Quantum Biopharma Announces Closing of Second Tranche

Rhea-AI Summary

Quantum BioPharma (NASDAQ:QNTM) has announced the closing of a second tranche of its previously announced offering from December 5, 2024. The company has issued 500 Debenture Units for $500,000. The proceeds will be allocated to the ongoing development of the company's business model and general working capital purposes. All securities issued in this second tranche are subject to a four-month and one-day statutory hold period from the issuance date. The securities are not registered under the U.S. Securities Act and cannot be offered or sold in the United States without registration or an applicable exemption.

Positive

• Secured additional $500,000 in funding through debenture units
• Strengthens working capital position

Negative

• Potential dilution for existing shareholders through new securities issuance
• Securities subject to 4-month hold period limiting liquidity

Insights

Financial Analyst

This $500,000 second tranche closing represents a relatively modest capital raise for Quantum BioPharma through convertible debentures. The financing, while providing additional working capital, appears to be a bridge funding solution rather than a substantial capital injection. The terms being unregistered securities with a 4-month hold period suggests this was a private placement targeting sophisticated investors. For a company with a $6.1M market cap, this represents about 8.2% dilution potential, which is significant enough to impact existing shareholders. The lack of specific use of proceeds beyond general working capital raises some concerns about cash burn rate and operational runway. This type of financing often indicates cash flow pressures and access to more traditional funding sources, which could signal underlying financial challenges.

Legal Expert

The regulatory compliance elements of this financing are noteworthy. The explicit mention of securities law restrictions, particularly regarding U.S. registration exemptions and the statutory hold period, reflects standard private placement protocols. The multi-exchange listing (NASDAQ, CSE and Frankfurt) adds complexity to the compliance requirements. The boilerplate disclaimers and careful wording around U.S. securities laws indicate this was structured as a Regulation S offering outside the United States, limiting the potential investor pool but simplifying regulatory requirements. The careful structuring shows proper legal diligence but also highlights the constraints under which the company is operating to raise capital.

TORONTO, ON / ACCESSWIRE / December 20, 2024 / Quantum BioPharma Ltd. (NASDAQ:QNTM)(CSE:QNTM)(FRA:0K91) ("Quantum BioPharma" or the "Company"), is pleased to announce that it has closed a second tranche ("Second 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 Second Tranche for the ongoing development of the Company's business model and for general working capital purposes.

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

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. Quantum BioPharma retains 100% of the rights to develop similar products 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

SOURCE: Quantum Biopharma Ltd.

View the original press release on accesswire.com

FAQ

How much did Quantum BioPharma (QNTM) raise in its second tranche offering?

Quantum BioPharma raised $500,000 through the issuance of 500 Debenture Units in its second tranche offering announced on December 20, 2024.

What is the hold period for QNTM's second tranche securities issued on December 20, 2024?

The securities issued in the second tranche are subject to a statutory hold period of four months and one day from the date of issuance.

How will Quantum BioPharma (QNTM) use the proceeds from the second tranche?

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

Can U.S. investors purchase the new securities issued by QNTM in December 2024?

No, the securities cannot be offered or sold in the United States without registration under the U.S. Securities Act of 1933 or an applicable exemption from registration requirements.