAQ/CSE/FRA: QNTM) has announced the closing of the first tranche of its previously announced offering from December 5, 2024. The company has issued 500 Debenture Units raising CAD $500,000. The proceeds will be allocated to the company's ongoing business model development and general working capital. Securities issued in this tranche are subject to a four-month and one-day statutory hold period from issuance. The company's obligations under the Debentures are no longer collaterally secured by general security.

Positive

• Secured CAD $500,000 in additional funding

Negative

• Debentures are no longer secured by company's general security, increasing risk for debenture holders
• Dilutive financing through debenture units

Insights

Financial Analyst

The closing of a $500,000 debenture unit offering represents a relatively modest capital raise for Quantum BioPharma. While this provides some immediate working capital, the small size suggests near-term operational expansion capacity. The lack of collateral security on the debentures indicates higher risk for investors, potentially reflecting challenging market conditions or asset base. This initial tranche, being part of a larger announced offering, signals that the company may seek additional funding tranches, suggesting ongoing capital needs. For a company with a $7.8M market cap, this dilutive financing, while providing short-term liquidity, may pressure shareholder value.

Legal Expert

The structured nature of this financing, with a four-month statutory hold period and explicit exclusion of U.S. investors without registration, demonstrates careful regulatory compliance. The removal of collateral security from the debentures represents a significant legal modification that increases risk for debenture holders. The company's clear disclosure about registration exemptions and jurisdictional limitations helps mitigate regulatory risks but also restricts the potential investor base. This financing structure, while legally sound, suggests a complex balance between capital needs and regulatory requirements.

TORONTO, ONTARIO / ACCESSWIRE / December 13, 2024 / Quantum BioPharma Ltd. (NASDAQ:QNTM)(CSE:QNTM)(FRA:0K91) ("Quantum BioPharma" or the "Company"), is pleased to announce that it has closed an initial tranche ("First Tranche") of the offering announced on December 5, 2024 (the "December 5 NR") and has issued 500 Debenture Units (as defined in the December 5 NR) for $500,000.

The Company will use the proceeds from the First Tranche for the ongoing development of the Company's business model and for general working capital purposes.

All securities issued in the First Tranche are subject to a statutory hold period of four months and one day from the date of issuance.

The Company's obligations under the Debentures (as defined in the December 5 NR) are no longer collaterally secured by general security from the Company.

All amounts in this press release are expressed in Canadian dollars.

The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

About Quantum BioPharma Ltd.

Quantum BioPharma is a biopharmaceutical company dedicated to building a portfolio of innovative assets and biotech solutions for the treatment of challenging neurodegenerative and metabolic disorders and alcohol misuse disorders with drug candidates in different stages of development. Through its wholly owned subsidiary, Lucid Psycheceuticals Inc. ("Lucid"), Quantum BioPharma is focused on the research and development of its lead compound, Lucid-MS. Lucid-MS is a patented new chemical entity shown to prevent and reverse myelin degradation, the underlying mechanism of multiple sclerosis, in preclinical models. Quantum BioPharma invented UNBUZZD™ and spun out its OTC version to a company, Celly Nutrition Corp. ("Celly Nutrition"), led by industry veterans. Quantum BioPharma retains ownership of 25.71% (as of June 30, 2024) of Celly Nutrition at www.unbuzzd.com. The agreement with Celly Nutrition also includes royalty payments of 7% of sales from unbuzzd™ until payments to Quantum BioPharma total $250 million. Once $250 million is reached, the royalty drops to 3% in perpetuity. Additionally, Quantum BioPharma retains a large tax loss carry forward of approximately C$130 million and could be utilized in the future to offset tax payable obligations against future profits. Quantum BioPharma retains 100% of the rights to develop similar product or alternative formulations specifically for pharmaceutical and medical uses. Quantum BioPharma maintains a portfolio of strategic investments through its wholly owned subsidiary, FSD Strategic Investments Inc., which represents loans secured by residential or commercial property.

Forward-Looking Information

Certain information in this news release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "potential", "believe", "intend" or the negative of these terms and similar expressions. Forward-looking statements in this news release include statements relating to: the stated terms, use of proceeds, and timeline of the Offering; and the Company's issuance of the Debentures, Warrants (and the underlying Warrant Shares if exercised), and potential issuance of Shares (if the Debentures are converted).

Forward-looking information in this press release are based on certain assumptions and expected future events, including but not limited to: the Company has the ability to carry out the Offering as stated; and the Company has the ability to issue the Debentures, Warrants (and the underlying Warrant Shares if exercised), and Shares (if the Debentures are converted).

These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements, including but not limited to: the Company's inability to carry out the Offering as stated; and the Company's inability to issue the Debentures, Warrants (and the underlying Warrant Shares if exercised), and Shares (if the Debentures are converted), as well the reader is urged to refer to additional information relating to Quantum BioPharma, including its annual information form, can be located on the SEDAR+ website at www.sedarplus.ca and on the EDGAR section of the United States Securities and Exchange Commission's website at www.sec.gov for a more complete discussion of such risk factors and their potential effects.

Readers are cautioned that the foregoing list is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated.

Forward-looking statements contained in this press release are expressly qualified by this cautionary statement and reflect the Company's expectations as of the date hereof and are subject to change thereafter. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward- looking information, except as required by applicable law.

Contacts:

Quantum BioPharma Ltd.
Zeeshan Saeed, Founder, CEO and Executive Co-Chairman of the Board
Email: Zsaeed@quantumbiopharma.com
Telephone: (416) 854-8884

Investor Relations
Email: ir@quantumbiopharma.com, info@quantumbiopharma.com
Website: www.quantumbiopharma.com

Contact Information

Zeeshan Saeed
Founder, CEO and Executive Co-Chairman of the Board
zsaeed@quantumbiopharma.com
1-833-571-1811

SOURCE: Quantum Biopharma Ltd.

View the original press release on accesswire.com

FAQ

How much did Quantum BioPharma (QNTM) raise in its first tranche closing on December 13, 2024?

Quantum BioPharma raised CAD $500,000 through the issuance of 500 Debenture Units in the first tranche closing.

What is the hold period for QNTM's December 2024 debenture units?

The securities issued in the first tranche have a statutory hold period of four months and one day from the date of issuance.

How will QNTM use the proceeds from the December 2024 first tranche offering?

The proceeds will be used for the ongoing development of the Company's business model and for general working capital purposes.

Are QNTM's December 2024 debentures secured by company assets?

No, the company's obligations under the Debentures are no longer collaterally secured by general security from the Company.