EXPLANATORY NOTE
Unaudited Interim Financial Statements as of, and for the period ended, June 30, 2022, and Related Management’s Discussion and Analysis of Financial Condition and Results of Operations
On August 18, 2022, Quoin Pharmaceuticals Ltd. (the “Company”) issued unaudited interim financial statements as of, and for the period ended, June 30, 2022, together with the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated by reference herein.
Business Update
The Company previously reported that, on April 22, 2022, the Company received a letter from the Listing Qualifications staff (the “Staff”) of The Nasdaq Stock Market, LLC (“Nasdaq”) notifying it that the Company was no longer in compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(1) requires listed companies to maintain stockholders’ equity of at least $2.5 million. In addition, as of April 21, 2022, the Company did not meet the alternative continued listing requirements based on market value of listed securities or net income from continuing operations. Based on the Company’s Form 6-K, dated August 10, 2022, the Staff has determined that the Company complies with the minimum stockholder’s equity requirement. However, if the Company fails to evidence compliance upon filing its Form 6-K with financial statements for the quarter ending September 30, 2022, it may be subject to delisting. At that time, the Staff will provide written notification to the Company, and the Company may then appeal the Staff’s determination to a Hearings Panel.
The Company also previously reported that, on June 10, 2022, the Company received a letter from the Nasdaq Listing Qualifications staff notifying it that the closing bid price per American Depositary Share (“ADS”) was below the required minimum of $1.00 for a period of 30 consecutive business days and that it did not meet the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2). Since then, the Staff has determined that for the 10 consecutive business days, from August 1 to August 12, 2022, the closing bid price of the Company’s ADSs has been at $1.00 per ADS or greater, and the Company has regained compliance with the minimum bid price requirement.
As of the date of the unaudited consolidated financial statements included in this report, the Company believes that its stockholders’ equity exceeds $2.5 million due to the completion of its previously reported public offering of ordinary shares represented by ADSs and pre-funded warrants, with each ADS and pre-funded warrant accompanied by an ordinary warrant (the “Offering”), for aggregate net proceeds of approximately $15.0 million, on August 9, 2022.
However, there can be no assurance that the Company will be able to maintain compliance with Nasdaq’s minimum stockholders’ equity requirement or minimum bid-price requirement for continued listing. If the Company’s ADSs are delisted from Nasdaq, it will have material negative impacts on the actual and potential liquidity of the Company’s securities, as well as material negative impacts on its ability to raise future capital.
Cautionary Note Regarding Forward-Looking Statements
Certain information included in this report may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” “believe,” “should,” “intend,” “project” or other similar words, but are not the only way these statements are identified. Unless context indicates or suggests otherwise, “we”, “our”, or “us” in this section refers to the consolidated operations of Quoin Pharmaceuticals Ltd.
These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections of results of operations or of financial condition, expected capital needs and expenses, statements relating to the research, development, completion and use of our products, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.
Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.
Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:
| ● | our history of losses and needs for additional capital to fund our operations and our expected use of net proceeds of the Offering; |
| ● | our limited operating history and the difficulties encountered by a small developing company; |
