Full Press Release Details
Financial statements as of September 30, 2021 and for the three
and nine months ended September 30, 2021 and 2020 (Unaudited)
QUOIN PHARMACEUTICALS, INC.
| Contents | |
| Page | |
| Financial Statements (Unaudited) | |
| Condensed Balance Sheets as of September 30, 2021 and December 31, 2020 | 2 |
| Condensed Statements of Operations and Changes in Stockholders' Deficit for the nine months ended September 30, 2021 and 2020 | 3 |
| Condensed Statements of Operations and Changes in Stockholders' Deficit for the three months ended September 30, 2021 and 2020 | 4 |
| Condensed Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 | 5 |
| Notes to condensed financial statements | 6 - 25 |
QUOIN PHARMACEUTICALS, INC.
Condensed Balance Sheets (Unaudited)
| September 30, 2021 | December 31, 2020 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 652,792 | $ | 323,832 | ||||
| Deferred offering costs | 305,917 | 141,338 | ||||||
| Total current assets | 958,709 | 465,170 | ||||||
| Intangible assets, net | 834,615 | 912,648 | ||||||
| Deferred loan costs | 50,000 | |||||||
| Total assets | $ | 1,843,324 | $ | 1,377,818 | ||||
| Liabilities and Stockholder's deficit | ||||||||
| Current Liabilities | ||||||||
| Accrued expenses | $ | 905,168 | $ | 960,847 | ||||
| Accounts payable | 517,795 | - | ||||||
| Accrued license acquisition | 500,000 | 875,000 | ||||||
| Accrued interest | 563,318 | 47,042 | ||||||
| Due to officers | 4,873,733 | 4,888,913 | ||||||
| Bridge note payable | 5,000,000 | - | ||||||
| Convertible notes payable | 1,213,313 | 1,213,313 | ||||||
| Total current liabilities | 13,573,327 | 7,985,115 | ||||||
| Warrant liability | 4,522,844 | - | ||||||
| Total liabilities | 18,096,171 | 7,985,115 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders' deficit | ||||||||
| Common stock, par value $0.01 per share, 10,000,000 shares authorized - 1,000,000 shares issued and outstanding at September 30, 2021 and December 31, 2020 | 100 | 100 | ||||||
| Accumulated deficit | (16,252,947 | ) | (6,607,397 | ) | ||||
| Total stockholders' deficit | (16,252,847 | ) | (6,607,497 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 1,843,324 | $ | 1,377,818 |
The accompanying footnotes are an integral part of these statements
QUOIN PHARMACEUTICALS, INC.
Condensed Statements of Operations and Changes in Stockholders'
Nine months ended June 30,
| 2021 | 2020 | |||||||
| Operating Expenses | ||||||||
| General and administrative | $ | 2,525,366 | $ | 949,143 | ||||
| Research and development | 556,064 | 127,922 | ||||||
| Total operating expenses | 3,081,430 | 1,077,065 | ||||||
| Other Expenses | ||||||||
| Fair value adjustment to bridge note payable | 1,250,000 | |||||||
| Warrant liability expense | 4,522,844 | |||||||
| Financing expense | 275,000 | |||||||
| Interest expense | 516,276 | - | ||||||
| Total other expenses | 6,564,120 | |||||||
| Net loss before income taxes | (9,645,550 | ) | (1,077,065 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net loss | (9,645,550 | ) | (1,077,065 | ) | ||||
| Accumulated deficit - beginning of period | (6,607,397 | ) | (4,512,033 | ) | ||||
| Accumulated deficit - end of period | $ | (16,252,947 | ) | $ | (5,589,098 | ) | ||
| Loss per share: Basic and diluted | $ | (9.65 | ) | $ | (1.08 | ) | ||
| Weighted average shares outstanding: | ||||||||
| Basic | 1,000,000 | 1,000,000 | ||||||
| Fully-diluted | 1,000,000 | 1,000,000 |
The accompanying footnotes are an integral part of these statements
QUOIN PHARMACEUTICALS, INC.
Condensed Statements of Operations and Changes in Stockholders'
Three months ended September 30,
| 2021 | 2020 | |||||||
| Operating Expenses | ||||||||
| General and administrative | $ | 1,042,783 | $ | 302,123 | ||||
| Research and development | 259,996 | 26,010 | ||||||
| Total operating expenses | 1,302,779 | 328,133 | ||||||
| Other Expenses | - | |||||||
| Warrant liability expense | (146,808 | ) | - | |||||
| Interest expense | 248,165 | - | ||||||
| Total other expenses | 101,357 | |||||||
| Net loss before income taxes | (1,404,136 | ) | (328,133 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net loss | (1,404,136 | ) | (328,133 | ) | ||||
| Accumulated deficit - beginning of period | (14,848,811 | ) | (5,260,965 | ) | ||||
| Accumulated deficit - end of period | $ | (16,252,947 | ) | $ | (5,589,098 | ) | ||
| Loss per share: Basic and diluted | $ | (1.40 | ) | $ | (0.33 | ) | ||
| Weighted average shares outstanding: | ||||||||
| Basic | 1,000,000 | 1,000,000 | ||||||
| Fully-diluted | 1,000,000 | 1,000,000 |
The accompanying footnotes are an integral part of these statements
QUOIN PHARMACEUTICALS, INC.
Condensed Statements of Cash Flows (Unaudited)
Nine months ended June 30,
| 2021 | 2020 | |||||||
| Cash flows used in operating activities: | ||||||||
| Net Loss | $ | (9,645,550 | ) | $ | (1,077,065 | ) | ||
| Fair value adjustment to bridge note payable | 1,250,000 | |||||||
| Warrant liability expense | 4,522,844 | - | ||||||
| Financing expense | 275,000 | - | ||||||
| Amortization of intangibles | 78,032 | 78,032 | ||||||
| Changes in assets and liabilities: | ||||||||
| Increase in accounts payable and accrued expenses | 462,117 | 203,515 | ||||||
| Increase in accrued interest | 516,276 | - | ||||||
| Net cash used in operating activities | (2,541,281 | ) | (795,518 | ) | ||||
| Cash flows used in investing activities | ||||||||
| Payment for license acquisition | (375,000 | ) | - | |||||
| Net cash used in investing activities | (375,000 | ) | - | |||||
| Cash flows provided by financing activities: | ||||||||
| Increase in deferred offering costs | (164,578 | ) | - | |||||
| Increase in deferred costs | (50,000 | ) | - | |||||
| Increase in due to officers | 139,285 | 795,518 | ||||||
| Payment of amounts due to officers | (154,466 | ) | - | |||||
| Proceeds from issuance of Bridge Notes, net | 3,475,000 | - | ||||||
| Net cash provided by financing activities | 3,245,241 | 795,518 | ||||||
| Net change in cash | 328,961 | - | ||||||
| Cash - beginning of period | 323,832 | - | ||||||
| Cash - end of period | $ | 652,792 | - |
The accompanying footnotes are an integral part of these statements
QUOIN PHARMACEUTICALS, INC.
Notes to Financial Statements
September 30, 2021 and December 31, 2020
NOTE 1 - ORGANIZATION AND BUSINESS
Quoin Pharmaceuticals, Inc. ("Quoin"
or the "Company") was incorporated in Delaware on March 5, 2018 ("Inception") and established in 2017 as
an Irish entity. The Irish entity did not have any operations, was merged into a wholly-owned subsidiary of Quoin which was then dissolved
The Company was established as a specialty pharmaceutical
company dedicated to developing products that treat rare and orphan diseases for which there are currently no approved treatments. The
first lead product is QRX003, a once daily, topical lotion comprised of a broad-spectrum serine protease inhibitor, formulated with the
proprietary Invisicare technology, to treat Netherton Syndrome (NS). In addition, the Company intends to pursue the clinical development
of QRX003 in additional rare dermatological diseases including Peeling Skin Syndrome, SAM Syndrome and Palmoplantar Keratoderma.
To date, the Company has not commercialized any
products and has not generated any revenue. The majority of the Company's operating expenses since inception have been associated
with completing due diligence on various technologies, asset technology acquisitions, negotiating and finalizing potential funding agreements,
and building its pipeline of preclinical product candidates. The founders of the Company funded all Company related expenditures through
2021, the Company and Cellect Biotechnology Ltd. ("Cellect"), a corporation organized under the laws of Israel and Nasdaq
Capital Market listed company, announced that the Boards of Directors of the two companies unanimously approved an Agreement and Plan
of Merger and Reorganization (the "Merger Agreement") pursuant to which a wholly owned subsidiary of Cellect will merge with
and into Quoin (the "Merger"), with Quoin surviving as a wholly-owned subsidiary of Cellect, and the operating business of
Cellect will be spun out into a new entity. Each share of Quoin Common Stock outstanding immediately prior to the Effective Time, as
defined will be converted solely into the right to receive a number of Cellect Ordinary Shares equal to the Exchange Ratio, as defined
which will trade in the United States in the form of American Depositary Shares ("ADS's," each ADS representing 400
Ordinary Shares which reflects Cellect's 4:1 ratio change of
their ADS's as of September 24, 2021) and constitutes the "Merger Consideration".
The Merger was completed on October 28,
2021. See Note 14- Subsequent Events.
NOTE 2 - LIQUIDITY AND ABILITY TO CONTINUE AS GOING CONCERN
The accompanying financial statements have been
prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course
The Company has incurred net losses every year
since inception and had an accumulated deficit of approximately $16.3 million at September 30, 2021. The Company will require substantial
additional capital for its contemplated research and development activities. These factors raise substantial doubt regarding the Company's
ability to continue as a going concern.
QUOIN PHARMACEUTICALS, INC.
Notes to Financial Statements
September 30, 2021 and December 31, 2020
On March 24, 2021, in connection with entering
into Merger Agreement, the Company also entered into a Bridge Purchase Agreement related to Bridge Financing and a Securities Purchase
Agreement related to Primary Finanicng (See Notes 1 and 5). The Merger and the Primary Financing were completed on October 28, 2021
(See Note 14 - Subsequent Events). The Company is also in the process of negotiating a line of credit of credit with a bank.
Obtaining additional financing to support the
research and development of the Company's therapeutic targets and its other operating requirements are necessary for the Company
to continue operations. If the Company is unable to obtain additional funding, the development of its product candidates will be impacted
and the Company would likely be forced to delay, reduce, or terminate some or all of its development programs, all of which could have
a material adverse effect on the Company's business and the financial statements.
These condensed financial statements do not include
any adjustments related to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities
that might result from the outcome of this uncertainty.
NOTE 3 - SUMMARY OF SIGNIFICANT POLICIES
Basis of presentation:
The unaudited condensed financial statements
have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") for interim
financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes
required to be presented for complete financial statements. The accompanying unaudited condensed financial statements reflect all adjustments
(consisting only of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of the results
for the interim periods presented. The accompanying unaudited condensed Balance Sheet as of December 31, 2020 has been derived from
the audited financial statements for the year ended December 31, 2020, initially filed with the U.S. Securities and Exchange Commission
("SEC") on Form F-4 on June 16, 2021. The unaudited condensed financial statements and related disclosures should
be read in conjunction with the Company's audited financial statements and related notes.
The preparation of financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and
accompanying notes. Actual results could materially differ from those estimates. Management considers many factors in selecting appropriate
financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these
financial statements. In addition, other factors may affect estimates, including: expected business and operational changes, sensitivity
and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative
of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes
and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas,
among others: fair value of debt instruments and warrants, research and development expense recognition, intangible asset estimated useful
lives and impairment assessments, allowances of deferred tax assets, contingency recognition, and cash flow assumptions regarding going
concern considerations.
QUOIN PHARMACEUTICALS, INC.
Notes to Financial Statements
September 30, 2021 and December 31, 2020
Other risks and uncertainties:
The Company is subject to risks common to development
stage biopharmaceutical companies including, but not limited to, new technological innovations, dependence on key personnel, protection