Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |||
Apr. 13, 2022 | Dec. 31, 2022 | Mar. 10, 2023 | Jun. 30, 2022 | |
Document and Entity Information | ||||
Document Type | 10-K | |||
Document Period End Date | Dec. 31, 2022 | |||
Entity Central Index Key | 0001671502 | |||
Entity Registrant Name | Quoin Pharmaceuticals, Ltd. | |||
Document Annual Report | true | |||
Document Transition Report | false | |||
Entity File Number | 001-37846 | |||
Entity Incorporation, State or Country Code | L3 | |||
Entity Tax Identification Number | 92-2593104 | |||
Entity Address State Or Province | VA | |||
Entity Address, Address Line One | 42127 Pleasant Forest Court | |||
Entity Address, City or Town | Ashburn | |||
Entity Address, Postal Zip Code | 20148 | |||
City Area Code | 703 | |||
Local Phone Number | 980-4182 | |||
Title of 12(b) Security | American Depositary Shares | |||
Trading Symbol | QNRX | |||
Security Exchange Name | NASDAQ | |||
Entity Well-known Seasoned Issuer | No | |||
Entity Voluntary Filers | No | |||
Entity Current Reporting Status | Yes | |||
Entity Interactive Data Current | Yes | |||
Entity Filer Category | Non-accelerated Filer | |||
Entity Small Business | true | |||
Entity Emerging Growth Company | false | |||
Entity Shell Company | false | |||
Entity Public Float | $ 3,775,500 | |||
Current Fiscal Year End Date | --12-31 | |||
Document Fiscal Year Focus | 2022 | |||
Document Fiscal Period Focus | FY | |||
Amendment Flag | false | |||
Auditor Name | Friedman LLP | Marcum LLP | ||
Auditor Location | East Hanover, New Jersey | East Hanover, New Jersey | ||
Auditor Firm ID | 711 | 688 | ||
Ordinary shares | ||||
Document and Entity Information | ||||
Entity Common Stock, Shares Outstanding | 59,233,024,799 | |||
ADS | ||||
Document and Entity Information | ||||
Entity Common Stock, Shares Outstanding | 11,846,532 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 2,860,628 | $ 7,482,773 |
Investments | 9,992,900 | |
Less: Short-term portion | 516,584 | 715,474 |
Total current assets | 13,370,112 | 8,198,247 |
Prepaid expenses - long term | 383,390 | 300,000 |
Intangible assets, net | 704,561 | 808,604 |
Other assets | 50,000 | |
Total assets | 14,458,063 | 9,356,851 |
Current liabilities: | ||
Accounts payable | 605,600 | 923,239 |
Accrued expenses | 1,175,705 | 1,685,409 |
Accrued license acquisition | 250,000 | |
Accrued interest and financing expense | 1,146,251 | 743,840 |
Due to officers - short term | 600,000 | 600,000 |
Warrant liability | 373,599 | |
Total current liabilities | 3,527,556 | 4,576,087 |
Due to officers - long term | 3,523,733 | 4,123,732 |
Total liabilities | 7,051,289 | 8,699,819 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Treasury stock, 2,641,693 ordinary shares | (2,932,000) | (2,932,000) |
Additional paid in capital | 47,855,521 | 31,659,017 |
Accumulated deficit | (37,516,747) | (28,069,985) |
Total shareholders' equity | 7,406,774 | 657,032 |
Total liabilities and shareholders' equity | 14,458,063 | 9,356,851 |
ADS | ||
Shareholders' equity: | ||
Ordinary shares, no par value per share, 500,000,000,000 ordinary shares authorized - 24,233,024,799 (4,846,605 ADS's) ordinary shares issued and outstanding at December 31, 2022 and 3,354,650,799 (670,930 ADS's) at December 31, 2021 | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Ordinary shares, par value | $ 0 | $ 0 |
Ordinary shares, shares authorized | 500,000,000,000 | 500,000,000,000 |
Ordinary shares, shares issued | 24,233,024,799 | 3,354,650,799 |
Ordinary shares, shares outstanding | 24,233,024,799 | 3,354,650,799 |
Treasury Stock, ordinary shares | 2,641,693 | 2,641,693 |
ADS | ||
Ordinary shares, shares issued | 4,846,605 | 670,930 |
Ordinary shares, shares outstanding | 4,846,605 | 670,930 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating expenses | ||
General and administrative | $ 6,584,868 | $ 4,499,923 |
Research and development | 2,672,836 | 1,562,927 |
Total operating expenses | 9,257,704 | 6,062,850 |
Other (income) and expenses | ||
Forgiveness of accounts payable | (416,000) | |
Fair value adjustment to convertible notes payable | 1,250,000 | |
Warrant liability (income) expense | (77,237) | 12,784,329 |
Financing expense | 275,000 | |
Unrealized income | (1,307) | |
Interest income | (95,745) | |
Interest and financing expense | 714,081 | 1,090,409 |
Total other expense | 123,792 | 15,399,738 |
Net loss | (9,381,496) | (21,462,588) |
Deemed dividend on warrant modification | (65,266) | |
Net loss attributable to shareholders | $ (9,446,762) | $ (21,462,588) |
ADS | ||
Loss per ADS | ||
Basic | $ (3.90) | $ (67.96) |
Fully-diluted | $ (3.90) | $ (67.96) |
Weighted average number of ADS's outstanding | ||
Basic | 2,421,916 | 315,801 |
Fully-diluted | 2,421,916 | 315,801 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) | Common Stock ADS | Common Stock | Treasury Stock | Additional Paid In Capital | Accumulated Deficit | ADS | Total |
Balance at beginning of year at Dec. 31, 2020 | $ 240,292 | $ 100 | $ (6,607,397) | $ (6,607,297) | |||
Balance at beginning of year (in shares) at Dec. 31, 2020 | 1,201,460,800 | ||||||
Net loss | (21,462,588) | (21,462,588) | |||||
Conversion of "2020 Notes" into ordinary shares | 5,183 | 1,213,313 | 1,213,313 | ||||
Conversion of "2020 Notes" into ordinary shares (in shares) | 25,913,600 | ||||||
Sale of equity securities, including conversion of "Bridge Notes" | 342,100 | 17,000,000 | 17,000,000 | ||||
Sale of equity securities, including conversion of "Bridge Notes" (in shares) | 1,710,500,800 | ||||||
Issuance of ADS and Pre-Funded Warrants, net | 342,100 | 17,000,000 | 17,000,000 | ||||
Costs associated with sale of equity securities | (1,897,126) | (1,897,126) | |||||
Merger recapitalization of Cellect | 83,355 | $ (2,932,000) | 2,932,000 | ||||
Merger recapitalization of Cellect (in shares) | 416,775,599 | ||||||
Issuance of ADS and Pre-Funded Warrants, net (in shares) | 1,710,500,800 | ||||||
Reclassification of warrants upon issuance of exchange warrants | 12,410,730 | 12,410,730 | |||||
Balance at end of year at Dec. 31, 2021 | 670,930 | (2,932,000) | 31,659,017 | (28,069,985) | $ 657,032 | ||
Balance at ending of year (in shares) at Dec. 31, 2021 | 3,354,650,799 | 670,930 | 3,354,650,799 | ||||
Net loss | (9,381,496) | $ (9,381,496) | |||||
Cashless exercise of warrants (in shares) | 3,857,439,000 | ||||||
Cashless exercise of warrants | 771,488 | ||||||
Settlement of accrued expenses | $ 44,187 | 193,537 | $ 193,537 | ||||
Settlement of accrued expenses (in shares) | 220,935,000 | ||||||
Deemed dividend on warrant modification | $ 65,266 | (65,266) | |||||
Sale of equity securities, including conversion of "Bridge Notes" (in shares) | 3,360,000 | 16,800,000,000 | 14,877,332 | 14,877,332 | |||
Stock based compensation | $ 764,007 | $ 764,007 | |||||
Issuance of ADS and Pre-Funded Warrants, net (in shares) | 3,360,000 | 16,800,000,000 | 14,877,332 | 14,877,332 | |||
Reclassification of warrants upon issuance of exchange warrants | $ 296,362 | $ 296,362 | |||||
Balance at end of year at Dec. 31, 2022 | $ 4,846,605 | $ (2,932,000) | $ 47,855,521 | $ (37,516,747) | $ 7,406,774 | ||
Balance at ending of year (in shares) at Dec. 31, 2022 | 24,233,024,799 | 4,846,605 | 24,233,024,799 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows used in operating activities | ||
Net loss | $ (9,381,496) | $ (21,462,588) |
Fair value adjustment to convertible notes payable | 1,250,000 | |
Change in fair value of warrant liability | (77,237) | 12,784,329 |
Stock based compensation | 764,007 | |
Forgiveness of trade payable | (416,000) | |
Financing expense | 275,000 | |
Amortization of intangibles | 104,043 | 104,043 |
Increase in accrued interest and financing expense | 714,081 | 696,799 |
Unrealized gain on investments | (93,779) | |
Changes in assets and liabilities: | ||
Increase (decrease) in accounts payable and accrued expenses | (217,806) | 1,347,801 |
Decrease in prepaid expenses & other assets | 123,455 | (715,474) |
Net cash used in operating activities | (8,480,732) | (5,720,090) |
Cash flows used in investing activities | ||
Purchase of investments | (9,899,121) | |
Payment for license acquisition | (250,000) | (625,000) |
Net cash used in investing activities | (10,149,121) | (625,000) |
Cash flows provided by financing activities: | ||
Payments of offering costs | (141,338) | |
Payments of deferred loan costs | (42,045) | 50,000 |
Increase in due to officers | 139,285 | |
Payment of amounts due to officers | (599,999) | (304,466) |
Proceeds from issuance of "Bridge Notes", net | 3,475,000 | |
Payment of interest on "Bridge Notes" | (311,670) | |
Proceeds from sale of equity securities, net | 14,877,332 | 10,102,874 |
Net cash provided by financing activities | 14,007,708 | 13,504,031 |
Net change in cash | (4,622,145) | 7,158,941 |
Cash - beginning of year | 7,482,773 | 323,832 |
Cash - end of year | 2,860,628 | 7,482,773 |
Supplemental information - Non cash items: | ||
Interest paid | 393,611 | |
Exchange of "2020 Notes" for Ordinary shares | 1,213,313 | |
Exchange of "Bridge Notes" for Ordinary shares | 5,000,000 | |
Reclassification of warrant liability to equity upon issuance of "Exchange Warrants" | 296,362 | $ 12,410,730 |
Deemed dividend on warrant modification | 65,266 | |
Offering expenses associated with warrant modification | 491,601 | |
Settlement of accrued expenses | $ 193,537 |
ORGANIZATION, BUSINESS AND BASI
ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION | |
ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION | NOTE 1 – ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION Quoin Pharmaceuticals Ltd. (“Quoin Ltd.,”or the “Company”), formerly known as Cellect Biotechnology Ltd. (“Cellect”), is the holding company for Quoin Pharmaceuticals, Inc., a Delaware corporation (“Quoin Inc.”). On October 28, 2021, Cellect completed the business combination with Quoin Inc., in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of March 24, 2021 (the “Merger Agreement”), by and among Cellect, Quoin Inc. and CellMSC, Inc., a Delaware corporation and wholly-owned subsidiary of Cellect (“Merger Sub”), pursuant to which Merger Sub merged with and into Quoin Inc., with Quoin Inc. surviving as a wholly-owned subsidiary of Cellect (the “Merger”). Immediately after completion of the Merger, Cellect changed its name to “Quoin Pharmaceuticals Ltd.”Because Quoin Inc. was the accounting acquirer, its historical financial statements became the Company’s historical financial statements and such assets and liabilities continued to be recorded at their historical carrying values. The impact of the recapitalization has been retroactively applied to all periods presented. Effective August 1, 2022, the ratio of American Depositary Shares (“ADSs”) evidencing ordinary shares changed from 1 ADS representing four hundred (400) ordinary shares to 1 ADS representing five thousand (5,000) ordinary shares, which resulted in a one for 12.5 reverse split of the issued and outstanding ADSs (the “Ratio Change”). All ADSs and related option and warrant information presented in these financial statements and accompanying footnotes has been retroactively adjusted to reflect the reduced number of ADSs resulting from the Ratio Change. Unless otherwise indicated, ADSs outstanding presented in these financial statements and accompanying footnotes assume all outstanding ordinary shares are represented by ADSs. Quoin Inc. was incorporated in Delaware on March 5, 2018. Quoin Inc. is clinical stage specialty pharmaceutical company dedicated to the development and commercialization of therapeutic products that treat rare and orphan diseases for which there are currently no approved treatments or cures. The Company’s initial focus is on the development of products, using proprietary owned and in-licensed drug delivery technologies, that could help address rare skin diseases. The Company’s first lead product is QRX003, a once daily, topical lotion comprised of a broad-spectrum serine protease inhibitor, formulated with the proprietary in-licensed Invisicare® technology, is under development as a potential treatment for Netherton Syndrome (“NS”), a rare hereditary genetic disease. QRX003 is currently being tested in two clinical studies in the United States (“U.S.”) under an open Investigational New Drug (“IND”) application with the Food and Drug Administration (“FDA”). Dosing of patients has commenced for the first study, and the Company is preparing to commence enrollment into the second clinical study. The Company is also developing QRX004 as a potential treatment for Recessive Dystrophic Epidermolysis Bullosa (“RDEB”). In addition, the Company has entered into Research Agreements with the Queensland University of Technology (“QUT”), which include an option for global licenses to QRX007 for the potential treatment of NS and QRX008 for the potential treatment of scleroderma. To date, no products have been commercialized and revenue has not been generated. |
LIQUIDITY RISKS AND OTHER UNCER
LIQUIDITY RISKS AND OTHER UNCERTAINTIES | 12 Months Ended |
Dec. 31, 2022 | |
LIQUIDITY RISKS AND UNCERTAINTIES | |
LIQUIDITY RISKS AND UNCERTAINTIES | NOTE 2 - LIQUIDITY RISKS AND OTHER UNCERTAINTIES The Company has incurred net losses every year since inception and has an accumulated deficit of approximately $37.5 million at December 31, 2022. The Company has historically funded its operations through debt and equity financings. On August 9, 2022, the Company completed an offering (the “August Offering”) of ordinary shares represented by ADSs and pre-funded warrants to purchase ordinary shares represented by ADSs with each ADS and pre-funded warrant accompanied by an ordinary warrant, for aggregate gross proceeds of $16.8 million, resulting in net proceeds of approximately $14.9 million (see Note 14). On February 24, 2023, the Company completed an offering (the “February Offering”) of ordinary shares represented by ADSs and pre-funded warrants to purchase ordinary shares represented by ADSs with each ADS and pre-funded warrant accompanied by an ordinary warrant, for aggregate gross proceeds of $7.0 million, resulting in net proceeds of approximately $6.0 million (See Note 18). As a result of the completion of such Offerings, the Company believes that it has sufficient cash and liquidity to effect its business plan for at least one year from the issuance of these consolidated financial statements. Additional financing will still be required to complete the research and development of the Company’s therapeutic targets and its other operating requirements until it achieves commercial profitability, if ever. Such financing may not be available at acceptable terms, if at all. If the Company is unable to obtain additional funding when it becomes necessary, 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, results of operations and financial condition. 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 of proprietary technology, compliance with government regulations, product liability, pre-clinical and clinical trial outcome risks, regulatory approval risks, uncertainty of market acceptance and additional financing requirements. The Company’s products require approval or clearance from the FDA prior to commencing commercial sales in the United States. There can be no assurance that the Company’s products will receive all of the required approvals or clearances. Approvals or clearances are also required in foreign jurisdictions in which the Company may license or sell its products. There can be no assurance that the Company’s products, if approved, will be accepted in the marketplace, nor can there be any assurance that any future products can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such products will be successfully marketed. The Company is also dependent on several third party suppliers, in some cases a single-source supplier which includes the supplier of the active pharmaceutical ingredient (API), as well as the contract manufacturer of the drug substance for the expected clinical development. Coronavirus (“COVID-19”) created a global pandemic, which commenced in 2020. The Company’s operations, to date, have not been dramatically affected by COVID-19. However, the extent of any future impact on the Company’s operational and financial performance will depend on the possibility of a resurgence and resulting severity with respect to the Company’s access to API and drug product for clinical testing, as well as the Company’s ability to safely and efficiently conduct planned clinical trials. Nasdaq Listing On April 22, 2022, the Company received a letter from the Listing Qualifications staff (the “Staff”) of The Nasdaq Stock Market, LLC (“Nasdaq”) notifying the Company that it is no longer in compliance with Nasdaq Listing Rule 5550(b)(1) requiring minimum stockholders’ equity of at least $2.5 million for continued listing on The Nasdaq Capital Market. 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, and the Company evidenced continued compliance for the year ended December 31, 2022. On June 10, 2022, the Company received a letter from the Staff notifying the Company that the closing bid price per ADS was below the required minimum of $1.00 for a period of 30 consecutive business days and that the Company did not meet the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2). On August 15, 2022, the Staff determined that the closing bid price of the Company’s ADSs was at $1.00 per ADS or greater for the preceding 10 business days, and the Company regained compliance with the minimum bid price requirement. 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 the Company’s ability to raise future capital. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), which have been consistently applied, reflecting the operations of Quoin Inc. since inception and include the accounts of Quoin Ltd. since the date of the Merger. All intercompany accounts and transactions have been eliminated in consolidation. Use of estimates: 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 developing the estimates and assumptions that are used in the preparation of these financial statements 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: Reclassification: Certain 2021 amounts were reclassified to conform to the current year presentation. The amount reclassified included the short term portion of prepaid expenses from the long term portion of prepaid expenses and the short term portion from long term portion due to officers. Cash and cash equivalents: The Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. The Company, from time to time during the periods presented, has had bank account balances in excess of federally insured limits where substantially all cash is held in the United States. The Company has not experienced losses in such accounts. The Company believes that it is not subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Warrants: The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement) provided that such contracts are indexed to the Company’s own stock. The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the Company’s control) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assesses classification of its warrants and other free-standing derivatives at each reporting date to determine whether a change in classification between assets, liabilities and equity is required. The Company evaluated the warrants to assess their proper classification using the applicable criteria enumerated under U.S. GAAP and determined that such warrants meet the criteria for equity classification in the accompanying balance sheets as of December 31, 2022. Investments: Investments as of December 31, 2022 consist of U.S. Treasury Bills, which are classified as trading securities, totaling $9.9 million. The Company determines the appropriate balance sheet classification of its investments at the time of purchase and evaluates the classification at each balance sheet date. All of the Company’s U.S. Treasury Bills held on December 31, 2022 matured within the subsequent one month from the balance sheet date. As of December 31, 2022, the carrying value of the Company’s U.S. Treasury Bills approximates their fair value due to their short-term maturities. Long-lived assets: Long-lived assets are comprised of acquired technology and licensed rights to use technology, which are considered platform technology with alternative future uses beyond the current products in development. Such intangible assets are being amortized on a straight-line basis over their expected useful life of 10 years . The Company assesses the impairment for long-lived assets whenever events or circumstances indicate the carrying value may not be recoverable. Factors we consider that could trigger an impairment review include the following: ● Significant changes in the manner of our use of the acquired assets or the strategy for our overall business, ● Significant underperformance relative to expected historical or projected development milestones, ● Significant negative regulatory or economic trends, and ● Significant technological changes which could render the platform technology obsolete. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the years ended December 31, 2022 and 2021, there were no impairment indicators which required an impairment loss measurement. Research and development: Research and development costs are expensed as incurred. Research and development expenses include personnel costs associated with research and development activities, including third-party contractors to perform research, conduct clinical trials and manufacture drug supplies and materials. The Company accrues for costs incurred by external service providers, including contract research organizations and clinical investigators, based on its estimates of service performed and costs incurred. These estimates include the level of services performed by third parties, patient enrollment in clinical trials when applicable, administrative costs incurred by third parties, and other indicators of the services completed. Based on the timing of amounts invoiced by service providers, the Company may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered. Income taxes: The Company accounts for its income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company also accounts for uncertain tax positions using the more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken in the Company’s income tax returns. As of December 31, 2022 and 2021, the Company had no uncertain tax positions which affected its financial position and its results of operations or its cash flows and will continue to evaluate for uncertain tax positions in the future. If at any time the Company should record interest and penalties in connection with income taxes, the interest and the penalties will be expensed within the interest and general and administrative expenses, respectively. Stock based compensation: The Company recognizes compensation costs resulting from the issuance of stock-based awards to employees, non-employees and directors as an expense in the consolidated statements of operations over the requisite service period based on a measurement of fair value for each stock-based award. The fair value of each option grant is estimated as of the date of grant using the Black-Scholes option-pricing model, net of actual forfeitures. The fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. The Company’s expected stock volatility is based on the historical data regarding the volatility of a publicly traded set of peer companies, since it has limited history of trading as a public company. The Company utilizes the simplified method to estimate the expected term. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield was assumed to be zero as the Company has not paid and dividends since its inception and does not anticipate paying dividends in the foreseeable future. Fair value of financial instruments: The Company considers its cash, investments, accounts payable, accrued expenses and the convertible and bridge notes payable to meet the definition of financial instruments. The carrying amounts of these financial instruments approximated their fair values due to the short maturities. The Company measures fair value as required by ASC Topic 820, Fair Value Measurements and Disclosures Earnings (loss) per share: The Company reports loss per share in accordance with ASC 260-10, Earnings Per Share For the year ended December 31, 2022, the number of shares excluded from the diluted net earnings (loss) per share included outstanding warrants to purchase 3,368,820 ADS or 16,844,100,000 Ordinary Shares and 307,142 in outstanding stock options as their inclusion in the denominator would be anti-dilutive. For the year ended December 31, 2021, the number of shares excluded from the diluted net earnings (loss) per share included outstanding warrants to purchase 143,028 ADS or 715,140,000 Ordinary Shares and warrants to purchase 1,257,723 ADS or 6,288,615,000 Ordinary Shares issuable pursuant to Primary Financing as their inclusion in the denominator would be anti-dilutive. |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
CONVERTIBLE NOTES PAYABLE. | |
CONVERTIBLE NOTES PAYABLE | NOTE 4 – On October 2, 2020, Quoin Inc. commenced an offering of promissory notes (the “2020 Notes” or “Convertible Notes Payable”) and warrants.Based upon the terms agreed to in March 2021 in the Primary Financing (see Note 5), the 2020 Notes were mandatorily convertible into 5,183 ADSs in the Primary Financing, subject to adjustment. Such notes were converted to equity in 2021. The holders also received warrants exercisable at any time after the issuance date for 29,388 ADSs at an initial exercise price of $49.75 per ADS. At the time of grant, the Company determined that these warrants met the criteria to be recorded as a liability instrument. Effective March 13, 2022, each holder agreed to exchange these warrants for warrants on the substantially same terms as the Investor Exchange Warrants (See Note 5) with the same number of shares issuable upon the exercise of an Exchange Warrant as upon the exercise of the original warrant and the same exercise price with a contractual term of 5 years (the “Noteholder Warrants”). The Noteholder Warrants have been determined to have equity classification. The change in the fair value of the warrants through the exchange date was included in other income (expense) in the accompanying statement of operations, and then reclassified from liability to additional paid in capital. On July 14, 2022, as a result of the Altium Agreement (see Note 5), the exercise price of the Noteholder Warrants was reduced to $0 and the 2020 Noteholders subsequently exercised all of their warrants. The change in the exercise price of the Noteholder Warrants resulted in a deemed dividend of approximately $65,000 recorded during the year ended December 31, 2022. The ADSs issued to the 2020 Noteholders did not include the accrued interest which was estimated to be approximately $744,000 at December 31, 2021 of which $312,000 was paid to two of the five 2020 Noteholders during the year ended December 31, 2022. Based on the terms of the cash settlement with these two 2020 Noteholders, the Company’s estimate of the liability to the remaining three 2020 Noteholders was increased to $1,146,000. Interest expense, at the stated interest rate, recognized in the year ended December 31, 2022 and 2021 was approximately $-0- and $202,000, respectively. |
BRIDGE FINANCING AND SECURITIES
BRIDGE FINANCING AND SECURITIES PURCHASE AGREEMENT (Primary Financing) | 12 Months Ended |
Dec. 31, 2022 | |
BRIDGE FINANCING AND SECURITIES PURCHASE AGREEMENT (Primary Financing) | |
BRIDGE FINANCING AND SECURITIES PURCHASE AGREEMENT (Primary Financing) | NOTE 5 – BRIDGE FINANCING AND SECURITIES PURCHASE AGREEMENT (Primary Financing) Bridge Financing In connection with the Merger Agreement and the Securities Purchase Agreement (described below), Quoin Inc. entered into a “Bridge Purchase Agreement” on March 24, 2021 with the Investor, pursuant to which the Investor agreed to purchase notes (the “Bridge Notes”) in the aggregate principal amount of up to $5,000,000 in exchange for an aggregate purchase price of up to $3,800,000 together with warrants. The Bridge Notes were purchased in three closings: (i) the first purchase of $2,000,000 on March 25, 2021 (proceeds of $1,500,000); (ii) the second purchase of $1,700,000 in April 2021 (proceeds of $1,250,000); and (iii) a third purchase of $1,300,000 in May 2021 (proceeds of $1,000,000). The Bridge Notes were issued with a 25% original issue discount, at an interest rate of 15% per annum and had a maturity date of the earliest to occur of: (i) December 25, 2021, (ii) the date on which Quoin Inc.’s equity is registered under the Exchange Act or is exchanged for equity so registered or (iii) immediately prior to the closing of the Merger. The Investor and Quoin Inc. agreed that if the Primary Financing is consummated, the Investor may, at its election, offset the purchase price related to the Primary Financing, by an amount equal to the outstanding amount under this Bridge Note, and, upon such set-off, the portion of this Bridge Note shall be deemed to have been paid in its entirety and all obligations thereunder shall be deemed to be fully satisfied. The Bridge Notes were offset against the purchase price under the Securities Purchase Agreement related to the Primary Financing and converted into 100,618 ADSs upon the closing of the Primary Financing Bridge Warrants Upon the funding of each Bridge Note tranches described above, the Investor received warrants (the “Bridge Warrants”) to purchase a number of shares of Quoin Inc.’s common stock equal to the aggregate principal amount of the Bridge Notes. The Bridge Warrants had a term of five years from the date all of the shares underlying the Bridge Warrants are freely tradable. Quoin Inc. issued a total of 99,074 Bridge Warrants in the year ended December 31, 2021. Following the closing date of the Merger, on each of the tenth trading day, the forty-fifth day, the ninetieth day, and the one hundred thirty-fifth day thereafter (each, a “Reset Date”), if the initial exercise price of the Bridge Warrants is greater than the arithmetic average of 85% of the three lowest weighted average prices of the post-Merger ordinary shares of the combined company during the ten trading day period immediately preceding the applicable Reset Date (the “Reset Price”), the exercise price of the Bridge Warrants will be reset to the Reset Price. Upon the occurrence of a Fundamental transaction, as defined in the Bridge Warrants, the warrant holder has the right to elect a cash settlement for the value of the warrant based on the Black Scholes options pricing model. The Company determined that the warrants met the criteria to be recorded as a liability instrument through the exchange date on the closing of the Primary Financing. The fair value for the total issuances of these warrants was determined by a MonteCarlo simulation model to be approximately $3.8 million at the date of issuance. Upon the closing of the Primary Financing in October 2021, the Bridge Warrants were exchanged for warrants to purchase 99,074 ADSs at a fixed per share exercise price of $49.75 (“Investor Exchange Warrants”), as amended, which replaced the reset provisions and modified the fundamental transaction requirements of the Bridge Warrants. On July 14, 2022, the Company and the Investor entered into an agreement amending the terms of the Investor Exchange Warrants, see below agreements with Altium Growth Fund, LP and Warrant Exercises. Primary Financing On October 28, 2021, the Company completed the private placement transaction with the Investor for an aggregate purchase price of approximately $17.0 million (comprised of the set off from approximately $5.0 million of Bridge Notes, and approximately $12.0 million in cash) (the “Primary Financing”), which resulted in the net proceeds of approximately $10.1 million. The Company issued 342,100 ADSs to the Investor. Quoin Ltd. also was required to issue to the Investor, effective as of March 13, 2022, the 136 th day following the consummation of the Merger (i) Series A Warrant to purchase 342,100 ADSs (the “Series A Warrant”) (ii) Series B Warrant to purchase 342,100 ADSs (the “Series B Warrant”) and (iii) Series C Warrant to purchase 191,174 ADSs (“Series C Warrant” and, together with the Series A Warrant and Series B Warrant, the “Investor Warrants”). The exercise price for the Investor Warrants is $49.75 per ADS, with Series A Warrant having a five-year maturity, and Series B Warrant and Series C Warrant having a two-year maturity. The Company had the right to require the mandatory exercise of the Series C Warrant, subject to an effective registration statement being in place for the resale of the shares underlying such warrants and the satisfaction of equity market conditions, as defined in the Series C Warrant. On April 22, 2022, a registration statement for the resale of the shares underlying Investor Warrants was declared effective by the Securities and Exchange Commission. In the period from April 22, 2022 to June 30, 2022, the Investor exercised the Series B Warrant in full pursuant to the alternate cashless exercise rights of such warrant, which gives the Investor the sole option as elected by the Investor to receive 1.0 ADS for each warrant ADS underlying such warrant, resulting in the issuance of a total of 342,100 ADSs to the Investor. The market related conditions to require the mandatory exercise of the Series C Warrant were not met during the period up to July 14, 2022. Agreements with Altium Growth Fund, LP and Warrant Exercises On July 14, 2022, the Company, Quoin Inc. and Altium entered into an agreement (the “Altium Agreement”), pursuant to which the parties agreed to, among other things, (i) amend certain terms of the Series A Warrant and Investor Exchange Warrants previously issued to Altium to reduce the exercise price to $0.00 per ADS with respect to a total of 399,999 ADSs, (ii) cancel the Series C Warrant and the remaining portion of the Series A Warrant previously issued to Altium, and (iii) terminate the Purchase Agreements, pursuant to which the warrants were previously issued to Altium. The incremental fair value of the modified warrants was approximately $491,000, which was accounted for as an offering expense as part of the August Offering (see Note 14) as the modification was done in contemplation of the August Offering. As of August 2, 2022, Altium exercised all of its outstanding warrants to purchase ADSs at $0.00 per ADS exercise price and the Company issued a total of 399,999 ADSs to Altium. The exercise price of the Noteholder Warrants was also reduced to $0.00 as of July 14, 2022 as a result of the Altium Agreement. The change in the exercise price of the Noteholder Warrants resulted in a deemed dividend of approximately $65,000 recorded during the year ended December 31, 2022. From July to September 2022, the 2020 Noteholders exercised all their warrants to purchase ADSs at $0.00 per ADS exercise price, and the Company issued a total of 29,388 ADSs to such noteholders. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities the Company considers the principal or most advantageous market in which it would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. For certain instruments, including cash and cash equivalents, accounts payable, and accrued expenses, it was estimated that the carrying amount approximated fair value because of the short maturities of these instruments. Fair value is estimated using various valuation models, which utilize certain inputs and assumptions that market participants would use in pricing the asset or liability. The inputs and assumptions used in valuation models are classified in the fair value hierarchy as follows: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Quoted market prices for similar instruments in an active market; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations inputs of which are observable and can be corroborated by market data. Level 3: Unobservable inputs and assumptions that are supported by little or no market activity and that are significant to the fair value of the asset and liability. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining the appropriate hierarchy levels, the Company analyzes the assets and liabilities that are subject to fair value disclosure. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis by fair value hierarchy at December 31, 2022 and 2021: December 31, 2022 Level 1 Level 2 Level 3 Total US Treasury Bills $ 9,992,900 $ — $ — $ 9,992,900 Total US Treasury Bills Asset $ 9,992,900 $ — $ — $ 9,992,900 December 31, 2021 Level 1 Level 2 Level 3 Total 2020 Notes warrants $ — $ — $ 373,599 $ 373,599 Total Warrant Liability $ — — $ 373,599 $ 373,599 The following shows the movement of the warrant liability balance during the year ended December 31, 2022 and 2021. Bridge Financing 2020 Note Warrants Warrants Beginning Balance January 1, 2021 $ — $ — Warrant value at issuance (recorded as warrant liability expense) 3,783,079 894,113 Change in Fair value of warrants 8,627,651 (520,514) Reclassification of warrant liability to an equity instrument (12,410,730) — Ending Balance December 31, 2021 $ — $ 373,599 Change in Fair value of warrants — (77,237) Reclassification of warrant liability to an equity instrument — (296,362) Ending Balance December 31, 2022 $ — $ — The Investor Exchange Warrant issued to the Investor on the Merger date was determined to be an equity-classified instrument, and accordingly the warrant liability on such date of approximately $12.4 million was reclassified to additional paid in capital. The Exchange Warrants issued to the 2020 Noteholders effective as of March 13, 2022 were determined to be an equity-classified instrument, and accordingly the warrant liability on such date of $296,362 was reclassified to additional paid in capital on that date. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
STOCK BASED COMPENSATION | |
STOCK BASED COMPENSATION | NOTE 7 – STOCK BASED COMPENSATION In March 2022, the Board of Directors of the Company approved the Amended and Restated Equity Incentive Plan (the “Amended Plan”) which increased the number of ordinary shares reserved for issuance under such equity incentive plan to 15% of the Company’s outstanding ordinary shares on a fully-diluted basis, or 6,391,925,000 ordinary shares, represented by 1,278,385 ADSs as of December 31, 2022. Under the Amended Plan, the Company may grant options to its directors, officers, employees, consultants, advisers and service providers. The Amended Plan was approved by the shareholders at the Company’s Annual General Meeting of Shareholders held on April 12, 2022. On April 12, 2022, the Company granted options to acquire 1,535,714,000 ordinary shares, represented by 307,142 ADSs, at $17.50 per share to management, directors and employees and 971,243 shares remained available for issuance as of December 31, 2022. Such options vest over a three or four year period. There were no further grants during the year ended December 31, 2022. The following table summarizes stock-based activities under the Amended Plan: Weighted Weighted Average Average ADS Underlying Exercise Contractual Options Price Terms Outstanding at December 31, 2021 5,744 $ 636.74 0.33 Granted 307,142 $ 17.50 Forfeited/Cancelled (5,744) $ 636.74 Outstanding at December 31, 2022 307,142 $ 17.50 9.28 Exercisable options at December 31, 2022 — $ — — The intrinsic value of outstanding options at December 31, 2022 was $0. Stock options granted during the year ended December 31, 2022 were valued using the Black-Scholes option-pricing model with the following weighted average assumptions: December 31, 2022 Expected volatility 106.0 % Risk-free interest rate 2.7 % Expected dividend yield 0.0 % Expected life of options in years 6.9 Exercise Price $ 17.50 Fair value of ADS $ 15.38 Estimated fair value of option $ 12.92 Stock based compensation expense was approximately $764,000 ($100,000 included in research and development expense and $664,000 included in general and administrative expenses) in the year ended December 31, 2022. There was no stock-based compensation in the year ended December 31, 2021. At December 31, 2022, the total unrecognized compensation expense related to non-vested options was approximately $3,205,000 and is expected to be recognized over the remaining weighted average service period of approximately 3.07 years. |
PREPAID EXPENSES
PREPAID EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES | |
PREPAID EXPENSES | NOTE 8 – PREPAID EXPENSES Prepaid expenses are as follows: December 31, December 31, 2022 2021 Prepaid R&D costs $ 383,390 $ 329,033 Prepaid insurance 508,084 684,191 Prepaid expense 8,500 2,250 Total $ 899,974 $ 1,015,474 Less: Short-term portion (516,584) (715,474) Long-term portion $ 383,390 $ 300,000 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 9 – ACCRUED EXPENSES Accrued expenses are as follows: December 31, December 31, 2022 2021 Research contract expenses (note 13) $ 105,071 $ 193,537 Payroll (note 12) 788,169 557,937 Payroll taxes (note 12) 159,593 199,582 Investor Relation firm fees (note 13) 56,000 584,000 Professional fees 44,278 144,377 Other Expenses 22,594 5,976 Total $ 1,175,705 $ 1,685,409 |
IN-LICENSED TECHNOLOGY
IN-LICENSED TECHNOLOGY | 12 Months Ended |
Dec. 31, 2022 | |
IN-LICENSED TECHNOLOGY | |
IN-LICENSED TECHNOLOGY | NOTE 10 –IN-LICENSED TECHNOLOGY Polytherapeutics: On March 24, 2018, Quoin Inc. entered into a securities purchase agreement (the “Acquisition Agreement”), in which it agreed to acquire all of the equity interests in Polytherapeutics, Inc. (the “Seller” or “Polytherapeutics”) for $40,833 and future royalties provided Quoin Inc. commercializes products using the technology developed by the Seller. The terms of any royalty payments to the Seller are 4.0% of the net revenue of royalty products, as defined in the Acquisition Agreement during the ten ( 10 ) year period commencing from the date of first sale of a royalty product. If a generic product is introduced by a third party to the market, during the royalty period, the royalty fees shall be reduced from 4% to 2% . If, during the royalty period, two or more generic products are introduced, the royalty fees shall be reduced from 2% to 0% . Quoin Inc. also entered into a research and consulting agreement which committed Quoin Inc. to pay the Seller for additional research and development consulting services (See Notes 13 and 15). Skinvisible: In October 2019, Quoin Inc. entered into the Exclusive Licensing Agreement (as amended from time to time, the “License Agreement”) with Skinvisible Pharmaceuticals, Inc. (“Skinvisible”), under which Skinvisible granted the Company a exclusive royalty-bearing license relating to the production and manufacture of prescription drug products related to certain patents held by Skinvisible, including those related to QRX003 and QRX004. The Company made Skinvisible a one-time non-refundable, non-creditable license fee of $1 million (the “License Fee”). In addition, the Company agreed to pay Skinvisible a single digit royalty percentage of the Company’s net sales revenues for any licensed product covered by the patent rights licensed under the License Agreement. The Company also agreed to pay Skinvisible 25% of any revenues the Company receives as royalties in the event that the Company sublicense any licensed products to a third party. The License Agreement also requires that the Company make a $5 million payment to Skinvisible upon receiving approval in the U.S. or European Union, whichever occurs first, for the first drug product developed using intellectual property licensed thereunder. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 11 - INTANGIBLE ASSETS Intangible assets are as follows: December 31, December 31, 2022 2021 Acquired technology – Polytherapeutics $ 40,433 $ 40,433 Technology license – Skinvisible 1,000,000 1,000,000 Total cost 1,040,433 1,040,433 Accumulated amortization (335,872) (231,829) Net book value $ 704,561 $ 808,604 The Company recorded amortization expense of approximately $104,000 and $104,000 in the years ended December 31, 2022 and 2021, respectively. The annual amortization expense expected to be recorded for existing intangible assets for the years 2023 through 2026, and thereafter, is approximately $104,000 , $104,000 , $104,000 , 104,000 and $288,000 , respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS Employment Agreements and Due to Officers/Founders: Due to the limited funding of Quoin Inc. prior to the consummation of the Merger, the compensation, including salary, office and car allowances and other benefits, due to Dr. Myers and Ms. Carter under their respective employment agreements, as well as reimbursement of expenses and other amounts paid by Dr. Myers and Ms. Carter to third parties on behalf of Quoin Inc., were not paid by Quoin Inc. to Dr. Myers and Ms. Carter, and were accrued as indebtedness to Dr. Myers and Ms. Carter. Following the closing of the Merger, Quoin Inc. began making payments of $25,000 per month to each of Dr. Myers and Ms. Carter to repay the above-described non-interest-bearing indebtedness. The Company repaid $300,000 and $125,000 of such indebtedness to Dr. Myers and $300,000 and $160,000 to Ms. Carter in the year ending December 31, 2022 and 2021, respectively. As of December 31, 2022, approximately $2,259,000 and $1,865,000 of such indebtedness was outstanding to Dr. Myers and Ms. Carter, respectively. Amounts due to officers at December 31, 2022 and 2021 consisted of the following: December 31, December 31, 2022 2021 Salaries and other compensation $ 4,108,500 $ 4,108,500 Invoices paid on behalf of the Company 15,232 615,232 Total $ 4,123,732 $ 4,723,732 Less: Short-term portion (600,000) (600,000) Long-term portion $ 3,523,733 $ 4,123,732 Expenses: In 2021, the Company paid $100,000 of consulting expenses to a company controlled by Dennis Langer, our director, and approximately $48,000 and $8,000 were paid during the years ended December 31, 2022 and 2021, respectively, to Dr. Myers’ son, who has been consulting for the Company on research and development matters from time to time. |
RESEARCH, CONSULTING AGREEMENTS
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | 12 Months Ended |
Dec. 31, 2022 | |
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | |
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | NOTE 13 – RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS Research and consulting agreement Quoin Inc. entered into a research and consulting agreement (the “Research Agreement”) which commits it to pay the former owner of Polytherapeutics (the “Consultant” or “Seller”) to transfer the technical know-how of Polytherapeutics with respect to (i) good manufacturing practices (“GMP”), clinical and commercial manufacturing of the Company’s PolyDur polymer and (ii) formulation development of products utilizing the Company’s PharmaDur polymer (See Note 10). The agreement required monthly consulting payments of $20,833 beginning on July 31, 2018 and ending February 28, 2021 (the “Post-Closing Period”) for a total of $666,667 over the consulting period. Pursuant to an amendment, the Post-Closing Period was revised to terminate on December 31, 2020. Through December 31, 2022 and the financial statement issuance date, the Company has not made any payments, the Consultant has not performed any services and the Company has not incurred or accrued for any expenses. See Note 16 for Consultant’s notification of breach of contract. Other research consulting agreements Quoin Inc. entered into three consulting agreements with Axella Research LLC (“Axella”) to provide regulatory and pre- clinical/clinical services to the Company with respect to QRX003 and QRX004. The combined fees of the three agreements are approximately $270,000, payable as milestones were met. The Company incurred accrued expenses of approximately $194,000 in relation to Axella consulting agreements as of December 31, 2021. In August 2022, the Company issued 44,187 ADSs to one of Axella ’ In November 2020, Quoin Inc. entered into a Master Service Agreement for an initial term of three years with Therapeutics Inc. for managing preclinical and clinical development for new products in the field of dermatology. The agreement required the execution of individual work orders. Quoin Inc. may terminate any work order for any reason with 90 days written notice subject to costs incurred through termination and a defined termination fee, unless there is a material breach by Therapeutics Inc. A work order was entered into in June 2022 for the first QRX003 clinical study at an expected estimated cost of approximately $4.4 million through 2024. A further work order was entered into in December 2022 for the second QRX003 clinical study at an expected estimated cost of approximately $830,000 through 2024. For the years ended December 31, 2022 and 2021, the Company incurred a research and development expense under these agreements of approximately $1.2 million and $340,000 respectively. In November 2021, the Company entered into a commitment with Queensland University of Technology for research related services associated with Netherton Syndrome of approximately $250,000 for an expected period of eighteen months. For the years ended December 31, 2022 and 2021, the Company incurred research and development costs related to this agreement of approximately $77,000 and $25,000, respectively. In May 2022, the Company entered into a commitment with Queensland University of Technology for research related services associated with Scleroderma of approximately $610,000 for an expected period of eighteen months. The Company incurred research and development expenses of approximately $276,000 for the year ended December 31, 2022. Consulting agreement: Quoin Inc. entered into a consulting agreement with an Investor Relations (IR) firm, which provides for a monthly fee of $14,000. The agreement had an automatic annual renewal clause and has been in effect since November 2017. The Company owed the IR firm $584,000 as of December 31, 2021, which was included in accrued expenses in the accompanying balance sheet. In March 2022, the Company entered into a settlement agreement with the IR firm reducing the liability to $168,000 and recognized $416,000 as other income in the accompanying consolidated statement of operations. For the years ended December 31, 2022 and 2021, the Company incurred expenses of $112,000 and $70,000, respectively. Performance milestones and Royalties See Note 10 for asset and in-licensed technology commitments. Merger agreement commitment In consideration for the Share Transfer disclosed in Note 1, the pre-closing Cellect shareholders received a contingent value right (“CVR”) entitling the holders to earnouts during the Payment Period (as such term is defined in the Share Transfer Agreement), comprised mainly of payments upon sale, milestone payments, license fees and exit fees realized by the business spun out of Cellect prior to the Merger. Cellect entered into a CVR Agreement with Mr. Eyal Leibovitz, in the capacity of Representative for the holders of CVRs, and Computershare Trust Company, N.A., a federally chartered trust company (the “Rights Agent”). Under the terms of the CVR Agreement, the holders of the Cellect ADSs immediately prior to the Merger had the right to receive, through their ownership of CVRs, their pro-rata share of the net Share Transfer consideration, making such holders of CVRs the indirect beneficiaries of the net payments under the Share Transfer. CVRs were recorded in a register administered by the Rights Agent but were not certificated. Since the Company will not receive any net proceeds from the CVRs, there is no asset or liability recorded in the consolidated financial statements. |
SHAREHOLDERS' EQUITY AND SHARE
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | 12 Months Ended |
Dec. 31, 2022 | |
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | |
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | NOTE 14 – SHAREHOLDERS’ EQUITY AND SHARE OWNERSHIP AND RIGHTS The Company held a Special General Meeting on February 28, 2022, at which the Company’s shareholders adopted the Amended and Restated Articles of Association of the Company. The Company held its Annual General Meeting on April 12, 2022, at which the Company’s shareholders approved an increase to the authorized share capital to 50,000,000,000 ordinary shares from 12,500,000,000, no par value. The Company held a further Annual General Meeting on November 3, 2022, at which the Company’s shareholders approved an increase to the authorized share capital to 500,000,000,000 ordinary shares from 50,000,000,000, no par value. These ordinary shares are not redeemable and do not have any preemptive rights. Holders of the Company’s ordinary shares have one vote for each ordinary share held on all matters submitted to a vote of shareholders at a shareholders meeting. The board of directors shall determine and provide a record date for each shareholders meeting and all shareholders at such record date may vote. Unless stipulated differently in the Companies Law or in the articles of association, all shareholders’ resolutions shall be approved by a simple majority vote. Under Israeli law, the Company may declare and pay dividends only if, upon the determination of our board of directors, there is no reasonable concern that the distribution will prevent the Company from being able to meet the terms of our existing and foreseeable obligations as they become due. Under the Companies Law, the distribution amount is further limited to the greater of retained earnings or earnings generated over the two most recent years legally available for distribution according to our then last reviewed or audited financial statements, provided that the date of the financial statements is not more than six months prior to the date of distribution. In the event that the Company does not have retained earnings or earnings generated over the two most recent years legally available for distribution, the Company may seek the approval of the court in order to distribute a dividend. The court may approve our request if it determines that there is no reasonable concern that the payment of a dividend will prevent the Company from satisfying existing and foreseeable obligations as they become due. The Bank of New York Mellon, as depositary, has registered and delivered American Depositary Shares, also referred to as ADSs. Following an ADS ratio adjustment effective August 1, 2022, each ADS represents five thousand (5,000) ordinary shares (or a right to receive five thousand (5,000) ordinary shares). Each ADS will also represent any other securities, cash or other property which may be held by the depositary. ADSs may be held either (a) directly (1) by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing a specific number of ADSs or (2) by having uncertificated ADSs, or (b) indirectly by holding a security entitlement in ADSs through a broker or other financial institution that is a direct or indirect participant in The Depository Trust Company, also called DTC. On August 9, 2022, the Company completed an offering (the “August Offering”) of 11,050,000,000 ordinary shares represented by 2,210,000 ADSs at a purchase price of $5.00 per ADS and pre-funded warrants (the “August Pre-Funded Warrants”) to purchase 5,750,000,000 ordinary shares represented by 1,150,000 ADSs at a per pre-funded warrant price of $4.9999, with each ADS and August Pre-Funded Warrant accompanied by an ordinary warrant (the “August Common Warrant”), for aggregate gross proceeds of $16.8 million, resulting in net proceeds of approximately $14.9 million. Each August Common Warrant had an exercise price of $5.00 per ADS and was to expire on the fifth anniversary of the Closing Date. On the Closing Date, the holder of August Pre-Funded Warrants sold in the August Offering exercised its Pre-Funded Warrants in full. The August Common Warrant exercise price and expiration date were subsequently amended for investors who participated in both the August Offering and February Offering, see Note 18. In connection with the August Offering, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors. The Purchase Agreement provided that for a period of 180 days following the closing of the August Offering, the Company will not effect or enter into an agreement to effect a “variable rate transaction” as defined in the Purchase Agreement. Further, the Company has agreed in the Purchase Agreement not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any ADSs or ordinary shares or their equivalents, subject to certain exceptions, for a period of 90 days after the closing of the August Offering. The Purchase Agreement also contained representations, warranties, indemnification and other provisions customary for transactions of this nature. Warrants The following table summarizes warrant activities during the year ended December 31, 2021 and the year ended December 31, 2022: Weighted ADSs Average Underlying Exercise Price Warrants Per Share Outstanding at December 31, 2020 107,894 $ 56.92 * Granted 29,388 49.75 * Outstanding at December 31, 2021 137,282 $ 55.39 * Granted 5,385,374 11.21 ** Terminated (232,349) 49.75 * Exercised – Cashless and Pre Funded Warrants (1,921,487) — Outstanding and exercisable at December 31, 2022 3,368,820 $ 5.35 ** As of December 31, 2022, outstanding warrants expire in 2024 and 2027, and have an intrinsic value of $0. * Note that the exercise price of certain warrants was reduced from $49.75 to $0 on July 14, 2022 and to refer to Note 5 ** Note that the exercise price of certain warrants were reduced from $5.00 to $1.10 on February 24, 2023 and refer to Note 18 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 15 – INCOME TAXES Significant components of the Company’s deferred tax assets and liabilities at December 31, 2022 and December 31, 2021 are as follows: (table in thousands) 2022 2021 Net operating losses $ 3,334 $ 1,945 Due to Officers — 1,411 Accrued Expenses and Other 189 212 R&D Credit Carryforward 76 102 Debt related activities — 375 Stock Compensation 178 — R&D Capitalization 581 — Intangibles 34 — Total gross deferred tax assets/(liabilities) $ 4,392 $ 4,045 Less valuation allowance (4,392) (4,045) Net deferred tax assets/(liabilities) $ — $ — The income tax benefit for the years ended December 31, 2022 and December 31, 2021 differed from the amounts computed by applying the U.S. federal income tax rate of 21% to loss before tax benefit as a result of nondeductible expenses, tax credits generated, utilization of net operating loss carryforwards, and increases in the Company’s valuation allowance. (table in thousands) 2022 2021 Federal Statutory Rate $ (1,970) $ (4,641) Permanent Differences 153 2,876 Research and Development (76) (102) State Income Tax 388 196 Change in Valuation Allowance 347 1,671 Deferred True Up 1,158 — Effect of Tax Act — — Effective Tax $ — $ — A valuation allowance is required to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of the available evidence, both positive and negative, the Company determined that valuation allowances of $4,392,000 and $4,045,000 at December 31, 2022 and December 31, 2021 were necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. At December 31, 2022 and 2021, the Company had gross U.S. Federal income tax net operating loss (“NOL”) carryforward of approximately $12,951,000 and $6,482,000, respectively that may be used to offset future taxable income. The NOL was generated after 2017 and can be carried forward indefinitely under the Tax Cuts and Jobs Act. The company also had gross $12,951,000 of state net operating losses that will begin to expire in 2038. At December 31, 2022, the Company had approximately $76,000 of federal Research and Development (R&D) tax credit carry-forwards. If not utilized, the federal R&D credits will begin to expire in 2042. The Internal Revenue Code (the “IRC”) contains limitations on the use of net operating loss carryforwards after the occurrence of a substantial ownership change as defined by IRC Section 382. The Company has not performed a detailed analysis, however utilization of such net operating loss carryforwards will likely be significantly limited due to the shares issued in the Primary Financing and the Merger. The income tax benefit for the years ended December 31, 2022 and 2021 differed from the amounts computed by applying the US federal income tax rate of 21% primarily because of the increase in the valuation allowance and the tax impact of other permanent items, which resulted in an effective tax rate of zero for both years. The Tax Cuts and Jobs Act of 2017 (TCJA) has modified the IRC 174 expenses related to research and development for the tax years beginning after December 31, 2021. Under the TCJA, the Company must now capitalize the expenditures related to research and development activities and amortize over five years for U.S. activities and 15 years for non-U.S. activities using a mid-year convention. Therefore, the capitalization of research and development costs in accordance with IRC 174 resulted in a gross deferred tax asset of $2,256,000. |
CONTINGENCIES
CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
CONTINGENCIES | |
CONTINGENCIES | NOTE 16 - CONTINGENCIES From time to time, the Company may become involved in various legal matters arising in the ordinary course of business. Management is unaware of any matters requiring accrual for related losses in the financial statements. In February 2020, the Seller of the equity interests in Polytherapeutics and party to the Research Agreement communicated with Quoin Inc. threatening litigation for non-payment and related breach of contract and immediate payment of all monthly payments in the total amount of $666,667 (See Notes 10 and 13). The Consultant has not provided any services and has not complied with other technical requirements under the Research Agreement, and therefore is considered to be in breach of contract. The Company and the Consultant have had communications with respect to the duration, commencement date and payment of the consulting services, but a revised agreement has not been reached. No lawsuits have been filed as of the financial statement issuance date. Should a formal claim or lawsuit be filed, the Company believes it has meritorious defenses. |
LICENSE AGREEMENTS
LICENSE AGREEMENTS | 12 Months Ended |
Dec. 31, 2022 | |
LICENSE AGREEMENTS | |
LICENSE AGREEMENTS | NOTE 17 – LICENSE AGREEMENTS During the years ended December 31 2022 and 2021 the Company entered into three and six license and supply agreements, respectively, whereby the Company will receive a royalty or other proceeds from the specified product revenues in select non-US markets from the licensor, if and when the underlying products are approved and commercialized. No royalty revenues have been received through December 31, 2022 under any of these agreements. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 18 - SUBSEQUENT EVENTS On February 24, 2023 (the “February Closing Date”), the Company completed an offering (the “February Offering”) of 24,750,000,000 ordinary shares represented by 4,950,000 ADSs at a purchase price of $1.00 per ADS and a pre-funded warrant (the “February Pre-Funded Warrant”) to purchase 10,250,000,000 ordinary shares represented by 2,050,000 ADSs at a per pre-funded warrant price of $0.9999, with each ADS and February Pre-Funded Warrant accompanied by an ordinary warrant (the “February Common Warrant”) for aggregate gross proceeds of $7.0 million, resulting in net proceeds of approximately $6.0 million, after deducting the placement agent’s fees and estimated offering expenses payable by us, and excluding the proceeds, if any, from the subsequent exercise of the February Common Warrants. Each February Common Warrant has an exercise price of $1.00 per ADS and expires on the fifth anniversary of the February Closing Date. On the February Closing Date, the holder of the February Pre-Funded Warrant exercised its Pre-Funded Warrant in full. In connection with the February Offering, the Company entered into a Securities Purchase Agreement (the “February Purchase Agreement”) with certain institutional investors. Under the February Purchase Agreement, subject to certain exemptions, the Company agreed not to: (i) for a period of ninety ( 90 In connection with the February Offering, the Company entered into an Amendment No. 1 to Warrant to Purchase Ordinary Shares Represented by American Depositary Shares, dated February 24, 2023 (collectively, the “Warrant Amendments”), with each of the purchasers (the “2022 Purchasers”) who participated in both the August Offering and February Offering. The Warrant Amendments amended certain terms of the August Common Warrants issued to such 2022 Purchasers. Specifically, the Warrant Amendments reduced the exercise price of such warrants to $1.10 and extended the term during which those warrants could remain exercisable until February 24, 2028. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation: | Basis of Presentation: The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), which have been consistently applied, reflecting the operations of Quoin Inc. since inception and include the accounts of Quoin Ltd. since the date of the Merger. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of estimates: | Use of estimates: 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 developing the estimates and assumptions that are used in the preparation of these financial statements 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: |
Reclassification: | Reclassification: Certain 2021 amounts were reclassified to conform to the current year presentation. The amount reclassified included the short term portion of prepaid expenses from the long term portion of prepaid expenses and the short term portion from long term portion due to officers. |
Cash and cash equivalents: | Cash and cash equivalents: The Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. The Company, from time to time during the periods presented, has had bank account balances in excess of federally insured limits where substantially all cash is held in the United States. The Company has not experienced losses in such accounts. The Company believes that it is not subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. |
Warrants: | Warrants: The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement) provided that such contracts are indexed to the Company’s own stock. The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the Company’s control) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assesses classification of its warrants and other free-standing derivatives at each reporting date to determine whether a change in classification between assets, liabilities and equity is required. The Company evaluated the warrants to assess their proper classification using the applicable criteria enumerated under U.S. GAAP and determined that such warrants meet the criteria for equity classification in the accompanying balance sheets as of December 31, 2022. |
Investments: | Investments: Investments as of December 31, 2022 consist of U.S. Treasury Bills, which are classified as trading securities, totaling $9.9 million. The Company determines the appropriate balance sheet classification of its investments at the time of purchase and evaluates the classification at each balance sheet date. All of the Company’s U.S. Treasury Bills held on December 31, 2022 matured within the subsequent one month from the balance sheet date. As of December 31, 2022, the carrying value of the Company’s U.S. Treasury Bills approximates their fair value due to their short-term maturities. |
Long-lived assets: | Long-lived assets: Long-lived assets are comprised of acquired technology and licensed rights to use technology, which are considered platform technology with alternative future uses beyond the current products in development. Such intangible assets are being amortized on a straight-line basis over their expected useful life of 10 years . The Company assesses the impairment for long-lived assets whenever events or circumstances indicate the carrying value may not be recoverable. Factors we consider that could trigger an impairment review include the following: ● Significant changes in the manner of our use of the acquired assets or the strategy for our overall business, ● Significant underperformance relative to expected historical or projected development milestones, ● Significant negative regulatory or economic trends, and ● Significant technological changes which could render the platform technology obsolete. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the years ended December 31, 2022 and 2021, there were no impairment indicators which required an impairment loss measurement. |
Research and development: | Research and development: Research and development costs are expensed as incurred. Research and development expenses include personnel costs associated with research and development activities, including third-party contractors to perform research, conduct clinical trials and manufacture drug supplies and materials. The Company accrues for costs incurred by external service providers, including contract research organizations and clinical investigators, based on its estimates of service performed and costs incurred. These estimates include the level of services performed by third parties, patient enrollment in clinical trials when applicable, administrative costs incurred by third parties, and other indicators of the services completed. Based on the timing of amounts invoiced by service providers, the Company may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered. |
Income taxes: | Income taxes: The Company accounts for its income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company also accounts for uncertain tax positions using the more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken in the Company’s income tax returns. As of December 31, 2022 and 2021, the Company had no uncertain tax positions which affected its financial position and its results of operations or its cash flows and will continue to evaluate for uncertain tax positions in the future. If at any time the Company should record interest and penalties in connection with income taxes, the interest and the penalties will be expensed within the interest and general and administrative expenses, respectively. |
Stock based compensation: | Stock based compensation: The Company recognizes compensation costs resulting from the issuance of stock-based awards to employees, non-employees and directors as an expense in the consolidated statements of operations over the requisite service period based on a measurement of fair value for each stock-based award. The fair value of each option grant is estimated as of the date of grant using the Black-Scholes option-pricing model, net of actual forfeitures. The fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. The Company’s expected stock volatility is based on the historical data regarding the volatility of a publicly traded set of peer companies, since it has limited history of trading as a public company. The Company utilizes the simplified method to estimate the expected term. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield was assumed to be zero as the Company has not paid and dividends since its inception and does not anticipate paying dividends in the foreseeable future. |
Fair value of financial instruments: | Fair value of financial instruments: The Company considers its cash, investments, accounts payable, accrued expenses and the convertible and bridge notes payable to meet the definition of financial instruments. The carrying amounts of these financial instruments approximated their fair values due to the short maturities. The Company measures fair value as required by ASC Topic 820, Fair Value Measurements and Disclosures |
Earnings (loss) per share: | Earnings (loss) per share: The Company reports loss per share in accordance with ASC 260-10, Earnings Per Share For the year ended December 31, 2022, the number of shares excluded from the diluted net earnings (loss) per share included outstanding warrants to purchase 3,368,820 ADS or 16,844,100,000 Ordinary Shares and 307,142 in outstanding stock options as their inclusion in the denominator would be anti-dilutive. For the year ended December 31, 2021, the number of shares excluded from the diluted net earnings (loss) per share included outstanding warrants to purchase 143,028 ADS or 715,140,000 Ordinary Shares and warrants to purchase 1,257,723 ADS or 6,288,615,000 Ordinary Shares issuable pursuant to Primary Financing as their inclusion in the denominator would be anti-dilutive. |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Schedule of assets and liabilities measured at fair value on a recurring basis | December 31, 2022 Level 1 Level 2 Level 3 Total US Treasury Bills $ 9,992,900 $ — $ — $ 9,992,900 Total US Treasury Bills Asset $ 9,992,900 $ — $ — $ 9,992,900 December 31, 2021 Level 1 Level 2 Level 3 Total 2020 Notes warrants $ — $ — $ 373,599 $ 373,599 Total Warrant Liability $ — — $ 373,599 $ 373,599 |
Schedule of movement of the warrant liability | Bridge Financing 2020 Note Warrants Warrants Beginning Balance January 1, 2021 $ — $ — Warrant value at issuance (recorded as warrant liability expense) 3,783,079 894,113 Change in Fair value of warrants 8,627,651 (520,514) Reclassification of warrant liability to an equity instrument (12,410,730) — Ending Balance December 31, 2021 $ — $ 373,599 Change in Fair value of warrants — (77,237) Reclassification of warrant liability to an equity instrument — (296,362) Ending Balance December 31, 2022 $ — $ — |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
STOCK BASED COMPENSATION | |
Summary of stock-based activities | Weighted Weighted Average Average ADS Underlying Exercise Contractual Options Price Terms Outstanding at December 31, 2021 5,744 $ 636.74 0.33 Granted 307,142 $ 17.50 Forfeited/Cancelled (5,744) $ 636.74 Outstanding at December 31, 2022 307,142 $ 17.50 9.28 Exercisable options at December 31, 2022 — $ — — |
Summary of weighted average assumptions of stock options granted valued using the Black-Scholes option-pricing model | December 31, 2022 Expected volatility 106.0 % Risk-free interest rate 2.7 % Expected dividend yield 0.0 % Expected life of options in years 6.9 Exercise Price $ 17.50 Fair value of ADS $ 15.38 Estimated fair value of option $ 12.92 |
PREPAID EXPENSES (Tables)
PREPAID EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES | |
Schedule of Prepaid expenses | December 31, December 31, 2022 2021 Prepaid R&D costs $ 383,390 $ 329,033 Prepaid insurance 508,084 684,191 Prepaid expense 8,500 2,250 Total $ 899,974 $ 1,015,474 Less: Short-term portion (516,584) (715,474) Long-term portion $ 383,390 $ 300,000 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | December 31, December 31, 2022 2021 Research contract expenses (note 13) $ 105,071 $ 193,537 Payroll (note 12) 788,169 557,937 Payroll taxes (note 12) 159,593 199,582 Investor Relation firm fees (note 13) 56,000 584,000 Professional fees 44,278 144,377 Other Expenses 22,594 5,976 Total $ 1,175,705 $ 1,685,409 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | December 31, December 31, 2022 2021 Acquired technology – Polytherapeutics $ 40,433 $ 40,433 Technology license – Skinvisible 1,000,000 1,000,000 Total cost 1,040,433 1,040,433 Accumulated amortization (335,872) (231,829) Net book value $ 704,561 $ 808,604 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
Schedule of amounts due to officers | December 31, December 31, 2022 2021 Salaries and other compensation $ 4,108,500 $ 4,108,500 Invoices paid on behalf of the Company 15,232 615,232 Total $ 4,123,732 $ 4,723,732 Less: Short-term portion (600,000) (600,000) Long-term portion $ 3,523,733 $ 4,123,732 |
SHAREHOLDERS' EQUITY AND SHAR_2
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | |
Schedule of warrant activities | Weighted ADSs Average Underlying Exercise Price Warrants Per Share Outstanding at December 31, 2020 107,894 $ 56.92 * Granted 29,388 49.75 * Outstanding at December 31, 2021 137,282 $ 55.39 * Granted 5,385,374 11.21 ** Terminated (232,349) 49.75 * Exercised – Cashless and Pre Funded Warrants (1,921,487) — Outstanding and exercisable at December 31, 2022 3,368,820 $ 5.35 ** * Note that the exercise price of certain warrants was reduced from $49.75 to $0 on July 14, 2022 and to refer to Note 5 ** Note that the exercise price of certain warrants were reduced from $5.00 to $1.10 on February 24, 2023 and refer to Note 18 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of deferred tax assets and liabilities | (table in thousands) 2022 2021 Net operating losses $ 3,334 $ 1,945 Due to Officers — 1,411 Accrued Expenses and Other 189 212 R&D Credit Carryforward 76 102 Debt related activities — 375 Stock Compensation 178 — R&D Capitalization 581 — Intangibles 34 — Total gross deferred tax assets/(liabilities) $ 4,392 $ 4,045 Less valuation allowance (4,392) (4,045) Net deferred tax assets/(liabilities) $ — $ — |
Schedule of reconciliation between effective tax and tax computed by applying the U.S. federal income tax rate | (table in thousands) 2022 2021 Federal Statutory Rate $ (1,970) $ (4,641) Permanent Differences 153 2,876 Research and Development (76) (102) State Income Tax 388 196 Change in Valuation Allowance 347 1,671 Deferred True Up 1,158 — Effect of Tax Act — — Effective Tax $ — $ — |
ORGANIZATION, BUSINESS AND BA_2
ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION (Details) | Aug. 01, 2022 shares |
ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION | |
Shares owned (as a percent) | 12.50% |
Minimum | |
ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION | |
Number of shares represented for one ADS | 400 |
Maximum | |
ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION | |
Number of shares represented for one ADS | 5,000 |
LIQUIDITY RISKS AND OTHER UNC_2
LIQUIDITY RISKS AND OTHER UNCERTAINTIES (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||||
Aug. 15, 2022 | Aug. 10, 2022 | Jun. 10, 2022 | Dec. 31, 2022 | Aug. 09, 2022 | Oct. 28, 2021 | |
LIQUIDITY RISKS AND OTHER UNCERTAINTIES | ||||||
Accumulated deficit | $ 37.5 | |||||
Proceeds from exercised warrants | 7 | |||||
Warrant exercises | 7 | |||||
ADS | ||||||
LIQUIDITY RISKS AND OTHER UNCERTAINTIES | ||||||
Minimum Stockholders' equity required for continued listing on Nasdaq capital market | $ 2.5 | |||||
Minimum closing bid price required per ADS | $ 1 | $ 1 | ||||
Threshold number of consecutive business days for calculating closing bid price per ads | 10 days | 30 days | ||||
Investors | ||||||
LIQUIDITY RISKS AND OTHER UNCERTAINTIES | ||||||
Warrant exercises | $ 6 | |||||
2020 Notes | ||||||
LIQUIDITY RISKS AND OTHER UNCERTAINTIES | ||||||
Proceeds received | $ 16.8 | |||||
Proceeds received net of offering costs | $ 14.9 | |||||
Deferred offering costs | $ 14.9 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Detail (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
U.S. Treasury Bills | $ 9.9 |
Maturity term | 1 month |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Long-lived assets & Income taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Intangible assets, useful life | 10 years | |
Impairment loss measurement | $ 0 | $ 0 |
Uncertain tax positions | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings per share (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Employee stock option | ||
Antidilutive securities excluded from diluted computation | ||
Antidilutive securities | 307,142 | |
Outstanding warrants | ||
Antidilutive securities excluded from diluted computation | ||
Antidilutive securities | 715,140,000 | |
Outstanding warrants | ADS | ||
Antidilutive securities excluded from diluted computation | ||
Antidilutive securities | 3,368,820 | 143,028 |
Warrants | ||
Antidilutive securities excluded from diluted computation | ||
Antidilutive securities | 16,844,100,000 | 6,288,615,000 |
Warrants | ADS | ||
Antidilutive securities excluded from diluted computation | ||
Antidilutive securities | 1,257,723 |
CONVERTIBLE NOTES PAYABLE - 202
CONVERTIBLE NOTES PAYABLE - 2020 Notes (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | ||||
Proceeds notes payable | $ 3,475,000 | |||
Contractual term | 5 years | |||
Warrant liability at date of issuance | $ 373,599 | |||
Deemed dividend on warrant modification | $ 65,266 | |||
Convertible Notes Warrants, Common Stock | ||||
Debt Instrument [Line Items] | ||||
Shares warrants may purchase | 29,388,000,000 | |||
Convertible notes 2020 [Member] | ||||
Debt Instrument [Line Items] | ||||
Expected accrued interest | 312,000 | |||
Deemed dividend on warrant modification | $ 65,000 | |||
Convertible notes 2020 [Member] | Convertible Notes Warrants, Common Stock | ||||
Debt Instrument [Line Items] | ||||
Shares issued upon conversion | 5,183 | |||
Warrants, exercise price of warrants (in dollars per share) | $ 0 | $ 49.75 |
CONVERTIBLE NOTES PAYABLE - Int
CONVERTIBLE NOTES PAYABLE - Interest Expense (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | ||
Accrued interest and financing expense | $ | $ 1,146,251 | $ 743,840 |
Convertible notes 2020 [Member] | ||
Debt Instrument [Line Items] | ||
Accrued interest and financing expense | $ | $ 1,146,000 | 744,000 |
Total number of notes holders | item | 5 | |
Number of notes holders who received consideration | item | 2 | |
Number of remaining noteholders | item | 3 | |
Interest expense | $ | $ 0 | $ 202,000 |
BRIDGE FINANCING AND SECURITI_2
BRIDGE FINANCING AND SECURITIES PURCHASE AGREEMENT (Primary Financing) - Bridge Financing (Details) - USD ($) | 12 Months Ended | ||
Mar. 24, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||
Fair value adjustment to convertible notes payable | $ (1,250,000) | ||
Interest paid | 393,611 | ||
Bridge Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 5,000,000,000,000 | ||
Debt instrument, aggregate purchase price | $ 3,800,000,000,000 | ||
Debt instrument, par, discount percentage (as a percent) | 25% | ||
Debt instrument, interest rate, stated percentage (as a percent) | 15% | ||
Bridge Notes, First Closing, March 25, 2021 | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 2,000,000,000,000 | ||
Proceeds from convertible debt | 1,500,000,000,000 | ||
Bridge Notes, Second Purchase, April 2021 | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | 1,700,000,000,000 | ||
Proceeds from convertible debt | 1,250,000,000,000 | ||
Bridge Notes, Third Purchase, May 2021 | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | 1,300,000,000,000 | ||
Proceeds from convertible debt | $ 1,000,000,000,000 | ||
Convertible notes payable | |||
Debt Instrument [Line Items] | |||
Debt conversion, converted instrument, shares issued | 100,618 | ||
Interest expense | $ 0 | $ 394,000 |
BRIDGE FINANCING AND SECURITI_3
BRIDGE FINANCING AND SECURITIES PURCHASE AGREEMENT (Primary Financing) - Bridge Warrants - General Information (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Oct. 28, 2021 | Mar. 31, 2021 |
Class of Warrant or Right [Line Items] | ||||
Warrants, term | 5 years | |||
Warrant liability | $ 373,599 | |||
Bridge Warrants, Common Stock | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants, term | 5 years | |||
Warrants, number of securities called by warrants (in shares) | 99,074 | |||
Warrants, exercise price of the three lowest weighted-average prices of post-merger ordinary shares, threshold, percentage (as a percent) | 85% | |||
Bridge Warrants, Common Stock, First Closing | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant liability | $ 3,800,000 |
BRIDGE FINANCING AND SECURITI_4
BRIDGE FINANCING AND SECURITIES PURCHASE AGREEMENT (Primary Financing) - Exchange Warrants (Details) - Exchange Warrants, American Depositary Shares | Dec. 31, 2022 $ / shares shares |
Class of Warrant or Right [Line Items] | |
Warrants, number of securities called by warrants (in shares) | shares | 99,074 |
Warrants, exercise price of warrants (in dollars per share) | $ / shares | $ 49.75 |
BRIDGE FINANCING AND SECURITI_5
BRIDGE FINANCING AND SECURITIES PURCHASE AGREEMENT (Primary Financing) - Investor Warrants (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||
Jul. 14, 2022 | Oct. 28, 2021 | Mar. 24, 2021 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Aug. 02, 2022 | Apr. 22, 2022 | |
Class of Warrant or Right [Line Items] | ||||||||
Net proceeds | $ 10,100,000 | $ 14,877,332 | $ 10,102,874 | |||||
Warrants, issued, period after purchase agreement closing | 136 days | |||||||
Number of warrants outstanding | 399,999 | |||||||
Change in fair value of warrant liability | $ 491,000 | (77,237) | $ 12,784,329 | |||||
Deemed dividend on warrant modification | $ 65,266 | |||||||
Sale of equity securities, including conversion of "Bridge Notes" (in shares) | 14,877,332 | |||||||
Bridge Notes | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Debt Instrument, Face Amount | $ 5,000,000,000,000 | |||||||
Altium Agreement | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrants, exercise price of warrants (in dollars per share) | $ 0 | |||||||
ADS | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrants, number of securities called by warrants (in shares) | 342,100 | |||||||
Warrants, exercise price of warrants (in dollars per share) | $ 0 | $ 0 | ||||||
Number of ADS received for a warrant | 1 | |||||||
ADS | Bridge Notes | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Sale of equity securities, including conversion of "Bridge Notes" (in shares) | 29,388 | |||||||
ADS | Altium | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Number of warrants outstanding | 399,999 | |||||||
ADS | Altium Agreement | Altium | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrants, exercise price of warrants (in dollars per share) | $ 0 | |||||||
Private Placement | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Aggregate purchase price | 17,000,000 | |||||||
Debt Instrument, Face Amount | $ 12,000,000 | |||||||
Sale of common stock, including conversion of Bridge Notes | 342,100 | |||||||
Private Placement | Bridge Notes | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Aggregate purchase price | $ 5,000,000 | |||||||
Series A Warrants, American Depositary Shares | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrants, number of securities called by warrants (in shares) | 342,100 | |||||||
Warrants, exercise price of warrants (in dollars per share) | $ 49.75 | |||||||
Investor warrants maturity term | 5 years | |||||||
Series B Warrants, American Depositary Shares | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrants, number of securities called by warrants (in shares) | 342,100 | |||||||
Warrants, exercise price of warrants (in dollars per share) | $ 3.98 | |||||||
Investor warrants maturity term | 2 years | |||||||
Series C Warrants, American Depositary Shares [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrants, number of securities called by warrants (in shares) | 191,174 | |||||||
Warrants, exercise price of warrants (in dollars per share) | $ 3.98 | |||||||
Investor warrants maturity term | 2 years |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair value on a recurring basis (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Warrant liability | $ 373,599 | |
Recurring | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Warrant liability | $ 9,992,900 | 373,599 |
Recurring | US Treasury Bills | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Warrant liability | 9,992,900 | |
Recurring | 2020 Notes Warrants | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Warrant liability | 373,599 | |
Recurring | Level 1 | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Warrant liability | 9,992,900 | |
Recurring | Level 1 | US Treasury Bills | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Warrant liability | $ 9,992,900 | |
Recurring | Level 3 | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Warrant liability | 373,599 | |
Recurring | Level 3 | 2020 Notes Warrants | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Warrant liability | $ 373,599 |
FAIR VALUE OF FINANCIAL INSTR_4
FAIR VALUE OF FINANCIAL INSTRUMENTS - Change in fair value (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Movement of warrant liability | ||
Warrant liability reclassified to additional paid in capital | $ 296,362 | $ 12,410,730 |
Bridge Financing Warrants | ||
Movement of warrant liability | ||
Beginning Balance | 0 | |
Warrant value at issuance (recorded as warrant liability expense) | 3,783,079 | |
Change in Fair value of warrants | 8,627,651 | |
Reclassification of warrant liability to an equity instrument | (12,410,730) | |
Reclassification of warrant liability to an equity instrument | 12,400,000 | |
2020 Notes Warrants | ||
Movement of warrant liability | ||
Beginning Balance | 373,599 | 0 |
Warrant value at issuance (recorded as warrant liability expense) | 894,113 | |
Change in Fair value of warrants | (77,237) | (520,514) |
Reclassification of warrant liability to an equity instrument | (296,362) | |
Ending Balance | $ 373,599 | |
Warrant liability reclassified to additional paid in capital | $ 296,362 |
STOCK BASED COMPENSATION (Detai
STOCK BASED COMPENSATION (Details) - $ / shares | 1 Months Ended | 12 Months Ended | ||
Apr. 12, 2022 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
ADS | ||||
STOCK BASED COMPENSATION | ||||
Granted (in shares) | 5,385,374 | 29,388 | ||
Amended Plan | ||||
STOCK BASED COMPENSATION | ||||
Percentage of ordinary shares reserved for issuance | 15% | |||
Number of ordinary shares reserved for future issuance | 6,391,925,000 | |||
Number of shares acquired on exercise of options granted | 1,535,714,000 | |||
Number of shares available for issuance | 971,243 | |||
Granted (in shares) | 0 | |||
Amended Plan | ADS | ||||
STOCK BASED COMPENSATION | ||||
Number of ordinary shares reserved for future issuance | 1,278,385 | |||
Number of shares acquired on exercise of options granted | 307,142 | |||
Exercised (in dollars per share) | $ 17.50 | |||
Vesting period | 4 years | |||
Granted (in shares) | 307,142 | |||
Amended Plan | ADS | Minimum | ||||
STOCK BASED COMPENSATION | ||||
Vesting period | 3 years |
STOCK BASED COMPENSATION - Opti
STOCK BASED COMPENSATION - Option activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Weighted Average Exercise Price | ||
Balance at the beginning (in dollars per share) | $ 55.39 | $ 56.92 |
Granted (in dollars per share) | 11.21 | 49.75 |
Forfeited/Cancelled (in dollars per share) | 49.75 | |
Balance at the ending (in dollars per share) | $ 5.35 | $ 55.39 |
ADS | ||
ADS Underlying Options | ||
Outstanding at beginning (in shares) | 137,282 | 107,894 |
Granted (in shares) | 5,385,374 | 29,388 |
Forfeited/Cancelled (in shares) | (232,349) | |
Outstanding at ending (in shares) | 3,368,820 | 137,282 |
Amended Plan | ||
ADS Underlying Options | ||
Granted (in shares) | 0 | |
Amended Plan | ADS | ||
ADS Underlying Options | ||
Outstanding at beginning (in shares) | 5,744 | |
Granted (in shares) | 307,142 | |
Forfeited/Cancelled (in shares) | (5,744) | |
Outstanding at ending (in shares) | 307,142 | 5,744 |
Weighted Average Exercise Price | ||
Balance at the beginning (in dollars per share) | $ 636.74 | |
Granted (in dollars per share) | 17.50 | |
Forfeited/Cancelled (in dollars per share) | 636.74 | |
Balance at the ending (in dollars per share) | $ 17.50 | $ 636.74 |
Weighted Average Contractual Terms | ||
Contractual term (in years) | 9 years 3 months 10 days | 3 months 29 days |
Exercisable options (in years) | 0 years |
STOCK BASED COMPENSATION - Weig
STOCK BASED COMPENSATION - Weighted average assumptions (Details) | 12 Months Ended |
Dec. 31, 2022 $ / shares | |
STOCK BASED COMPENSATION | |
Expected volatility | 106% |
Risk-free interest rate | 2.70% |
Expected dividend yield | 0% |
Expected life of options in years | 6 years 10 months 24 days |
Exercise Price | $ 17.50 |
Fair value of ADS | 15.38 |
Estimated fair value of option | $ 12.92 |
STOCK BASED COMPENSATION - Stoc
STOCK BASED COMPENSATION - Stock based compensation expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
STOCK BASED COMPENSATION | ||
Intrinsic value of outstanding options | $ 0 | |
Stock-based compensation expense | 764,000 | $ 0 |
Unrecognized stock compensation expense | $ 3,205,000 | |
Unrecognized stock compensation expense expected to be recognized over the remaining weighted average service period | 3 years 25 days | |
Research and Development Expense [Member] | ||
STOCK BASED COMPENSATION | ||
Stock-based compensation expense | $ 100,000 | |
General and Administrative Expense [Member] | ||
STOCK BASED COMPENSATION | ||
Stock-based compensation expense | $ 664,000 |
PREPAID EXPENSES (Details)
PREPAID EXPENSES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
PREPAID EXPENSES | ||
Prepaid R&D costs | $ 383,390 | $ 329,033 |
Prepaid insurance | 508,084 | 684,191 |
Prepaid expense | 8,500 | 2,250 |
Total | 899,974 | 1,015,474 |
Less: Short-term portion | (516,584) | (715,474) |
Long-term portion | $ 383,390 | $ 300,000 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ACCRUED EXPENSES | ||
Research contract expenses | $ 105,071 | $ 193,537 |
Payroll | 788,169 | 557,937 |
Payroll taxes | 159,593 | 199,582 |
Investor Relation firm fees | 56,000 | 584,000 |
Professional fees | 44,278 | 144,377 |
Other expenses | 22,594 | 5,976 |
Total | $ 1,175,705 | $ 1,685,409 |
IN-LICENSED TECHNOLOGY - Polyth
IN-LICENSED TECHNOLOGY - Polytherapeutics (Details) - Polytherapeutics - USD ($) | 12 Months Ended | ||
Mar. 24, 2018 | Dec. 31, 2022 | Dec. 31, 2021 | |
IN-LICENSED TECHNOLOGY | |||
Purchase price agreement | $ 40,833 | ||
Royalty payments, as a percent of net revenue | 4% | ||
Royalty payment period | 10 years | ||
Royalty payments with one generic product introduced, as a percent of net revenue | 2% | 4% | |
Royalty payments with two generic product introduced, as a percent of net revenue | 0% | 2% |
IN-LICENSED TECHNOLOGY - Skinvi
IN-LICENSED TECHNOLOGY - Skinvisible (Details) - Skinvisable $ in Millions | 1 Months Ended |
Oct. 31, 2019 USD ($) | |
IN-LICENSED TECHNOLOGY | |
License Fee | $ 1 |
Percentage of revenues to be paid | 25% |
Amount of payment to be made | $ 5 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
INTANGIBLE ASSETS | ||
Total cost | $ 1,040,433 | $ 1,040,433 |
Accumulated amortization | (335,872) | (231,829) |
Net book value | 704,561 | 808,604 |
Acquired technology - Polytherapeutics | ||
INTANGIBLE ASSETS | ||
Total cost | 40,433 | 40,433 |
Technology license - Skinvisible | ||
INTANGIBLE ASSETS | ||
Total cost | $ 1,000,000 | $ 1,000,000 |
INTANGIBLE ASSETS (Details)_2
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INTANGIBLE ASSETS | ||
Amortization of intangibles | $ 104,043 | $ 104,043 |
Expected amortization expense | ||
2023 | 104,000 | |
2024 | 104,000 | |
2025 | 104,000 | |
2026 | 104,000 | |
Thereafter | $ 288,000 |
RELATED PARTY TRANSACTIONS - Na
RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS | ||
Non-bearing interest indebtedness | $ 599,999 | $ 304,466 |
Research and development | ||
RELATED PARTY TRANSACTIONS | ||
Consulting expense from related party | 48,000 | 8,000 |
Consulting expense | ||
RELATED PARTY TRANSACTIONS | ||
Consulting expense from related party | 100,000 | |
Dr. Myers | ||
RELATED PARTY TRANSACTIONS | ||
Monthly payment amount | 25,000 | |
Non-bearing interest indebtedness | 300,000 | 125,000 |
Outstanding indebtedness | 2,259,000 | |
Ms. Carter | ||
RELATED PARTY TRANSACTIONS | ||
Monthly payment amount | 25,000 | |
Non-bearing interest indebtedness | 300,000 | $ 160,000 |
Outstanding indebtedness | $ 1,865,000 |
RELATED PARTY TRANSACTIONS - Am
RELATED PARTY TRANSACTIONS - Amounts due to officers (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
RELATED PARTY TRANSACTIONS | ||
Due to officers - short term | $ 600,000 | $ 600,000 |
Officer [Member] | ||
RELATED PARTY TRANSACTIONS | ||
Total | 4,123,732 | 4,723,732 |
Less: Short-term portion | (600,000) | (600,000) |
Long-term portion | 3,523,733 | 4,123,732 |
Officer [Member] | Salaries and other compensation | ||
RELATED PARTY TRANSACTIONS | ||
Due to officers - short term | 4,108,500 | 4,108,500 |
Officer [Member] | Invoices paid on behalf of the Company | ||
RELATED PARTY TRANSACTIONS | ||
Due to officers - short term | $ 15,232 | $ 615,232 |
RESEARCH, CONSULTING AGREEMEN_2
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS (Details) | 1 Months Ended | 12 Months Ended | ||||||||
Jul. 31, 2018 USD ($) | Aug. 31, 2022 USD ($) shares | Mar. 31, 2022 USD ($) | Nov. 30, 2020 | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jun. 30, 2022 USD ($) | May 31, 2022 USD ($) | Nov. 30, 2021 USD ($) | Feb. 28, 2021 USD ($) | |
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | ||||||||||
Accrued expenses | $ 1,175,705 | $ 1,685,409 | ||||||||
Settlement of accrued expenses (in shares) | shares | 44,187 | |||||||||
Research and development | 2,672,836 | 1,562,927 | ||||||||
Gain on reduction in liability | 416,000 | |||||||||
Other income | (123,792) | (15,399,738) | ||||||||
Research and consulting agreement | Polytherapeutics | ||||||||||
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | ||||||||||
Monthly payments | $ 20,833 | |||||||||
Total amount of agreement | $ 666,667 | |||||||||
Research and consulting agreement | Axella Research LLC | ||||||||||
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | ||||||||||
Total amount of agreement | $ 270,000 | |||||||||
Number of agreements | 3 | |||||||||
Research and development | $ 0 | |||||||||
Research and consulting agreement | Netherton Syndrome | ||||||||||
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | ||||||||||
Research and development | 77,000 | 25,000 | ||||||||
Research and consulting agreement | Therapeutics Inc. | ||||||||||
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | ||||||||||
Research and development | 1,200,000 | 340,000 | ||||||||
Research and consulting agreement | Scleroderma | ||||||||||
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | ||||||||||
Total amount of agreement | $ 610,000 | |||||||||
Research and development | 276,000 | |||||||||
Consulting agreements | Axella Research LLC | ||||||||||
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | ||||||||||
Accrued expenses | 194,000 | |||||||||
Consulting agreements | Investor Relations firm | ||||||||||
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | ||||||||||
Monthly payments | 14,000 | |||||||||
Accrued expenses | 584,000 | |||||||||
Gain on reduction in liability | $ 168,000 | |||||||||
Other income | $ 416,000 | |||||||||
Consulting fees | 112,000 | $ 70,000 | ||||||||
Consulting agreements | Netherton Syndrome | ||||||||||
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | ||||||||||
Total amount of agreement | $ 250,000 | |||||||||
Consulting agreements | Therapeutics Inc. | ||||||||||
RESEARCH, CONSULTING AGREEMENTS AND COMMITMENTS | ||||||||||
Total amount of agreement | $ 830,000 | $ 4,400,000 | ||||||||
Initial term | 3 years | |||||||||
Written termination notice period | 90 days |
SHAREHOLDERS' EQUITY AND SHAR_3
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS - Share Capital (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||||||||||
Aug. 09, 2022 USD ($) $ / shares shares | Dec. 31, 2022 Y Vote $ / shares shares | Nov. 03, 2022 $ / shares shares | Nov. 02, 2022 shares | Sep. 30, 2022 $ / shares | Aug. 02, 2022 $ / shares | Aug. 01, 2022 shares | Apr. 22, 2022 shares | Apr. 12, 2022 $ / shares shares | Apr. 11, 2022 shares | Dec. 31, 2021 $ / shares shares | |
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | |||||||||||
Ordinary shares, shares authorized | 500,000,000,000 | 500,000,000,000 | |||||||||
Ordinary shares, par value | $ / shares | $ 0 | $ 0 | |||||||||
Number of vote for each ordinary share | Vote | 1 | ||||||||||
Issuance of ADS and Pre-Funded Warrants, net (in shares) | 14,877,332 | ||||||||||
Threshold period for not to enter in to an agreement for variable rate transaction from the date of closing of the Offering | 180 days | ||||||||||
Threshold period for not to issue or proposed issuance of any ADSs or ordinary shares | 90 days | ||||||||||
Public offering | |||||||||||
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | |||||||||||
Issuance of ADS and Pre-Funded Warrants, net (in shares) | 11,050,000,000 | ||||||||||
Public offering | Pre-Funded Warrants | |||||||||||
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | |||||||||||
Warrants, number of securities called by warrants (in shares) | 5,750,000,000 | ||||||||||
ADS | |||||||||||
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | |||||||||||
Number of ordinary shares for each ADS | 5,000 | ||||||||||
Warrants, number of securities called by warrants (in shares) | 1 | ||||||||||
Warrants, exercise price of warrants (in dollars per share) | $ / shares | $ 0 | $ 0 | |||||||||
ADS | Public offering | |||||||||||
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | |||||||||||
Purchase price | $ / shares | $ 5 | ||||||||||
ADS | Public offering | Pre-Funded Warrants | |||||||||||
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | |||||||||||
Purchase price | $ / shares | $ 4.9999 | ||||||||||
Warrants, number of securities called by warrants (in shares) | 1,150,000 | ||||||||||
Gross proceeds from offering | $ | $ 16.8 | ||||||||||
Net proceeds from offering | $ | $ 14.9 | ||||||||||
Warrants, exercise price of warrants (in dollars per share) | $ / shares | $ 5 | ||||||||||
Quoin | |||||||||||
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | |||||||||||
Ordinary shares, shares authorized | 500,000,000,000 | 50,000,000,000 | 50,000,000,000 | 12,500,000,000 | |||||||
Ordinary shares, par value | $ / shares | $ 0 | $ 0 | |||||||||
Number of years of income that limits distribution | Y | 2 | ||||||||||
Maximum period between date of financial statements and distribution date | 6 months | ||||||||||
Quoin | ADS | |||||||||||
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | |||||||||||
Number of ordinary shares for each ADS | 5,000 | ||||||||||
Quoin | ADS | Public offering | |||||||||||
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS | |||||||||||
Issuance of ADS and Pre-Funded Warrants, net (in shares) | 2,210,000 |
SHAREHOLDERS' EQUITY AND SHAR_4
SHAREHOLDERS' EQUITY AND SHARE OWNERSHIP AND RIGHTS - Warrants (Details) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2022 | Dec. 31, 2021 | Feb. 24, 2023 | Sep. 30, 2022 | Aug. 02, 2022 | Jul. 14, 2022 | |
Weighted Average Exercise Price Per Share | ||||||
Balance at the beginning (in dollars per share) | $ 55.39 | $ 56.92 | ||||
Granted (in dollars per share) | 11.21 | 49.75 | ||||
Terminated (in dollars per share) | 49.75 | |||||
Balance at the ending (in dollars per share) | $ 5.35 | $ 55.39 | ||||
Intrinsic value of outstanding options | $ 0 | |||||
Maximum | ||||||
Weighted Average Exercise Price Per Share | ||||||
Exercise price of warrants | $ 5 | $ 49.75 | ||||
Minimum | ||||||
Weighted Average Exercise Price Per Share | ||||||
Exercise price of warrants | $ 1.10 | $ 0 | ||||
ADS | ||||||
ADSs Underlying Warrants | ||||||
Outstanding at beginning (in shares) | 137,282 | 107,894 | ||||
Granted (in shares) | 5,385,374 | 29,388 | ||||
Terminated (in shares) | (232,349) | |||||
Exercised - Cashless and Pre Funded Warrants | (1,921,487) | |||||
Outstanding at ending (in shares) | 3,368,820 | 137,282 | ||||
Weighted Average Exercise Price Per Share | ||||||
Exercise price of warrants | $ 0 | $ 0 | ||||
Intrinsic value of outstanding options | $ 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
INCOME TAXES | |||
Increase in valuation allowance | $ 4,392,000 | $ 4,045,000 | |
Federal income tax rate | 21% | 21% | 21% |
Effective tax rate | 0% | 0% | |
Gross deferred tax asset | $ 2,256,000 | ||
Deferred tax assets: | |||
Net operating losses | 3,334,000 | $ 1,945,000 | |
Due to Officers | 1,411,000 | ||
Accrued Expenses and Other | 189,000 | 212,000 | |
R&D Credit Carryforward | 76,000 | 102,000 | |
Debt related activities | 375,000 | ||
Stock Compensation | 178,000 | ||
R&D Capitalization | 581,000 | ||
Intangibles | 34,000 | ||
Total gross deferred tax assets/(liabilities) | 4,392,000 | 4,045,000 | |
Less valuation allowance | (4,392,000) | (4,045,000) | |
Federal | |||
INCOME TAXES | |||
Net operating loss carryforward | 12,951,000 | $ 6,482,000 | |
Federal | Research and Development (R&D) tax credit | |||
INCOME TAXES | |||
Tax credit carry-forwards | 76,000 | ||
State | |||
INCOME TAXES | |||
Net operating loss carryforward | $ 12,951,000 |
INCOME TAXES - Company's valuat
INCOME TAXES - Company's valuation allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Federal Statutory Rate | $ (1,970) | $ (4,641) |
Permanent Differences | 153 | 2,876 |
Research and Development | (76) | (102) |
State Income Tax | 388 | 196 |
Change in Valuation Allowance | 347 | $ 1,671 |
Deferred True Up | $ 1,158 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) | 1 Months Ended |
Feb. 29, 2020 USD ($) | |
CONTINGENCIES | |
Possible damages sought | $ 666,667 |
LICENSE AGREEMENTS (Details)
LICENSE AGREEMENTS (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) agreement | Dec. 31, 2021 agreement | |
LICENSE AGREEMENTS | ||
Number of license and supply agreements entered | agreement | 3 | 6 |
Royalty revenues | $ | $ 0 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||||
Feb. 24, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Aug. 02, 2022 | Apr. 22, 2022 | |
SUBSEQUENT EVENTS | |||||
Issuance of ADS and Pre-Funded Warrants, net (in shares) | 14,877,332 | ||||
ADS | |||||
SUBSEQUENT EVENTS | |||||
Shares warrants may purchase | 342,100 | ||||
Exercise price of warrants | $ 0 | $ 0 | |||
Subsequent Event [Member] | |||||
SUBSEQUENT EVENTS | |||||
Aggregate gross proceeds | $ 7 | ||||
Net proceeds | $ 6 | ||||
Subsequent Event [Member] | February Purchase Agreement | |||||
SUBSEQUENT EVENTS | |||||
Threshold period for not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any ADSs, ordinary shares or ordinary share equivalents, after the closing date of the Offering | 90 days | ||||
Threshold period for not to enter into an agreement to effect a variable rate transaction, after the closing date of the Offering | 180 days | ||||
Subsequent Event [Member] | February Pre-Funded Warrant | |||||
SUBSEQUENT EVENTS | |||||
Shares warrants may purchase | 10,250,000,000 | ||||
Subsequent Event [Member] | ADS | February Pre-Funded Warrant | |||||
SUBSEQUENT EVENTS | |||||
Shares warrants may purchase | 2,050,000 | ||||
Warrant price | $ 0.9999 | ||||
Subsequent Event [Member] | ADS | February Common Warrant | |||||
SUBSEQUENT EVENTS | |||||
Exercise price of warrants | $ 1 | ||||
Subsequent Event [Member] | February Offering [Member] | |||||
SUBSEQUENT EVENTS | |||||
Issuance of ADS and Pre-Funded Warrants, net (in shares) | 24,750,000,000 | ||||
Exercise price of warrants | $ 1.10 | ||||
Subsequent Event [Member] | February Offering [Member] | ADS | |||||
SUBSEQUENT EVENTS | |||||
Issuance of ADS and Pre-Funded Warrants, net (in shares) | 4,950,000 | ||||
Purchase price | $ 1 |