Telix QSAM Inc (QSAM)

[BuddyWhazhizname]

Different year, same story.

I see Nelson and Bolin have worked their magic again:

Management believes that the opportunity presented to the Company with the licensing of Sm-153 DOTMP must be viewed in connection with our broader strategic plan for 2020. Specifically, it is critical for the Company to take decisive action to reduce our debt burden, which has started to mature including some significant obligations which are currently in default or will be in default in the coming periods. We believe there is a path forward that includes transferring the ABS licensed technology we control related to our compost and soil business to EPH, as well as a termination of the management agreement, in return for a forgiveness of approximately $1 million in loans as of the end of the second quarter of 2020. As part of this plan, we would seek to redeem and retire or covert into equity approximately $4.2 million of Bridge Notes principal and interest. If we convert these notes to equity, that would cause significant dilution for current shareholders.

(Q2 report, page 23)

As of June 30, 2020, approximately $2,801,908 of the original issuance principal amount and $1,116,914 of accrued interest on the Bridge Notes matured and is currently in default. Management is working on a plan to extend the term or convert into equity these and the other Bridge Notes, as discussed above. Any equity conversion would be highly dilutive to our current shareholders. If we cannot repay these obligations or otherwise come to agreement with the holders, our ability to operate will be materially adversely affected, if not completely shut down and the Company may be forced to seek bankruptcy protection.

To continue operations in 2020, we will need to raise additional capital for the Company. We have a verbal commitment with the primary investor of EPH that they will continue to provide funding to the Company either as Bridge Notes, other Q2 securities, or advances on management fees, to maintain our operations through at least the end of the third quarter of 2020; however, we do not have any formal written agreement and there can be no guarantee that this investor will continue to fund our operations in the future.

Toxic debt followed by massive dilution was Nelson's special talent at CYPW. After he couldn't sell any more CYPW stock, he got a license for their wonder technology and started QPWR. He sold one system to a customer, took a down payment, defaulted on that contract and switched the company to composting wonder technology.

Total assets on June 30 was $19,601 in cash. Current liabilities were $5,048,968. After all those millions in cash investors have put in, the company literally doesn't even own a stapler..... And they had funding to continue operating until, oh, two weeks ago.

The plan now? Well, they are going to sell their "ABS licensed technology" to their composting sugar daddy EPH. How did that go?:

In the second quarter of 2019, the Company licensed soil technology called ABS from Agrarian Technologies, Inc., for which the Company is currently pursuing sales and distributorship agreements but has not yet been able to generate any material revenue from these activities. The Company pays a minimum royalty under this license agreement to the licensor of $7,500 per quarter, $30,000 of which has been accrued but not paid as of June 30, 2020; and then pays royalties on the sales of the ABS product based on volume sold to the extent such volume royalties exceed the minimum royalties.

They never saw a penny from that company-saving wonder technology (and it's hard to understand how they can talk about holding a license when they're a year behind in royalties...).

They are giving up the composting management contract with EPH, which was the company's only source of revenue, in exchange, potentially, for a small reduction in debt.

But now they've got a new company-saving wonder technology, Sm-153 DOTMP CycloSam® .

It came out of a company called IsoTherapeutics Group, LLC, which appears to be a real company. Their trademark was issued in 2011. The timeline at IsoTherapeutics:

October 2016

IsoTherapeutics Group, LLC spun out its CycloSam® bone agent technology into a separate company, CycloSam Therapeutics, LLC after securing seed funding from private investors>.

June 2017

CycloSam Therapeutics, Inc. was incorporated in Delaware.

September 2018

CycloSam Therapeutics, Inc. changes name to IGL Pharma, Inc.

In October 2018 this drug was licensed exclusively to Oncolix, Inc. (OTCQB: ONCX) Last trade on Friday was at $0.000001

It does appear that a clinical trial of up to 20 patients is in the "Not yet recruiting" stage. Estimated Study Completion Date : September 2023, provided they start in November 2020.

The details of the deal:

The License Agreement is for 20 years or until the expiration of the multiple patents covered under the license, and requires multiple milestone based payments including: $60,000 and other expense reimbursements within 60 days of signing, up to $150,000 as the Technology advances through multiple stages of clinical trials, and $1.5 million upon commercialization. IGL will also receive equity in QSAM equal to 5% of the company to be issued within 60 days of signing. Upon commercialization, IGL will receive an on-going royalty equal to 4.5% of Net Sales, as defined in the License Agreement, and up to 50% of any Sublicense Consideration received by QSAM, as defined in the License Agreement.

So, yeah, we've got this wonder drug that IsoTherapeutics didn't think worth keeping, spun it out as CycloSam Therapeutics that got investment and didn't go anywhere, then the principals licensed to a nearly bankrupt company (ONCX), and now to another nearly bankrupt company for a cash consideration of $60,000. And that's with their fantastic management team that is so experienced and successful in the sector.... You'd think $60K would be pocket change to those guys.

Uh-oh, another deal breaker. The license agreement says:

3.2 Fund Raise and Board Seat. QSAM shall have 180 days from the Effective Date to raise a minimum of $1 million in equity or debt provided the debt has no security interests on the Product.

Effective date was April 20, 2020. That was the 111th day of the year, and today is the 285th. Hmmm, we're 174 days into that 180 day deadline.

They certainly haven't sold a million in stock lately and it's hard to imagine anyone loaning them another million without security.

Exhibit A of that filing shows only two patents have been issued, 12 are pending and 6 patent applications have expired. IGL is probably eager for the million from QSAM to finish those remaining applications before they expire, too. Funny how that illustrious management team doesn't think those patents are worth any of their own money.

But, hey, that Phase 1 clinical trial should be in by September 2023, and if that goes well, they can raise some more money and start the Phase 2 clinical trial, then after that the Phase 3 clinical trial. After that, they can start to make some money.