1 unchanged sentence
Disclosure Controls and Procedures
−Removed: We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
−Removed: As of December 31, 2022, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).
−Removed: Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2022.
−Removed: In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving the desired control objectives.
+Added: We maintain disclosure controls and procedures, which are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
+Added: Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation, as of the end of the period covered by this report, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15e under the Exchange Act).
+Added: Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Annual Report on Internal Control over Financial Reporting
−Removed: Our management, including our Chief Executive Officer and Chief Financial Officer, are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
−Removed: Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
+Added: Our management, including our Chief Executive Officer and Chief Financial Officer, are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act).
+Added: Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
+Added: preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Internal control over financial reporting includes policies and procedures that:
3 unchanged sentences
● provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
−Removed: Due to its inherent limitations, any system of internal control over financial reporting may not prevent or detect misstatements.
+Added: Due to its inherent limitations, any system of internal control over financial reporting, no matter how well defined, may not prevent or detect misstatements.
In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
5 unchanged sentences
Changes in Internal Control over Financial Reporting
−Removed: During the year ended December 31, 2022, there were no changes in our internal control over financial reporting] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
+Added: There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), that occurred during the quarter ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Other Information
+Added: During the fourth quarter of 2023, none of our directors or executive officers adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408(a) of Registration S-K).
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
25 unchanged sentences
Inc.), a biotherapeutics pharmaceutical company, and was responsible for taking that company public in 2014.
−Removed: From 2001 to 2002, he served as President of the drug delivery division of West Pharmaceutical Services, Inc.
−Removed: WST), a designer and manufacturer of injectable pharmaceutical packaging and delivery systems.
+Added: From 2001 to 2002, he served as President of the drug delivery division of West Pharmaceutical Services, Inc., a publicly traded company and a designer and manufacturer of injectable pharmaceutical packaging and delivery systems.
From 1996 to 1999, Dr.
1 unchanged sentence
From 2000 to 2001, Dr.
−Removed: Myers served as Executive Vice President and Chief Commercial Officer of Flamel Technologies (n/k/a Avadel Pharmaceuticals PLC (Nasdaq:
−Removed: AVDL), a specialty pharmaceutical company.
+Added: Myers served as Executive Vice President and Chief Commercial Officer of Flamel Technologies (n/k/a Avadel Pharmaceuticals PLC, a publicly traded company and a specialty pharmaceutical company.
From 1987 to 1995, Dr.
1 unchanged sentence
Since 2023, Dr.
−Removed: Myers has served as a director of Ethicann Pharmaceuticals and SquareX Pharmaceuticals, each a clinical stage pharmaceutical company.
+Added: Myers has served as a director of Cranial Devices, a clinical stage medical device company.
Since 2019, Dr.
1 unchanged sentence
Myers earned his Ph.D.
−Removed: in Chemistry from the University College Cork, Ireland.
+Added: in Chemistry from University College Cork, Ireland.
We believe Dr.
−Removed: Myers is qualified to serve on our Board due to his extensive knowledge as one of Quoin Inc.’s co-founders and Chief Executive Officer, and his extensive commercial and management experience with both public and private life sciences companies.
+Added: Myers is qualified to serve on our Board due to his extensive knowledge as one of Quoin Inc.’s co-founders and Chief Executive Officer, and his extensive clinical development, commercial and management experience with both public and private life sciences companies.
Denise Carter , Chief Operating Officer and Director .
9 unchanged sentences
From 2001 to 2003, Ms.
−Removed: Carter was the Vice President of Business Development of the drug delivery division of West Pharmaceuticals, Inc.
+Added: Carter was the Vice President of Business Development of the drug delivery division of West Pharmaceuticals, Inc., a publicly traded company.
From 2000 to 2001, she was the Senior Director of Business Development of Eurand, a specialty pharmaceutical company.
12 unchanged sentences
since October 28, 2021.
−Removed: He has significant experience in operational, corporate development and general management roles within the pharmaceutical and healthcare industry.
−Removed: Since 2012, Mr.
−Removed: Cooper has served as the President of Boulder Cove LC, a pharmaceutical and healthcare consulting company.
+Added: Cooper has significant experience in finance, operation, corporate development and general management roles within the pharmaceutical and healthcare industry.
+Added: Since July 2023, Mr.
+Added: Cooper has served as Chief Financial Officer for Hydrinity Skin Sciences, a medical aesthetics company.
+Added: From 2012 to 2023, Mr.
+Added: Cooper served as the President of Boulder Cove LC, a pharmaceutical and healthcare consulting company.
From September 2019 to December 2022, Mr.
5 unchanged sentences
From 1996 to 2010, Mr.
−Removed: Cooper served as the Executive Vice President of Corporate and Product Development of Medicis Pharmaceutical Corp.
−Removed: MRX), a pharmaceutical and medical aesthetics company.
+Added: Cooper served as the Executive Vice President of Corporate and Product Development of Medicis Pharmaceutical Corp., a publicly traded pharmaceutical and medical aesthetics company.
Since January 2018, Mr.
1 unchanged sentence
From 2006 to 2007, Mr.
−Removed: Cooper served as a director of Bioenvision (Nasdaq:
−Removed: BIVN) a pharmaceutical company.
+Added: Cooper served as a director of Bioenvision, a publicly traded pharmaceutical company.
Cooper holds an MBA from the WP Carey School of Business at Arizona State University and a BA from Northeastern Illinois University.
19 unchanged sentences
From April 2016 to September 2019, Mr.
−Removed: Culverwell served as a director and Audit Committee Chairman of Amryt Pharma PLC (Nasdaq:
−Removed: AMYT), a commercial-stage biopharmaceutical company.
+Added: Culverwell served as a director and Audit Committee Chairman of Amryt Pharma PLC, a publicly traded company and a commercial-stage biopharmaceutical company.
From February 2013 to July 2017, Mr.
15 unchanged sentences
From 2004 to June 2022, Dr.
−Removed: Langer served as a director of Myriad Genetics, Inc.
−Removed: MYGN), a genetic testing and precision medicine company.
+Added: Langer served as a director of Myriad Genetics, Inc., a publicly traded company and a genetic testing and precision medicine company.
From 2021 to June 2022, Dr.
Langer served as a director of Brooklyn ImmunoTherapeutics, Inc.
−Removed: (n/k/a Eterna Therapeutics Inc., Nasdaq:
−Removed: ERNA), a biotechnology company.
+Added: (n/k/a Eterna Therapeutics Inc.), a publicly traded company and a biotechnology company.
From 2007 to 2019, Dr.
−Removed: Langer served as a director of Dicerna Pharmaceuticals Inc.
−Removed: DRNA), a biopharmaceutical company.
+Added: Langer served as a director of Dicerna Pharmaceuticals Inc., a publicly traded company and a biopharmaceutical company.
Langer serves on the Dean’s Advisory Board of Harvard Law School.
24 unchanged sentences
She earned a B.Comm degree (Finance and Economics) and a B.A.
−Removed: degree (French and Literature) from the University of Melbourne in 2007.
+Added: (French and Literature) from the University of Melbourne in 2007.
We believe Ms.
5 unchanged sentences
since October 28, 2021.
−Removed: Since 2015, Mr.
−Removed: Sember has served as the Chief Executive Officer of RaeSedo, Inc., a therapeutics company.
Since 2007, he has served as a Principal of Accela Advisors, a biopharmaceutical consulting firm specializing in strategic planning, business development and coaching for startups.
−Removed: From January 2018 to October 2020, Mr.
+Added: From January 2018 to October 2020, From 2022 until 2023, Mr.
+Added: Sember served as the Chief Executive Officer of RaeSedo, Inc, a startup therapeutics company spin out of the University of Arizona.
Sember served as the Chief Executive Officer of Regulonix Holding, Inc., a drug development company.
23 unchanged sentences
Dunn earned his JD from New York University School of Law and a BA from Stanford University.
−Removed: Family Relationships
−Removed: There are no family relationships among any of our directors or executive officers.
−Removed: Legal Proceedings
−Removed: There are no material legal proceedings to which any of our directors or executive officers, or any associate of any of our directors or executive officers, is a party adverse to us or our subsidiaries or has a material interest adverse to us or our subsidiaries.
Delinquent Section 16(a) Reports
−Removed: Starting from January 1, 2023, our directors, officers (as defined under Rule 16a-1(f) under the Exchange Act) and stockholders who beneficially own more than 10% of any class of our equity securities registered pursuant to Section 12 of the Exchange Act (collectively, the “Reporting Persons”) are required to file initial statements of beneficial ownership of securities and statements of changes in beneficial ownership of securities with respect to our equity securities with the SEC under Section 16(a) of the Exchange Act.
−Removed: Therefore, there were no late Form 3 or Form 4 filings in 2022.
+Added: Section 16(a) of the Exchange Act and the regulations promulgated thereunder require our executive officers, directors and persons who beneficially own more than 10% of our common stock to file forms with the SEC to report their ownership of the Company’s shares and any changes in ownership.
+Added: We have reviewed all forms filed electronically with the SEC during, and with respect to, 2023.
+Added: Based on that review and written information given to us by all of our directors and executive officers, we believe that all of our directors, executive officers and holders of more than 10% of our stock filed on a timely basis all reports that they were required to file under Section 16(a) during fiscal 2023, except for a late Form 3 filed on March 7, 2023 for Michael Sember.
Code of Ethics
1 unchanged sentence
A copy of our Code of Ethics has been posted to the “Investors—Corporate Governance” section of our website www.quoinpharma.com, and it is attached as an exhibit to this Annual Report.
−Removed: If we make any amendment to the Code of Ethics or grant any waivers, including any implicit waiver, from a provision of the Code of Ethics, we will disclose the nature of such amendment or waiver on our website to the extent required by the rules and regulations of the SEC.
−Removed: We have not granted any waivers under our Code of Ethics.
+Added: If we make any amendment to the Code of Ethics or grant any waivers, including any implicit waiver, from a provision of the Code of Ethics, we will disclose the nature of such amendment or waiver on our website www.quoinpharma.com.
+Added: to the extent required by the rules and regulations of the SEC.
+Added: The information on the website is not and should not be considered part of this Form 10-K and is not incorporated by reference in this Form 10-K.
Board of Directors
−Removed: The Board determined that Joseph Cooper, James Culverwell, Dr.
−Removed: Dennis Langer, Natalie Leong, and Michael Sember, qualify as independent directors, as such term is defined under Nasdaq listing rules.
The Board of Directors has established three standing committees:
9 unchanged sentences
● recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors;
−Removed: Our audit committee provides assistance to our board of directors in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions by pre-approving the services performed by our independent accountants and reviewing their reports regarding our accounting practices and systems of internal control over financial reporting.
−Removed: Our audit committee also oversees the audit efforts of our independent accountants and takes those actions that it deems necessary to satisfy itself that the accountants are independent of management.
−Removed: Under the Companies Law, our audit committee is responsible for:
● determining whether there are deficiencies in the business management practices of our company, including in consultation with our internal auditor or the independent auditor, and making recommendations to the board of directors to improve such practices;
● determining the approval process for transactions that are ‘non-negligible’ (i.e., transactions with a controlling shareholder that are classified by the audit committee as non-negligible, even though they are not deemed extraordinary transactions), as well as determining which types of transactions would require the approval of the audit committee, which determination may be based on annually pre-determined criteria;
−Removed: ● determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under the Companies Law);
+Added: ● determining whether to approve certain related party transactions (including transactions in which an office holder (as defined below) has a personal interest and whether such transaction is extraordinary or material under the Companies Law);
● examining the work plan of the internal auditor before its submission to our board of directors and proposing amendments thereto or, upon a decision of the board of directors, acting as the corporate body to approve such work plan;
● examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools at his disposal to fulfill his responsibilities;
−Removed: ● examining the scope of our external auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors;
+Added: ● examining the scope of our independent auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors;
● establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to be provided to such employees.
8 unchanged sentences
● assessing implementation of the compensation policy;
−Removed: ● the initial approval of transactions regarding the terms of compensation for all office holders, subject to further approvals that may be required by the board of directors and/or a general meeting of shareholders, depending on the circumstances;
−Removed: ● deciding, under the special circumstances set forth in the Companies Law, whether to exempt the approval of terms and conditions of a Chief Executive Officer’s service from the requirement of shareholder approval;
−Removed: ● approving non-material amendments to the compensation arrangement of an office holder who is not a director;
+Added: ● resolving whether to approve arrangements with respect to the terms of office and employment of office holders, which require the approval of the compensation committee pursuant to the Companies Law;
+Added: ● exempting, under certain circumstances, a transaction with our Chief Executive Officer from the approval of our shareholders.;
● making other determinations that the Companies Law assigns to a compensation committee;
7 unchanged sentences
● reviewing and establishing appropriate insurance coverage for our office holders.
+Added: Compensation Policy under the Companies Law
+Added: In general, under the Companies Law, a public company must have a compensation policy approved by the board of directors after receiving and considering the recommendations of the compensation committee.
+Added: In addition, our compensation policy must be approved at least once every three years, first, by our board of directors, upon the recommendation of our compensation committee, and second, by a simple majority of the ordinary shares present, in person or by proxy, and voting (excluding abstentions) at a general meeting of shareholders, provided that either:
+Added: ● such majority includes at least a majority of the shares held by shareholders who are not controlling shareholders and shareholders who do not have a personal interest in such compensation policy;
+Added: ● the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the compensation policy and who vote against the policy does not exceed two percent (2%) of the aggregate voting rights in the Company.
+Added: Under special circumstances, the board of directors may approve the compensation policy despite the objection of the shareholders on the condition that the compensation committee and then the board of directors decide, on the basis of detailed grounds and after
+Added: discussing again the compensation policy, that approval of the compensation policy, despite the objection of shareholders, is for the benefit of the company.
+Added: If a company that initially offers its securities to the public, like us, adopts a compensation policy in advance of its initial public offering, and describes it in its prospectus for such offering, then such compensation policy shall be deemed a validly adopted policy in accordance with the Companies Law requirements described above.
+Added: Furthermore, if the compensation policy is established in accordance with the aforementioned relief, then it will remain in effect for a term of five years from the date such company becomes a public company.
+Added: The compensation policy must be based on certain considerations, include certain provisions and reference certain matters as set forth in the Companies Law.
+Added: The compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement of office holders, including exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement.
+Added: The compensation policy must be determined and later reevaluated according to certain factors, including:
+Added: the advancement of the company’s objectives, business plan and long-term strategy;
+Added: the creation of appropriate incentives for office holders, while considering, among other things, the company’s risk management policy;
+Added: the size and the nature of the company’s operations;
+Added: and with respect to variable compensation, the contribution of the office holder towards the achievement of the company’s long-term goals and the maximization of its profits, all with a long-term objective and according to the position of the office holder.
+Added: The compensation policy must furthermore consider the following additional factors:
+Added: ● the education, skills, experience, expertise and accomplishments of the relevant office holder;
+Added: ● the office holder’s position and responsibilities;
+Added: ● prior compensation agreements with the office holder;
+Added: ● the ratio between the cost of the terms of employment of an office holder and the cost of the employment of other employees of the company, including employees employed through contractors who provide services to the company, in particular the ratio between such cost to the average and median salary of such employees of the company, as well as the impact of disparities between them on the work relationships in the company;
+Added: ● if the terms of employment include variable components — the possibility of reducing variable components at the discretion of the board of directors and the possibility of setting a limit on the value of non-cash variable equity-based components;
+Added: ● if the terms of employment include severance compensation — the term of employment or office of the office holder, the terms of the office holder’s compensation during such period, the company’s performance during such period, the office holder’s individual contribution to the achievement of the company goals and the maximization of its profits and the circumstances under which he or she is leaving the company.
+Added: The compensation policy must also include, among other things:
+Added: ● with regards to variable components:
+Added: ● with the exception of office holders who report to the chief executive officer, a means of determining the variable components on the basis of long-term performance and measurable criteria;
+Added: provided that the company may determine that an immaterial part of the variable components of the compensation package of an office holder shall be awarded based on non-measurable criteria, or if such amount is not higher than three months’ salary per annum, taking into account such office holder’s contribution to the company;
+Added: ● the ratio between variable and fixed components, as well as the limit of the values of variable components at the time of their payment, or in the case of equity-based compensation, at the time of grant;
+Added: ● a condition under which the office holder will return to the company, according to conditions to be set forth in the compensation policy, any amounts paid as part of the office holder’s terms of employment, if such amounts were paid based on information later to be discovered to be wrong, and such information was restated in the company’s financial statements;
+Added: ● the minimum holding or vesting period of variable equity-based components to be set in the terms of office or employment, as applicable, while taking into consideration long-term incentives;
+Added: ● a limit to retirement grants.
+Added: Our compensation policy is designed to promote retention and motivation of directors and executive officers, incentivize superior individual excellence, align the interests of our directors and executive officers with our long-term performance and provide a risk management tool.
+Added: To that end, a portion of our executive officer compensation package is targeted to reflect our short and long-term goals, as well as the executive officer’s individual performance.
+Added: On the other hand, our compensation policy includes measures designed to reduce the executive officer’s incentives to take excessive risks that may harm us in the long-term, such as limits on the value of cash bonuses and equity-based compensation, limitations on the ratio between the variable and the total compensation of an executive officer and minimum vesting periods for equity-based compensation.
+Added: Our compensation policy also addresses our executive officers’ individual characteristics (such as their respective position, education, scope of responsibilities and contribution to the attainment of our goals) as the basis for compensation variation among our executive officers and considers the internal ratios between compensation of our executive officers and directors and other employees.
+Added: Pursuant to our compensation policy, the compensation that may be granted to an executive officer may include:
+Added: base salary, annual bonuses and other cash bonuses (such as a signing bonus and special bonuses with respect to significant events, such as a significant partnership, collaboration agreement or the generation of positive clinical trial results or regulatory approval of one of the Company’s products), equity-based compensation and termination of service grants.
+Added: An annual cash bonus may be awarded to executive officers upon the attainment of pre-set periodic objectives and individual targets.
+Added: The annual cash bonus that may be granted to our executive officers is based primarily on measurable short- and long-term criteria.
+Added: A non-material part of variable compensation for executive officers may be based on qualitative or non-measurable criteria which focus on the executive officer’s contribution to the Company, subject to a maximum amount linked to the executive officer’s base salary.
+Added: The equity-based compensation under our compensation policy for our executive officers is designed in a manner consistent with the underlying objectives in determining the base salary and the annual cash bonus, with its main objectives being to enhance the alignment between the executive officers’ interests with our long-term interests and those of our shareholders and to strengthen the retention and the motivation of executive officers in the long term.
+Added: Our compensation policy provides for equity compensation in any form permitted under our equity incentive plan then in place.
+Added: The equity-based compensation shall be granted from time to time and be individually determined and awarded according to the performance, educational background, prior business experience, qualifications, role and the personal responsibilities of the executive officer.
+Added: In addition, our compensation policy contains compensation recovery provisions which allow us under certain conditions to recover bonuses paid in excess, enables our compensation committee and board of directors to approve an immaterial change in the terms of employment of an executive officer and allow us to exculpate, indemnify and insure our executive officers and directors to the maximum extent permitted by Israeli law subject to certain limitations set forth therein.
+Added: Our compensation policy also provides for compensation to the members of our board of directors in accordance with market compensation trends, provided however that in the case of an external director, such compensation will be paid in accordance with the amounts provided in the Companies Regulations (Rules Regarding the Compensation and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel) of 2000, as such regulations may be amended from time to time.
+Added: Our compensation policy was approved by our compensation committee, our board of directors and shareholders and became effective on April 12, 2022.
Nominating and Governance Committee
6 unchanged sentences
Internal Auditor
−Removed: We are required to appoint an internal auditor in accordance with the recommendation of the audit committee in accordance with the Companies Law.
−Removed: An internal auditor may not be:
−Removed: ● a person (or a relative of a person) who holds more than 5% of the company’s outstanding shares or voting rights;
−Removed: ● a person (or a relative of a person) who has the power to appoint a director or the chief executive officer of the company;
−Removed: ● an office holder (including a director) of the company (or a relative thereof);
−Removed: ● a member of the company’s independent accounting firm, or anyone on his or her behalf.
+Added: Under the Companies Law, the board of directors of a public company must appoint an internal auditor based on the recommendation of the audit committee.
+Added: The role of the internal auditor is, among other things, to review the company’s compliance with applicable law and orderly business procedure.
+Added: Under the Companies Law, the internal auditor cannot be an interested party, an office holder, or a relative of an interested party or an office holder.
+Added: Nor may the internal auditor be the company’s independent auditor or its representative.
+Added: An “interested party” is defined in the Companies Law as (i) a holder of 5% or more of the issued share capital or voting power in a company, (ii) any person or entity who has the right to designate one or more directors or to designate the chief executive officer of the company, or (iii) any person who serves as a director or as chief executive officer of the company.
The role of the internal auditor is to examine, among other things, our compliance with applicable law and orderly business procedures.
2 unchanged sentences
Edo Pollack, a Certified Public Accountant and partner-in-charge of the Israel office of Eisner Advisory Group LLC.
−Removed: The Chairman of the board of directors is the direct supervisor of the internal auditor, unless the board of directors determines otherwise (and, in this regard, we have not determined otherwise).
−Removed: The internal auditor is required to submit his or her findings to the Chairman of the Board, the Chief Executive Officer, and the Chairman of the audit committee.
−Removed: The internal auditor may not be dismissed or suspended without his consent, other than by a decision of the board of directors requiring a quorum of the majority of the members of the board, after the board of directors has heard the audit committee’s position on the matter, and the internal auditor has been afforded a reasonable opportunity to bring his position before the audit committee and the board of directors.
−Removed: Fiduciary Duties of Directors and Executive Officers
+Added: Fiduciary Duties of Directors, Executive Officers and Shareholders
The Companies Law codifies the fiduciary duties that office holders owe to a company.
−Removed: An “office holder” under the Companies Law means a director, a Chief Executive Officer, or other officer who occupies a general or chief management position, or serves in a position directly secondary to or directly reporting to the Chief Executive Officer.
−Removed: Each person named in the table of our directors and executive officers above is an “office holder” under the Companies Law.
+Added: An office holder is defined in the Companies Law as a general manager, chief business manager, deputy general manager, vice general manager, any other person assuming the responsibilities of any of these positions regardless of such person’s title, a director, and any other manager directly subordinate to the general manager.
+Added: Each person listed in the table under “Management” is an office holder under the Companies Law.
An office holder’s fiduciary duties consist of a duty of care and a duty of loyalty.
9 unchanged sentences
● disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his or her position as an office holder.
+Added: Shareholder duties
+Added: Pursuant to the Companies Law, a shareholder has a duty to act in good faith and in a customary manner toward the company and other shareholders and to refrain from abusing his or her power with respect to the company, including, among other things, in voting at a general meeting and at shareholder class meetings with respect to the following matters:
+Added: ● an amendment to the company’s articles of association;
+Added: ● an increase of the company’s authorized share capital;
+Added: ● interested party transactions that require shareholder approval.
+Added: In addition, a shareholder has a general duty to refrain from discriminating against other shareholders.
+Added: Certain shareholders also have a duty of fairness toward the company.
+Added: These shareholders include any controlling shareholder, any shareholder who knows that it has the power to determine the outcome of a shareholder vote, and any shareholder who has the power to appoint or to prevent the appointment of an office holder of the company or exercise any other rights available to it under the company’s articles of association with respect to the company.
+Added: The Companies Law does not define the substance of this duty of fairness, except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty of fairness.
Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions
−Removed: The Companies Law requires that an office holder promptly disclose to the board of directors any personal interest that he or she may be aware of concerning any existing or proposed transaction with the company, including all material information or documents related thereto.
−Removed: An interested office holder’s disclosure must be made promptly, and in any event no later than the first meeting of the board of directors at which the transaction is considered.
−Removed: As used in the context of the Companies Law, a “personal interest” includes an interest of any person in an act or transaction of a company, including a personal interest of such person’s “relative,” or of a corporate body in which such person or a relative of such person is a 5% or greater shareholder, director or chief executive officer, or in which he or she has the right to appoint at least one director or the chief executive officer, but excluding a personal interest stemming solely from an interest in shares in the company.
−Removed: A “personal interest” is furthermore deemed to include, in a proposal brought before a meeting of shareholders, the personal interest of a shareholder for whom a vote is being cast by power of attorney, as well as the personal interest of a person voting by virtue of a power of attorney, even if the person granting such power of attorney has no personal interest in the matter.
−Removed: A “relative” (in this context, and generally in the context of the Companies Law) means (a) a spouse, sibling, parent, grandparent, child or descendant, (b) a spouse’s child or descendant, parent or sibling, or (c) the spouse of any of the foregoing.
−Removed: An office holder is not, however, obligated to disclose a personal interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered an “extraordinary transaction.”
−Removed: Under the Companies Law, an “extraordinary transaction” is defined as any of the following:
−Removed: ● a transaction other than in the ordinary course of business;
−Removed: ● a transaction that is not on market terms;
−Removed: ● a transaction that may have a material impact on a company’s profitability, assets or liabilities.
−Removed: Generally speaking, a director and any other office holder who has a personal interest in a transaction which is considered at a meeting of the board of directors or the audit committee may not be present at such a meeting or vote on that matter (unless it is with respect to a transaction which is not an extraordinary transaction), unless a majority of the directors or members of the audit committee, as applicable, have a personal interest in the matter.
−Removed: If a majority of the members of the audit committee or the board of directors have a personal interest in the matter, then all of the directors may participate in the deliberations of the audit committee or board of directors
−Removed: (as the case may be) with respect to such transaction, and vote on the approval thereof;
−Removed: however in such case shareholder approval will be required.
−Removed: Generally speaking, any transaction between the Company and an office holder, or between the Company and a person or entity in whom the office holder has a personal interest, requires approval by the board of directors;
−Removed: if such transaction is an extraordinary transaction, it requires approval first by the company’s audit committee, and subsequently by the board of directors.
+Added: The Companies Law requires that an office holder promptly disclose to the board of directors any personal interest and all related material information known to such office holder concerning any existing or proposed transaction with the company.
+Added: A personal interest includes an interest of any person in an act or transaction of a company, including a personal interest of one’s relative or of a corporate body in which such person or a relative of such person is a 5% or greater shareholder, director, or general manager or in which such person has the right to appoint at least one director or the general manager, but excluding a personal interest stemming solely from one’s ownership of shares in the company.
+Added: A personal interest includes the personal interest of a person for whom the office holder holds a voting proxy or the personal interest of the office holder with respect to the officer holder’s vote on behalf of a person for whom he or she holds a proxy even if such shareholder has no personal interest in the matter.
+Added: If it is determined that an office holder has a personal interest in a non-extraordinary transaction (meaning any transaction that is in the ordinary course of business, on market terms or that is not likely to have a material impact on the company’s profitability, assets or liabilities), approval by the board of directors is required for the transaction unless the company’s articles of association provide for a different method of approval.
+Added: Any such transaction that is adverse to the company’s interests may not be approved by the board of directors.
+Added: Approval first by the company’s audit committee and subsequently by the board of directors is required for an extraordinary transaction (meaning any transaction that is not in the ordinary course of business, not on market terms or that is likely to have a material impact on the company’s profitability, assets or liabilities) in which an office holder has a personal interest.
+Added: A director and any other office holder who has a personal interest in a transaction which is considered at a meeting of the board of directors or the audit committee may generally (unless it is with respect to a transaction which is not an extraordinary transaction) not be present at such a meeting or vote on that matter unless a majority of the directors or members of the audit committee, as applicable, have a personal interest in the matter.
+Added: If a majority of the members of the audit committee or the board of directors have a personal interest in the matter, then all of the directors may participate in deliberations of the audit committee or board of directors, as applicable, with respect to such transaction and vote on the approval thereof and, in such case, shareholder approval is also required.
+Added: Certain disclosure and approval requirements apply under Israeli law to certain transactions with controlling shareholders, certain transactions in which a controlling shareholder has a personal interest, and certain arrangements regarding the terms of service or employment of a controlling shareholder.
+Added: For these purposes, a controlling shareholder is any shareholder that has the ability to direct the company’s actions, including any shareholder holding 25% or more of the voting rights if no other shareholder owns more than 50%
+Added: of the voting rights in the company.
+Added: Two or more shareholders with a personal interest in the approval of the same transaction are deemed to be one shareholder.
+Added: Exculpation, insurance and indemnification of office holders
+Added: Under the Companies Law, a company may not exculpate an office holder from liability for a breach of the duty of loyalty.
+Added: An Israeli company may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of duty of care, but only if a provision authorizing such exculpation is included in its articles of association.
+Added: Our articles of association include such a provision.
+Added: An Israeli company may not exculpate a director from liability arising out of a prohibited dividend or distribution to shareholders.
+Added: An Israeli company may indemnify an office holder from the following liabilities and expenses incurred for acts performed as an office holder, either in advance of an event or following an event, provided a provision authorizing such indemnification is contained in its articles of association:
+Added: ● a financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court.
+Added: However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the above mentioned events and amount or criteria;
+Added: ● reasonable litigation expenses, including legal fees, incurred by the office holder (1) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such office holder as a result of such investigation or proceeding;
+Added: and (ii) no financial liability, such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent;
+Added: and (2) in connection with a monetary sanction;
+Added: ● reasonable litigation expenses, including legal fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf or by a third-party or in connection with criminal proceedings in which the office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent;
+Added: ● expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or certain compensation payments made to an injured party imposed on an office holder by an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law;
+Added: ● expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder pursuant to certain provisions of the Israeli Economic Competition Law, 5758-1988.
+Added: An Israeli company may insure an office holder against the following liabilities incurred for acts performed as an office holder if and to the extent provided in the company’s articles of association:
+Added: ● a breach of the duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
+Added: ● a breach of the duty of care to the company or to a third-party, including a breach arising out of the negligent conduct of the office holder;
+Added: ● a financial liability imposed on the office holder in favor of a third-party;
+Added: ● a financial liability imposed on the office holder in favor of a third-party harmed by a breach in an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law;
+Added: ● expenses, including reasonable litigation expenses and legal fees, incurred by the office holder as a result of an administrative proceeding instituted against him or her, pursuant to certain provisions of the Israeli Securities Law.
+Added: An Israeli company may not exempt, indemnify or insure an office holder against any of the following:
+Added: ● a breach of the duty of loyalty, except with respect to insurance coverage or indemnification, to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
+Added: ● a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder;
+Added: ● an act or omission committed with intent to derive illegal personal benefit;
+Added: ● a fine, monetary sanction, or forfeit levied against the office holder.
+Added: Under the Companies Law, exculpation, indemnification, and insurance of office holders must be approved by the compensation committee and the board of directors (and, with respect to directors and the chief executive officer, by the shareholders).
+Added: However, under regulations promulgated under the Companies Law, the insurance of office holders shall not require shareholder approval and may be approved by only the compensation committee if the engagement terms are determined in accordance with the company’s compensation policy, which was approved by the shareholders by the same special majority required to approve a compensation policy, provided that the insurance policy is on market terms and the insurance policy is not likely to materially impact the company’s profitability, assets, or obligations.
+Added: Our articles of association allow us to exculpate, indemnify, and insure our office holders to the maximum extent permitted by law.
+Added: Our office holders are currently covered by a directors and officers’ liability insurance policy.
+Added: We have entered enter into agreements with each of our directors and executive officers exculpating them in advance, to the fullest extent permitted by law, from liability to us for damages caused to us as a result of a breach of duty of care, and undertaking to indemnify them to the fullest extent permitted by law.
+Added: This indemnification is limited to events determined as foreseeable by the board of directors based on our activities and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances.
+Added: In the opinion of the SEC, indemnification of directors and office holders for liabilities arising under the Securities Act, however, is against public policy and therefore unenforceable.
Approvals Required for the Compensation of Directors and Executive Officers
−Removed: The Companies Law requires special approvals for a transaction regarding the terms of compensation of an office holder (whether or not by way of an employment agreement), which is deemed to include the payment or issuance of any benefit to the office holder which was not already promised under an existing agreement, including any form of cash, equity, termination benefits, exculpation, insurance or indemnification, or any additional benefit or amendment not covered by a previously approved agreement or arrangement.
−Removed: Approval of the compensation of an office holder who is not a director requires approval first by the company’s compensation committee, then by the company’s board of directors, and, if such compensation transaction is not consistent with the company’s compensation policy, or if the office holder is the Chief Executive Officer, the subsequent approval of a special majority for compensation matters at a general meeting of shareholders, namely, a simple majority of the company’s shareholders, provided that (1) such majority includes a majority of the votes cast by the shareholders who are not controlling shareholders and who do not have a personal interest in the matter, present and voting (abstentions are disregarded) or (2) the votes cast by shareholders who are not controlling shareholders and who do not have a personal interest in the matter and voted against the compensation policy, constitute two percent or less of the aggregate voting rights in the company (a “Special Majority for Compensation Matters”).
−Removed: Arrangements regarding the terms of compensation of an office holder who is a director require the approval of the compensation committee, followed by the board of directors, followed by a simple majority at a general meeting of shareholders;
−Removed: however, under certain circumstances a Special Majority for Compensation Matters is required.
−Removed: The respective approvals of the compensation committee and the board of directors must be in line with the company’s duly approved compensation policy;
−Removed: however, in special circumstances, compensation terms may be approved notwithstanding an inconsistency with the compensation policy, provided that the compensation committee and the board have considered those provisions that must be included in the compensation policy under the Companies Law, and shareholder approval was obtained by a special majority.
+Added: Under the Companies Law, the compensation of a public company’s directors requires the approval of (i) its compensation committee, (ii) its board of directors and, unless exempted under regulations promulgated under the Companies Law, (iii) the approval of its shareholders at a general meeting.
+Added: In addition, if the compensation of a public company’s directors is inconsistent with the company’s compensation policy, then those inconsistent provisions must be separately considered by the compensation committee and board of directors, and approved by the shareholders by a special vote in one of the following two ways:
+Added: ● at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such matter, present and voting at such meeting, vote in favor of the inconsistent provisions of the compensation package, excluding abstentions;
+Added: ● the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting against the inconsistent provisions of the compensation package does not exceed two percent (2%) of the aggregate voting rights in the Company.
+Added: Executive officers other than the chief executive officer
+Added: The Companies Law requires the compensation of a public company’s executive officers (other than the chief executive officer and who do not also serve as a director) be approved in the following order:
+Added: (i) the compensation committee, (ii) the company’s board of directors, and (iii) if such compensation arrangement is inconsistent with the company’s stated compensation policy, the company’s shareholders (by a special vote as discussed above with respect to the approval of director compensation that is inconsistent with the compensation policy).
+Added: However, there are exceptions to the foregoing approval requirements with respect to such non-director executive officers.
+Added: If the shareholders of the company do not approve the compensation of such a non-director executive officer, the compensation committee and board of directors may override the shareholders’ disapproval for such non-director executive officer provided that the compensation committee and the board of directors each document the basis for their decision to override the disapproval of the shareholders and approve the compensation.
+Added: An amendment to an existing compensation arrangement with a non-director executive officer requires only the approval of the compensation committee, if the compensation committee determines that the amendment is immaterial.
+Added: However, if such non-director executive officer is subordinate to the chief executive officer, an immaterial amendment to an existing compensation arrangement shall not require the approval of the compensation committee if (i) such amendment is approved by the chief executive officer, (ii) the company’s compensation policy allows for such immaterial amendments to be approved by the chief executive officer and (iii) the engagement terms are consistent with the company’s compensation policy.
+Added: Chief Executive officer
+Added: Under the Companies Law, the compensation of a public company’s chief executive officer is required to be approved by:
+Added: (i) the company’s compensation committee, (ii) the company’s board of directors and (iii) the company’s shareholders (by a special vote as discussed above with respect to the approval of director compensation that is inconsistent with the compensation policy).
+Added: However, if the shareholders of the company do not approve the compensation arrangement with a chief executive officer who does not serve as a director, the compensation committee and board of directors may override the shareholders’ decision provided that they each document the basis for their decision and the compensation is in accordance with the company’s compensation policy.
+Added: The approval of each of the compensation committee and board of directors should be in accordance with the company’s compensation policy;
+Added: however, in special circumstances, they may approve compensation terms of a chief executive officer that are inconsistent with such policy provided that they have considered those provisions that must be included in the compensation policy according to the Companies Law and that shareholder approval was obtained (by a special majority vote as discussed above with respect to the approval of director compensation that is inconsistent with the compensation policy).
+Added: In the case of a new chief executive officer, the compensation committee may waive the shareholder approval requirement with regard to the compensation of a candidate for the chief executive officer position if the compensation committee determines that:
+Added: (i) the compensation arrangement is consistent with the company’s compensation policy, (ii) the chief executive officer candidate did not have, on the date of his appointment or during the two-year period preceding his appointment, an “affiliation” (including an employment relationship, a business or professional relationship or control) with the company or a controlling shareholder of the company or a relative thereof and (iii) subjecting the approval of the engagement to a shareholder vote would impede the company’s ability to employ the chief executive officer candidate.
+Added: However, if the chief executive officer candidate will serve as a member of the board of directors, such candidate’s compensation terms as chief executive officer must be approved in accordance with the rules applicable to approval of compensation of directors.
Executive Compensation
9 unchanged sentences
Chief Financial Officer
−Removed: (1) For bonuses earned during the year ended December 31, 2021, represents:
−Removed: (i) with respect to Mr.
−Removed: Carter and Mr.
−Removed: Dunn, a discretionary cash bonus under the officer’s respective employment agreement granted in recognition of the applicable officer’s promotion of our long-term goals, strategy and operating plan, the need to form appropriate incentives for our officers, and contribution to the achievement of our objectives in accordance with the officer’s respective corporate role during the year ended December 31, 2021;
−Removed: (ii) with respect to Mr.
+Added: (1) For bonuses earned during the year ended December 31, 2022, represents a discretionary cash bonus under the officer’s respective employment agreement granted in recognition of the applicable officer’s promotion of our long-term goals, strategy and operating plan, the need to have appropriate incentives for our officers, and contribution to the achievement of our objectives in accordance with the applicable officer’s respective corporate role during the year ended December 31, 2022.
Myers’ and Ms.
−Removed: Carter, a transaction bonus related to the completion of the Merger and
−Removed: private placement transactions during the year ended December 31, 2021, and (iii) with respect to Mr.
−Removed: Dunn, a signing bonus of $30,000 upon joining the company in November 2021.
−Removed: The amount of bonuses earned during the year ended December 31, 2022 is not calculable through the date of this Annual Report, and such amount will be disclosed in our Current Report on Form 8-K under Item 5.02(f) after we obtain applicable approvals of our shareholders under the Companies Law at our 2023 Annual Meeting of Shareholders.
−Removed: (2) Represents the grant date fair value of option awards granted to each of our named executive officers on April 12, 2022, calculated in accordance with FASB ASC Topic 718.
−Removed: These options have an exercise price of $17.50 per ADS and vest in four equal annual installments beginning on April 12, 2023.
+Added: Carter’s bonuses were approved by shareholders at our Annual Meeting held October 26, 2023.
+Added: The amount of bonuses earned during the year ended December 31, 2023 is not calculable through the date of this Annual Report, and such amount will be disclosed in a Current Report on Form 8-K after we obtain applicable approvals of our shareholders under the Companies Law at our 2024 Annual Meeting of Shareholders.
+Added: (2) Represents the grant date fair value of option awards granted to each of our named executive officers on April 12, 2022 and October 26, 2023, respectively, calculated in accordance with FASB ASC Topic 718.
+Added: The 2022 options have an exercise price of $210 per ADS and vest in four equal annual installments beginning on April 12, 2023.
+Added: The 2023 options have an exercise price of $5.75 per ADS and vest in in three annual installments of 20% and a fourth annual installment of 40% beginning on October 26, 2024.
The option values were calculated using a Black-Scholes Model for pricing options.
−Removed: See Note 7 to Consolidated Financial Statements included in this Annual Report for all relevant valuation assumptions used to determine the grant date fair value of these options.
+Added: See Note 7 to the Consolidated Financial Statements included in this Annual Report for all relevant valuation assumptions used to determine the grant date fair value of these options.
(3) Represents amounts paid as office and automobile allowance to Mr.
4 unchanged sentences
Denise Carter
−Removed: Dunn was appointed as our Chief Financial Officer on November 1, 2021.
Employment Agreements
7 unchanged sentences
Myers with a monthly office allowance of $2,500 and a monthly automobile allowance of $1,500.
+Added: At the annual general meeting of shareholders held on October 26, 2023, shareholders approved an amendment to Dr.
+Added: Myers’ employment agreement to increase to Dr.
+Added: Meyer’s annual base salary by 9.5%, retroactive to January 1, 2023, to $602,250.
Pursuant to her Executive Employment Agreement with Quoin Inc., dated March 9, 2018, which was amended as of November 9, 2021 (as amended, the “Carter Agreement”), Ms.
5 unchanged sentences
Carter with a monthly office allowance of $2,500 and a monthly automobile allowance of $1,500.
+Added: At the annual general meeting of shareholders held on October 26, 2023, shareholders approved an amendment to Ms.
+Added: Carter’s employment agreement to increase to Ms.
+Added: Carter’s annual base salary by 9.5%, retroactive to January 1, 2023, to $481,800.
Pursuant to his Service Agreement with Quoin Inc., dated November 1, 2021 (as amended, the “Dunn Agreement”), Mr.
1 unchanged sentence
In addition, Mr.
−Removed: Dunn is entitled to receive (i) a signing bonus equal to one-twelfth of his annual base salary, and (ii) subject to employment by us on the applicable date of bonus payout, an annual target
−Removed: discretionary bonus of not less than 45% of his annual base salary, payable at the discretion of the Board, which will be prorated for 2021.
+Added: Dunn is entitled to receive (i) a signing bonus equal to one-twelfth of his annual base salary, and (ii) subject to employment by us on the applicable date of bonus payout, an annual target discretionary bonus of not less than 45% of his annual base salary, payable at the discretion of the Board, which will be prorated for 2021.
Under the Dunn Agreement, upon our adoption of an option plan, we are obligated to grant an option to Mr.
1 unchanged sentence
Dunn is also eligible to receive healthcare benefits as may be provided from time to time by us to our employees generally and paid time off annually in accordance with our policies in effect from time to time.
+Added: Effective October 26, 2023, Mr.
+Added: Dunn’s annual base salary was amended to provide for an increase to his annual base salary by 9.5%, retroactive to January 1, 2023, to $394,200.
Health and Welfare Benefits
Our named executive officers are eligible to participate in the same employee benefit plans, and on the same terms and conditions, as all other full-time, salaried U.S.
−Removed: These benefits include medical, dental, and vision insurance, an employee assistance program, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, and commuter benefits.
+Added: These benefits include medical, dental, and vision insurance, an employee assistance
+Added: program, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, and commuter benefits.
We also maintain the “Section 401(k) Plan that provides eligible employees, including our named executive officers, with an opportunity to save for retirement on a tax-advantaged basis.
9 unchanged sentences
(1) Represents the number of ADSs issuable upon the exercise of options.
−Removed: Each option vests in four equal annual installments beginning on April 12, 2023.
+Added: The 2022 options vest in four equal annual installments beginning on April 12, 2023.
+Added: The 2023 options vest in in three annual installments of 20% and a fourth annual installment of 40% beginning on October 26, 2024.
(2) Represents the exercise price per ADS.
8 unchanged sentences
Myers and Ms.
−Removed: Carter, at an exercise price of $17.50 per ADS, vesting in four equal annual installments beginning on April 12, 2023.
In addition, our Board approved the grant of an option to purchase 5,953 ADSs under the Plan to Mr.
−Removed: Dunn, at an exercise price of $17.50 per ADS, in four equal annual installments beginning on April 12, 2023.
−Removed: Under the Companies Law, shareholder approval was not required for the option grant to Mr.
+Added: The 2022 option grants were each at an exercise price of $210.00 per ADS, in four equal annual installments beginning on April 12, 2023.
+Added: At our October 2023 Annual Meeting, our shareholders approved the grant an option to purchase 80,956 and 80,966 ADSs under the Plan to Dr.
+Added: Myers and Ms.
+Added: Carter, respectively.
+Added: In addition, our Board approved the grant of an option to purchase 51,149 ADSs under the Plan to Mr.
+Added: The 2023 option grants were each at an exercise price of $5.75 per ADS, vesting in three annual installments of 20% and a fourth annual installment of 40% beginning on October 26, 2024.
+Added: Under the Companies Law, shareholder approval was not required for the option grants to Mr.
Potential Payments Upon Termination or in Connection With a Change of Control
33 unchanged sentences
Option Awards
−Removed: Under the Plan, upon termination of employment for any reason, other than in the event of death or disability or for ”Cause” (as defined in the Plan), all unvested options will expire and all vested options at time of termination will generally be exercisable for 90 days following termination, subject to the terms of the Plan and the governing option agreement.
+Added: Under the Plan, upon termination of employment for any reason, other than in the event of death or disability or for ”Cause” (as defined in the Plan), all unvested options will expire and all vested options at time of termination will generally be exercisable for
+Added: 90 days following termination, subject to the terms of the Plan and the governing option agreement.
If we terminate a grantee for Cause, the grantee’s right to exercise all vested and unvested the options granted to the grantee will expire immediately.
8 unchanged sentences
In addition, each non-employee director who joins the Board is granted an inaugural award of options valued at $165,000.
−Removed: At our April 2022 Annual Meeting, our shareholders approved, pursuant to and in line with our non-employee directors’ compensation program, the following option grants to each of our non-employee directors under the Plan:
−Removed: ● as an inaugural grant, an option to purchase 9,428.56 ADS, at an exercise price of $17.50 per ADS, vesting over a three-year period beginning on April 12, 2023;
−Removed: ● as an annual grant for 2022, an option to purchase 3,428.56 ADS, at an exercise price of $17.50 per ADS, vesting over a three-year period beginning on April 12, 2023.
The following table sets forth information concerning the compensation awarded to, earned by or paid to non-employee directors for the year ended December 31, 2023.
4 unchanged sentences
Michael Sember
−Removed: (1) Includes $15,000 Compensation Committee Chairman fee for the year ended December 30, 2021, which was paid in 2022.
−Removed: (2) Represents the grant date fair value of option awards granted to each of our non-employee directors on April 12, 2022, calculated in accordance with FASB ASC Topic 718.
−Removed: These options have an exercise price of $17.50 per ADS and vest in three equal annual installments beginning on April 12, 2023.
+Added: (1) Represents the grant date fair value of option awards granted to each of our non-employee directors on October 26, 2023, calculated in accordance with FASB ASC Topic 718.
+Added: These options have an exercise price of $5.75 per ADS and vest in four equal annual installments beginning on October 26, 2024.
The option values were calculated using a Black-Scholes Model for pricing options.
See Note 7 to Consolidated Financial Statements included in this Annual Report for all relevant valuation assumptions used to determine the grant date fair value of these options.
+Added: As of December 31, 2023 the aggregate number of outstanding options held by each of our non-employee directors was 8,724 ADSs .
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
8 unchanged sentences
Ordinary shares that may be acquired by a person within 60 days of March 13, 2024, pursuant to the exercise of options are deemed to be outstanding for purpose of computing the percentage ownership of such person, but are not deemed to be outstanding for purposes of computing the percentage ownership of ordinary shares of any other person shown in the table.
−Removed: Each ADS represents 5,000 ordinary shares of Quoin Ltd.
+Added: Each ADS represents one ordinary share.
Unless indicated otherwise below, the address of our directors and executive officers is c/o Quoin Pharmaceuticals Ltd., 42127 Pleasant Forest Court, Ashburn, VA 20148-7349.
1 unchanged sentence
Name and Address of Beneficial Owner
−Removed: 5% Beneficial Owners :
−Removed: Lind Global Fund II LP (1)
−Removed: 4,950,000,000
Directors and Named Executive Officers:
8 unchanged sentences
All directors and officers as a group (8 persons) (9)
−Removed: 1,573,744,165
* Less than 1%
−Removed: (1) Based on Schedule 13G filed with the SEC on March 3, 2023 by Lind Global Fund II LP, a Delaware limited partnership (“Lind Global Fund”), Lind Global Partners II LLC, a Delaware limited liability company (“Lind Global Partners”), and Jeff Easton (“Mr.
−Removed: Eastern” and together with Lind Global Fund and Lind Global Partners,” the “Lind Reporting Persons”), consists of 3,750,000,000 ordinary shares and 1,200,000,000 ordinary shares issuable upon the exercise warrants held by Lind Global Fund, giving effect to the provision in such warrants limiting the holder’s ability to exercise the warrants if such exercise would cause the holder to beneficially own greater than 9.99% of our outstanding shares.
−Removed: Lind Global Partners, the general partner of the Lind Global Fund, may be deemed to have sole voting and dispositive power with respect to the shares held by Lind Global Fund.
−Removed: Easton, the managing member of Lind Global Partners, may be deemed to have sole voting and dispositive power with respect to the shares held by Lind Global Fund.
−Removed: The address of the principal office of each of the Lind Reporting Persons is 444 Madison Ave, Floor 41 New York, NY 10022.
−Removed: (2) Consists of (i) 561,480,000 ordinary shares held directly and (ii) 107,142,900 ordinary shares issuable upon the exercise of options which will vest within 60 days .
−Removed: (3) Consists of (i) 561,475,000 ordinary shares held directly and (ii) 107,142,900 ordinary shares issuable upon exercise of options which will vest within 60 days .
−Removed: (4) Represents 21,428,533 ordinary shares issuable upon exercise of options which will vest within 60 days.
−Removed: (5) Consists of (i) 19,070,000 ordinary shares held directly and (ii) 21,428,533 ordinary shares issuable upon exercise of options which will vest within 60 days.
−Removed: (6) Consists of (i) 21,005,000 ordinary shares held directly and (ii) 21,428,533 ordinary shares issuable upon exercise of options which will vest within 60 days.
−Removed: (7) Represents 21,428,533 ordinary shares issuable upon exercise of options which will vest within 60 days.
−Removed: (8) Represents 21,428,533 ordinary shares issuable upon exercise of options which will vest within 60 days.
−Removed: (9) Represents 89,285,700 ordinary shares issuable upon exercise of options which will vest within 60 days.
(1) Consists of (i) 9,358 ordinary shares held directly and (ii) 3,572 ordinary shares issuable upon the exercise of options.
−Removed: We are not aware of any arrangement that may, at a subsequent date, result in a change of control of us.
+Added: (2) Consists of (i) 9,357 ordinary shares held directly and (ii) 3,572 ordinary shares issuable upon exercise of options.
+Added: (3) Represents 715 ordinary shares issuable upon exercise of options.
+Added: (4) Consists of (i) 317 ordinary shares held directly and (ii) 715 ordinary shares issuable upon exercise of options.
+Added: (5) Consists of (i) 350 ordinary shares held directly and (ii) 715 ordinary shares issuable upon exercise of options.
+Added: (6) Represents 715 ordinary shares issuable upon exercise of options.
+Added: (7) Represents 715 ordinary shares issuable upon exercise of options.
+Added: (8) Represents 2,977 ordinary shares issuable upon exercise of options.
+Added: (9) Consists of (i) 19,382 ordinary shares held directly and (ii) 13,696 ordinary shares issuable upon the exercise of options.
Equity Compensation Plan Table
18 unchanged sentences
(1) Represents the number of ADSs issuable upon the exercise of options.
−Removed: (2) Represents the exercise price per ADS.
+Added: (2) Represents the weighted-average exercise price of outstanding options exercisable into ADSs.
Certain Relationships and Related Transactions, and Director Independence
4 unchanged sentences
In 2021, Quoin Inc.
−Removed: paid $100,000 of consulting expenses to a company controlled by Dennis Langer, our director, and approximately $8,000 and $48,000 were paid in 2021 and 2022, respectively, to Dr.
−Removed: Myers’ son, who has been consulting Quoin Inc.
+Added: paid $100,000 of consulting expenses to a company controlled by Dennis Langer, our director, and approximately $8,000 and $48,000 and $12,000 were paid in 2021, 2022, and 2023, respectively, to Dr.
+Added: Myers’ son, who was consulting Quoin Inc.
on research and development matters from time to time.
+Added: As of March 31, 2023, Dr.
+Added: Myers’ son no longer provides consulting services to Quoin.
Due to the limited funding of Quoin Inc.
14 unchanged sentences
Carter in 2021, 2022 and 2023, respectively.
−Removed: As of December 31, 2022, there was approximately $2,259,000 and $1,865,000 of such indebtedness was outstanding to Dr.
+Added: As of December 31, 2023, approximately $1,959,000 and $1,565,000 of such indebtedness was outstanding to Dr.
Myers and Ms.
9 unchanged sentences
We reached cash settlements with two 2020 Noteholders, who are not our directors, to account for this.
−Removed: Based on the terms of these cash settlements, we estimate the liability to the remaining three 2020 Noteholders, including our directors, to be $1,146,000 as of December 31, 2022, and we expect to settle the remaining liability in 2023.
−Removed: The exercise price of the warrants held by the 2020 Noteholders was reduced to $0.00 as of July 14, 2022 as a result of the Altium Agreement discussed above.
+Added: Based on the terms of these cash settlements, we estimate the liability to the remaining three 2020 Noteholders, including our directors, to be $1,146,000 as of December 31, 2023 and 2022.
+Added: The exercise price of the warrants held by the 2020 Noteholders was reduced to $0.00 as of July 14, 2022 as a result of agreement with Quoin’s investor.
The change in the exercise price of the Noteholder Warrants resulted in a deemed dividend of approximately $65,000.
4 unchanged sentences
Based on information provided by Friedman, effective September 1, 2022, Friedman combined with Marcum LLP (“Marcum”).
−Removed: The Company’s shareholders appointed Marcum as the Company’s independent registered public accounting firm for the year ended December 31, 2022.
+Added: Marcum has served as the Company’s independent registered public accounting firm since September 1, 2022.
The following table sets forth the aggregate accounting fees paid by us to Marcum and Friedman for all services, including audit services, for the years ended December 31, 2023 and 2022, as applicable.
1 unchanged sentence
December 31, 2022
−Removed: Type of Fees (in thousands)
+Added: Type of Fees (a) (in thousands)
Audit-Related Fees
All Other Fees
−Removed: Audit Fees refer to the aggregate fees, including expenses, billed by our principal accountant for the audit of our annual financial statements and review of financial statements included in our quarterly reports and other services that are normally provided in connection with statutory and regulatory filings or engagements during each of the fiscal years ended December 31, 2022 and 2021.
−Removed: Audit-Related Fees refer to the aggregate fees, including expenses, billed by our principal accountant for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements not reported under “Audit Fees” above during the fiscal years ended December 31, 2022 and 2021.
−Removed: Tax Fees refer to the aggregate fees, including expenses, billed by our principal accountant for services rendered for tax compliance, tax advice and tax planning during the fiscal years ended December 31, 2022 and 2021.
−Removed: All Other Fees refer to the aggregate fees, including expenses, billed for all other products and services provided by our principal accountant during the fiscal years ended December 31, 2022 and 2021.
+Added: (a) The aggregate fees included in Audit Fees are fees billed for the fiscal years.
+Added: Audit fees relate to professional services rendered in connection with the annual financial statements, quarterly review of financial statements, and audit services provided in connection with other statutory and regulatory filings .
+Added: Audit fees refer to the aggregate fees, including expenses, for the audit of our annual financial statements and review of financial statements included in our quarterly reports and other services that are normally provided in connection with statutory and regulatory filings or engagements.
+Added: Audit-Related Fees.
+Added: Audit-Related fee s refer to the aggregate fees, including expenses, for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements not reported under “Audit Fees” above.
+Added: Our independent registered public accounting firm did not provide any tax services during the periods.
+Added: All Other Fees.
+Added: Our independent registered public accounting firm did not provide any “other services” during the periods.
Pre-Approval Policy
44 unchanged sentences
Amendment to the Amended and Restated Articles of Association of Quoin Pharmaceuticals Ltd., adopted on November 3, 2022 (incorporated by reference to Annex A included in Exhibit 99.1 to Form 6-K filed with the SEC on September 21, 2022).
+Added: Amendment to the Amended and Restated Articles of Association of Quoin Pharmaceuticals Ltd., adopted on October 26, 2023 (incorporated by reference to Annex A included in the proxy statement filed with the SEC on September 12, 2023).
Form of Deposit Agreement between Cellect Biotechnology Ltd.
23 unchanged sentences
(incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on February 28, 2023
+Added: Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
+Added: Form of Pre-Funded Warrant issued in the 2024 Offering (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on March 8, 2024).
+Added: Form of Series D Warrant (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on March 8, 2024).
+Added: Form of Series E Warrant (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed with the SEC on March 8, 2024).
+Added: Form of Amendment to Warrants to Purchase Ordinary Shares Represented by American Depositary Shares (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K filed with the SEC on March 8, 2024).
Compensation Policy for Executives and Directors of Quoin Pharmaceuticals Ltd, adopted on April 12, 2022 (incorporated by reference to Annex B included in Exhibit 99.1 to Form 6-K filed with the SEC on March 8, 2022).
84 unchanged sentences
Form of Non-Qualified Stock Option Award Agreement for officers (incorporated by reference to Exhibit 10.35 to Form F-1 filed with the SEC on August 3, 2022).
+Added: License and Distribution Agreement, by and between Quoin Pharmaceuticals Inc.
+Added: and Farma Mondo (incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC on September 13, 2023).
+Added: Purchase Agreement, dated January 25, 2024, by and between Quoin Pharmaceuticals Ltd.
+Added: and Alumni Capital LP (incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC on January 30, 2024).
+Added: Securities Purchase Agreement dated March 4, 2024 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on March 8, 2024).
+Added: Placement Agency Agreement dated March 4, 2024 (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K filed with the SEC on March 8, 2024).
Code of Ethics.
+Added: (incorporated by reference to Exhibit 14.1 to Form 10-K filed with the SEC on March 15, 2023).
Subsidiaries of Registrant (incorporated by reference to Exhibit 8.1 to Form 20-F filed with the SEC on April 13, 2022).
+Added: Consent of Marcum LLP, Certified Public Accountants
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
2 unchanged sentences
Certification of Chief Financial Officer pursuant to 18 U.S.C.
−Removed: Description of Ordinary Shares.
+Added: Clawback Policy
Information formatted in Extensible Business Reporting Language (XBRL):
13 unchanged sentences
Chairman and Chief Executive Officer
−Removed: (Principal Executive Officer)
March 14, 2024
Michael Myers
+Added: (Principal Executive Officer)
/s/ Gordon Dunn
22 unchanged sentences
QUOIN PHARMACEUTICALS LTD.
−Removed: Reports of Independent Registered Public Accounting Firm (PCAOB F irm ID:
+Added: Reports of Independent Registered Public Accounting Firm (PCAOB Firm ID:
Marcum LLP # 688 )
8 unchanged sentences
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of Quoin Pharmaceuticals Ltd.
−Removed: (the “Company”) as of December 31, 2022, the related consolidated statements of operations, and stockholders’ equity and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
+Added: We have audited the accompanying consolidated balance sheets of Quoin Pharmaceuticals Ltd.
+Added: (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audit.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.
+Added: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
+Added: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
11 unchanged sentences
(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
+Added: The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Contracted Research & Development Cost Recognition:
9 unchanged sentences
/s/ Marcum LLP
−Removed: We have served as the Company’s auditor since 2020 (such date takes into account the acquisition of certain assets of Friedman LLP effective September 1, 2022)
−Removed: East Hanover, New Jersey
−Removed: March 15, 2023.
−Removed: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
−Removed: To the Shareholders and the Board of Directors of Quoin Pharmaceuticals Ltd.
−Removed: Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of Quoin Pharmaceuticals Ltd.
−Removed: (the “Company”) as of December 31, 2021, the related consolidated statements of operations, and stockholders’ equity and cash flows for the year ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
−Removed: Consideration of the Company’s Ability to Continue as a Going Concern
−Removed: The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
−Removed: As discussed in Note 2 to the financial statements, the Company has a working capital deficiency, an accumulated deficit, has incurred significant losses and cash outflows from operations.
−Removed: These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
−Removed: Management’s plans in regard to these matters are also described in Note 2.
−Removed: The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
−Removed: Basis for Opinion
−Removed: These financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audit.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
−Removed: As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
−Removed: Accordingly, we express no such opinion.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: /s/ Friedman LLP
We have served as the Company’s auditor since 2020
East Hanover, New Jersey
−Removed: April 13, 2022, except for Notes 2 and 17, as to which the date is August 2, 2022 as referenced within the financial statements filed on August 2, 2022 in Form F-1.
+Added: March 14, 2024
QUOIN PHARMACEUTICALS LTD.
1 unchanged sentence
Current assets:
−Removed: Prepaid expenses
+Added: Cash and cash equivalents
+Added: Prepaid expenses and other current assets
Total current assets
5 unchanged sentences
Accrued expenses
−Removed: Accrued license acquisition
Accrued interest and financing expense
Due to officers - short term
−Removed: Warrant liability
Total current liabilities
3 unchanged sentences
Shareholders’ equity:
−Removed: 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
−Removed: Treasury stock, 2,641,693 ordinary shares
−Removed: ( 2,932,000 )
+Added: Ordinary shares, no par value per share, 100,000,000 and 8,333,334 ordinary shares authorized at December 31, 2023 and 2022, respectively - 987,220 ( 987,220 ADS’s) ordinary shares issued and outstanding at December 31, 2023 and 403,887 ( 403,887 ADS’s ) at December 31, 2022
+Added: Treasury stock, - 0 - ordinary shares issued at December 31, 2023 and 45 ordinary shares issued at December 31, 2022
( 2,932,000 )
15 unchanged sentences
Forgiveness of accounts payable
−Removed: Fair value adjustment to convertible notes payable
Warrant liability (income) expense
−Removed: Financing expense
−Removed: Unrealized income
−Removed: Interest income
+Added: Unrealized loss (gain)
+Added: Realized and accrued interest income
Interest and financing expense
−Removed: Total other expense
+Added: Total other (income) expense
( 8,686,573 )
16 unchanged sentences
( 9,381,496 )
−Removed: ( 21,462,588 )
−Removed: Conversion of “2020 Notes” into ordinary shares
−Removed: Sale of equity securities, including conversion of “Bridge Notes”
−Removed: 1,710,500,800
−Removed: Costs associated with sale of equity securities
−Removed: ( 1,897,126 )
−Removed: ( 1,897,126 )
−Removed: Merger recapitalization of Cellect
−Removed: ( 2,932,000 )
−Removed: Reclassification of warrant upon issuane of Exchange warrants
−Removed: Balance at December 31, 2021
−Removed: 3,354,650,799
−Removed: ( 2,932,000 )
−Removed: ( 28,069,985 )
−Removed: ( 9,381,496 )
−Removed: ( 9,381,496 )
Stock based compensation
Issuance of ADS and Pre-Funded Warrants, net
−Removed: 16,800,000,000
Cashless exercise of warrants
−Removed: 3,857,439,000
Settlement of accrued expenses
Reclassification of warrant liability upon issuance of Exchange warrant
−Removed: Deemed dividend on warrant modification
+Added: Deemed dividend on warrant modifcation
Balance at December 31, 2022
2 unchanged sentences
( 8,686,573 )
+Added: ( 8,686,573 )
+Added: Stock based compensation
+Added: Retirement of Treasury Stock
+Added: ( 2,932,000 )
+Added: Issuance of ADS and Pre-Funded Warrants, net
+Added: Balance at December 31, 2023
+Added: ( 46,203,320 )
The accompanying footnotes are an integral part of these consolidated financial statements
5 unchanged sentences
( 9,381,496 )
−Removed: Fair value adjustment to convertible notes payable
Change in fair value of warrant liability
1 unchanged sentence
Forgiveness of trade payable
−Removed: Financing expense
Amortization of intangibles
+Added: Asset impairment
Increase in accrued interest and financing expense
−Removed: Unrealized gain on investments
+Added: Unrealized gain and accrued interest on investments
Changes in assets and liabilities:
−Removed: Increase (decrease) in accounts payable and accrued expenses
+Added: Increase in accounts payable and accrued expenses
Decrease in prepaid expenses & other assets
2 unchanged sentences
( 8,480,732 )
−Removed: Cash flows used in investing activities
+Added: Cash flows provided by (used in) investing activities:
Purchase of investments
( 18,090,684 )
+Added: ( 9,899,121 )
+Added: Proceeds from maturity of investments
Payment for license acquisition
−Removed: Net cash used in investing activities
+Added: Net cash provided by (used in) investing activities
( 10,149,121 )
Cash flows provided by financing activities:
−Removed: Payments of offering costs
−Removed: Payments of deferred loan costs
−Removed: Increase in due to officers
+Added: Payments of deferred financing costs
Payment of amounts due to officers
−Removed: Proceeds from issuance of “Bridge Notes”, net
Payment of interest on “Bridge Notes”
1 unchanged sentence
Net cash provided by financing activities
−Removed: Net change in cash
+Added: Net change in cash and cash equivalents:
( 4,622,145 )
−Removed: Cash - beginning of year
−Removed: Cash - end of year
+Added: Cash and cash equivalents - beginning of year
+Added: Cash and cash equivalents - end of year
Supplemental information - Non cash items:
−Removed: Interest paid
−Removed: Exchange of “2020 Notes” for Ordinary shares
−Removed: Exchange of “Bridge Notes” for Ordinary shares
Reclassification of warrant liability to equity upon issuance of “Exchange warrants”
6 unchanged sentences
December 31, 2023 and 2022
−Removed: NOTE 1 – ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION
+Added: NOTE 1 – ORGANIZATION AND BUSINESS
Quoin Pharmaceuticals Ltd.
1 unchanged sentence
(“Cellect”), is the holding company for Quoin Pharmaceuticals, Inc., a Delaware corporation (“Quoin Inc.”).
−Removed: 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.
−Removed: 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.
−Removed: surviving as a wholly-owned subsidiary of Cellect (the “Merger”).
−Removed: Immediately after completion of the Merger, Cellect changed its name to “Quoin Pharmaceuticals Ltd.”Because Quoin Inc.
−Removed: 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.
−Removed: The impact of the recapitalization has been retroactively applied to all periods presented.
−Removed: 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”).
−Removed: 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.
−Removed: Unless otherwise indicated, ADSs outstanding presented in these financial statements and accompanying footnotes assume all outstanding ordinary shares are represented by ADSs.
was incorporated in Delaware on March 5, 2018.
−Removed: 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.
+Added: On October 28, 2021, Cellect completed the business combination with Quoin Inc., with Quoin Inc.
+Added: surviving as a wholly-owned subsidiary of Cellect (the “Merger”).
+Added: Immediately after completion of the Merger, Cellect changed its name to “Quoin Pharmaceuticals Ltd.”
+Added: The Company is a 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.
−Removed: 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.
+Added: The Company’s first lead product, QRX003, is a 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”).
−Removed: Dosing of patients has commenced for the first study, and the Company is preparing to commence enrollment into the second clinical study.
+Added: Dosing of patients commenced in December 2022 for the first study and in March 2023 for the second 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.
−Removed: To date, no products have been commercialized and revenue has not been generated.
+Added: To date, no products have been commercialized and no revenue has been generated.
NOTE 2 - LIQUIDITY RISKS AND OTHER UNCERTAINTIES
1 unchanged sentence
The Company has historically funded its operations through debt and equity financings.
−Removed: 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).
−Removed: 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).
−Removed: 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.
+Added: At December 31, 2023, the Company had cash balances totaling $ 2.4 million and investments of $ 8.3 million.
+Added: On March 7, 2024, the Company completed an 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 warrants to purchase ordinary shares represented by ADSs, for aggregate gross proceeds of approximately $ 6.5 million, before offering costs (See Note 18).
+Added: 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.
1 unchanged sentence
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.
−Removed: QUOIN PHARMACEUTICALS LTD.
−Removed: Notes to Consolidated Financial Statements
−Removed: December 31, 2022 and 2021
Other risks and uncertainties:
4 unchanged sentences
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.
−Removed: 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.
−Removed: Coronavirus (“COVID-19”) created a global pandemic, which commenced in 2020.
−Removed: The Company’s operations, to date, have not been dramatically affected by COVID-19.
−Removed: 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.
−Removed: Nasdaq Listing
−Removed: 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.
−Removed: 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.
−Removed: 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).
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: QUOIN PHARMACEUTICALS LTD.
+Added: Notes to Consolidated Financial Statements
+Added: December 31, 2023 and 2022
+Added: The Company is also dependent on several third party suppliers, in some cases a single source supplier including the contract research organization managing both of the Company’s current clinical studies, the supplier of the active pharmaceutical ingredient (API), as well as the contract manufacturer of the drug product for clinical development.
+Added: On April 5, 2023, the Company received a letter from the Listing Qualifications staff of The Nasdaq Stock Market, LLC (“Nasdaq”) 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).Pursuant to Nasdaq Rule 5810(c)(3)(A), the Company had a period of one hundred eighty (180) calendar days, or until October 2, 2023 (the “Compliance Period”), to regain compliance with Nasdaq’s minimum bid price requirement.
+Added: On August 1, 2023, the Company received a letter from Nasdaq stating that the Company’s closing bid price per ADS was at $ 1.00 or greater for the last 10 consecutive business days.
+Added: Accordingly, the Company regained compliance with Listing Rule 5550(a)(2) and the matter was closed.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1 unchanged sentence
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S.
−Removed: GAAP”), which have been consistently applied, reflecting the operations of Quoin Inc.
−Removed: since inception and include the accounts of Quoin Ltd.
−Removed: since the date of the Merger.
+Added: GAAP”), which have been consistently applied.
All intercompany accounts and transactions have been eliminated in consolidation.
−Removed: QUOIN PHARMACEUTICALS LTD.
−Removed: Notes to Consolidated Financial Statements
−Removed: December 31, 2022 and 2021
+Added: Effective July 18, 2023, the ratio of American Depositary Shares (“ADSs”) evidencing ordinary shares changed from 1 ADS representing five thousand ( 5,000 ) ordinary shares to 1 ADS representing sixty thousand ( 60,000 ) ordinary shares, which resulted in a 1 for 12 reverse split of the issued and outstanding ADSs.
+Added: Effective November 8, 2023, the Company completed a 1 for 60,000 reverse split of the ordinary shares which resulted in the ratio of ADSs evidencing ordinary shares to be changed from 1 ADS representing sixty thousand ( 60,000 ) ordinary shares to 1 ADS representing one ( 1 ) ordinary share.
+Added: All ordinary share, ADSs and related option and warrant information presented in these financial statements and accompanying footnotes has been retroactively adjusted to reflect the number of ordinary shares and ADSs resulting from the aforementioned ordinary share reverse split and ADS ratio changes.
Use of estimates:
6 unchanged sentences
Estimates are used in the following areas, among others:
−Removed: settlement of debt or other obligations, fair value of debt instruments, stock-based compensation and warrants, research and development expense recognition, intangible asset estimated useful lives and impairment assessments, allowances of deferred tax assets, contingency recognition, and cash flow assumptions regarding going concern considerations.
−Removed: Reclassification:
−Removed: Certain 2021 amounts were reclassified to conform to the current year presentation.
−Removed: 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.
+Added: settlement of debt or other obligations, stock-based compensation, research and development expense recognition, intangible asset estimated useful lives and impairment assessments, allowances of deferred tax assets, and cash flow assumptions regarding going concern considerations.
Cash and cash equivalents:
3 unchanged sentences
The Company believes that it is not subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
+Added: QUOIN PHARMACEUTICALS LTD.
+Added: Notes to Consolidated Financial Statements
+Added: December 31, 2023 and 2022
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.
2 unchanged sentences
The Company evaluated the warrants to assess their proper classification using the applicable criteria enumerated under U.S.
−Removed: GAAP and determined that such warrants meet the criteria for equity classification in the accompanying balance sheets as of December 31, 2022.
−Removed: Investments as of December 31, 2022 consist of U.S.
−Removed: Treasury Bills, which are classified as trading securities, totaling $ 9.9 million.
+Added: GAAP and determined that such warrants meet the criteria for equity classification in the accompanying consolidated balance sheets as of December 31, 2023 and December 31, 2022, respectively.
+Added: Investments as of December 31, 2023 and 2022 consist of U.S.
+Added: Treasury Bills, which are classified as trading securities, totaling $ 8.3 million and $ 10.0 million, respectively.
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.
−Removed: Treasury Bills held on December 31, 2022 matured within the subsequent one month from the balance sheet date.
+Added: Treasury Bills held on December 31, 2023 have maturities within four months from the balance sheet date.
As of December 31, 2023, the carrying value of the Company’s U.S.
Treasury Bills approximates their fair value due to their short-term maturities.
−Removed: QUOIN PHARMACEUTICALS LTD.
−Removed: Notes to Consolidated Financial Statements
−Removed: December 31, 2022 and 2021
Long-lived assets:
9 unchanged sentences
Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.
−Removed: During the years ended December 31, 2022 and 2021, there were no impairment indicators which required an impairment loss measurement.
+Added: During the year ended December 31, 2023 there was one impairment indicator which required an impairment loss measurement (see Note 11).
+Added: During the year ended December 31, 2022, there were no impairment indicators which required an impairment loss measurement.
Research and development:
3 unchanged sentences
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.
−Removed: 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.
+Added: Based on the timing of amounts invoiced by service providers, the Company may also record
+Added: QUOIN PHARMACEUTICALS LTD.
+Added: Notes to Consolidated Financial Statements
+Added: December 31, 2023 and 2022
+Added: payments made to those providers as prepaid expenses that will be recognized as expenses in future periods as the related services are rendered.
Income taxes:
8 unchanged sentences
Stock based compensation:
−Removed: 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
−Removed: QUOIN PHARMACEUTICALS LTD.
−Removed: Notes to Consolidated Financial Statements
−Removed: December 31, 2022 and 2021
−Removed: value for each stock-based award.
+Added: 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.
−Removed: 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.
+Added: Since the Company has a limited history of trading as a public company, the Company’s expected stock volatility is based on a weighting of its historical volatility along with a group of a publicly traded set of peer companies.
The Company utilizes the simplified method to estimate the expected term.
3 unchanged sentences
Fair value of financial instruments:
−Removed: The Company considers its cash, investments, accounts payable, accrued expenses and the convertible and bridge notes payable to meet the definition of financial instruments.
+Added: The Company considers its cash and cash equivalents, investments, accounts payable, accrued expenses to meet the definition of financial instruments.
The carrying amounts of these financial instruments approximated their fair values due to the short maturities.
4 unchanged sentences
The Company reports loss per share in accordance with ASC 260-10, Earnings Per Share , which provides for calculation of “basic” and “diluted” earnings per share.
−Removed: Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common shareholders by the weighted average common shares outstanding for the period.
+Added: Basic earnings per share includes no dilution and is computed by dividing net income or loss available to shareholders by the weighted average shares outstanding for the period.
Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity.
The calculation of diluted net earnings (loss) per share gives effect to ordinary shares equivalents;
−Removed: however, potential common shares are excluded if their effect is anti-dilutive.
−Removed: 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.
−Removed: 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.
−Removed: NOTE 4 – CONVERTIBLE NOTES PAYABLE
+Added: however, potential shares are excluded if their effect is anti-dilutive.
+Added: QUOIN PHARMACEUTICALS LTD.
+Added: Notes to Consolidated Financial Statements
+Added: December 31, 2023 and 2022
+Added: For the year ended December 31, 2023, the number of shares excluded from the diluted net earnings (loss) per share included outstanding warrants to purchase 864,081 ADS and outstanding stock options to purchase 278,011 ADS.
+Added: 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 280,735 ADS and outstanding stock options to purchase 25,595 ADS.
+Added: The inclusion of these warrants and stock options for both 2023 and 2022 in the denominator would be anti-dilutive.
+Added: Recent Accounting Pronouncements:
+Added: In December 2023, the FASB issued ASU No.
+Added: 2023-09, Income Taxes (Topic 740):
+Added: Improvements to Income Tax Disclosures.
+Added: The standard is intended to enhance the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information.
+Added: The new standard will be effective for the Company for the fiscal year beginning January 1, 2025.
+Added: While the new standard does require further disaggregation of the income tax footnote, the Company currently does not expect the adoption of the new standard to have a material effect on its consolidated financial statements.
+Added: NOTE 4 – ACCRUED INTEREST AND FINANCING EXPENSE
On October 2, 2020, Quoin Inc.
−Removed: 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.
−Removed: Such notes were converted to equity in 2021.
+Added: issued promissory notes (the “2020 Notes”) to certain investors (“2020 Noteholders”).
+Added: The 2020 Notes were mandatorily convertible into 432 ADSs, subject to adjustment and were converted in 2021.
+Added: The ADSs issued to the 2020 Noteholders did not include accrued interest.
+Added: Two of the five 2020 Noteholders received their amount due during the year ended December 31, 2022 and the Company’s estimate of the liability to the remaining three 2020 Noteholders was estimated to be $ 1,146,000 as of December 31, 2023 and December 31, 2022.
+Added: There was no interest expense during the year ended December 31, 2023.
The holders also received warrants exercisable at any time after the issuance date for 2,449 ADSs at an initial exercise price of $ 597 per ADS.
At the time of grant, the Company determined that these warrants met the criteria to be recorded as a liability instrument.
−Removed: 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”).
+Added: 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 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.
−Removed: 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
−Removed: QUOIN PHARMACEUTICALS LTD.
−Removed: Notes to Consolidated Financial Statements
−Removed: December 31, 2022 and 2021
−Removed: to additional paid in capital.
+Added: 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.
−Removed: 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.
−Removed: 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 .
−Removed: Interest expense, at the stated interest rate, recognized in the year ended December 31, 2022 and 2021 was approximately $- 0 - and $ 202,000 , respectively.
−Removed: NOTE 5 – BRIDGE FINANCING AND SECURITIES PURCHASE AGREEMENT (Primary Financing)
−Removed: Bridge Financing
−Removed: In connection with the Merger Agreement and the Securities Purchase Agreement (described below), Quoin Inc.
−Removed: 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.
−Removed: The Bridge Notes were purchased in three closings:
−Removed: (i) the first purchase of $ 2,000,000 on March 25, 2021 (proceeds of $ 1,500,000 );
−Removed: (ii) the second purchase of $ 1,700,000 in April 2021 (proceeds of $ 1,250,000 );
−Removed: and (iii) a third purchase of $ 1,300,000 in May 2021 (proceeds of $ 1,000,000 ).
−Removed: 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:
−Removed: (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.
−Removed: The Investor and Quoin Inc.
−Removed: 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.
+Added: 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 2,449 ADSs to such noteholders.
+Added: NOTE 5 – FINANCING
+Added: In connection with the Merger Agreement and the Securities Purchase Agreement with Altium Growth Fund LLP (the “Investor”) (described below), during March to May 2021 Quoin Inc.
+Added: issued three tranches of bridge notes (the “Bridge Notes”) in the aggregate principal amount of $ 5.0 million.
+Added: The Bridge notes had a maturity date of the earliest to occur of:
+Added: (i) December 25, 2021, (ii) the date on which the Company’s equity was registered under the Exchange Act or is exchanged for equity so registered or (iii) immediately prior to the closing of the Merger.
The Bridge Notes were offset against the purchase price under the Securities Purchase Agreement related to the Primary Financing and converted into 8,385 ADSs upon the closing of the Primary Financing in October 2021.
−Removed: Interest expense, at the stated interest rate, recognized in the year ended December 31, 2022 and 2021 was $- 0 - and $ 394,000 , respectively.
−Removed: Bridge Warrants
−Removed: 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.
−Removed: The Bridge Warrants had a term of five years from the date all of the shares underlying the Bridge Warrants are freely tradable.
−Removed: issued a total of 99,074 Bridge Warrants in the year ended December 31, 2021.
−Removed: 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.
−Removed: 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.
+Added: The Bridge Notes were issued with warrants to purchase a number of shares of Quoin Inc.’s common stock equal to the aggregate principal amount of the Bridge Notes.
+Added: Upon the closing of the financing in October 2021, the warrants were exchanged for warrants to purchase 8,256 ADSs at a fixed per share exercise price of $ 597 with a five year maturity (“Investor Exchange Warrants”).
+Added: On July 14, 2022, the Company and the Investor entered into an agreement amending the terms of the Investor Exchange Warrants.
+Added: See below, “Agreements with Altium Growth Fund, LP and Warrant Exercises”.
QUOIN PHARMACEUTICALS LTD.
1 unchanged sentence
December 31, 2023 and 2022
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The Company issued 342,100 ADSs to the Investor.
−Removed: 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”).
−Removed: 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.
+Added: The Company also issued to the Investor, effective as of March 13, 2022 (i) Series A Warrant to purchase 28,508 ADSs (the “Series A Warrant”) (ii) Series B Warrant to purchase 28,508 ADSs (the “Series B Warrant”) and (iii) Series C Warrant to purchase 15,931 ADSs (“Series C Warrant” and, together with the Series A Warrant and Series B Warrant, the “Investor Warrants”).
+Added: The exercise price for the Investor Warrants was $ 597 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.
−Removed: 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.
−Removed: 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.
+Added: 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, resulting in the issuance of a total of 28,508 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.
1 unchanged sentence
On July 14, 2022, the Company, Quoin Inc.
−Removed: 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.
−Removed: 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.
+Added: 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 from $ 597 to $ 0.00 per ADS with respect to a total of 33,333 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.
+Added: The incremental fair value of the modified warrants was approximately $ 491,000 , which was accounted for as an offering expense as part of the 2022 Offering (see Note 14) as the modification was done in contemplation of such 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 33,333 ADSs to Altium.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: QUOIN PHARMACEUTICALS LTD.
−Removed: Notes to Consolidated Financial Statements
−Removed: December 31, 2022 and 2021
+Added: The exercise price of the Noteholder Warrants (See Note 4) was also reduced from $ 597 to $ 0.00 as of July 14, 2022 as a result of the Altium Agreement.
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
12 unchanged sentences
The fair value hierarchy gives the lowest priority to Level 3 inputs.
+Added: QUOIN PHARMACEUTICALS LTD.
+Added: Notes to Consolidated Financial Statements
+Added: December 31, 2023 and 2022
In determining the appropriate hierarchy levels, the Company analyzes the assets and liabilities that are subject to fair value disclosure.
5 unchanged sentences
December 31, 2022
−Removed: 2020 Notes warrants
−Removed: Total Warrant Liability
−Removed: The following shows the movement of the warrant liability balance during the year ended December 31, 2022 and 2021.
−Removed: Bridge Financing
+Added: US Treasury Bills
+Added: Total US Treasury Bills Asset
+Added: The following shows the movement of the warrant liability balance during the year ended December 31,2022, there was no movement in the year ended December 31, 2023.
Beginning Balance January 1, 2022
−Removed: Warrant value at issuance (recorded as warrant liability expense)
Change in Fair value of warrants
Reclassification of warrant liability to an equity instrument
−Removed: ( 12,410,730 )
Ending Balance December 31, 2022
−Removed: Change in Fair value of warrants
−Removed: Reclassification of warrant liability to an equity instrument
−Removed: Ending Balance December 31, 2022
−Removed: QUOIN PHARMACEUTICALS LTD.
−Removed: Notes to Consolidated Financial Statements
−Removed: December 31, 2022 and 2021
−Removed: 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.
−Removed: 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.
+Added: Warrants issued to the 2020 Noteholders were classified as a liability on issuance.
+Added: The original warrants were exchanged for the Noteholder Warrants effective as of March 13, 2022, which 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.
NOTE 7 – STOCK BASED COMPENSATION
−Removed: 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.
+Added: 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 106,532 ordinary shares, represented by 106,532 ADSs as of December 31, 2022, and 319,397 ordinary shares represented by 319,397 ADSs as of December 31, 2023.
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.
−Removed: 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.
−Removed: Such options vest over a three or four year period.
−Removed: There were no further grants during the year ended December 31, 2022.
+Added: As of the year ended December 31, 2023, 41,386 shares remained available for issuance.
+Added: QUOIN PHARMACEUTICALS LTD.
+Added: Notes to Consolidated Financial Statements
+Added: December 31, 2023 and 2022
The following table summarizes stock-based activities under the Amended Plan:
3 unchanged sentences
Outstanding at December 31, 2022
+Added: Forfeited/Cancelled
+Added: Outstanding at December 31, 2023
Exercisable options at December 31, 2023
6 unchanged sentences
Exercise Price
−Removed: Fair value of ADS
−Removed: Estimated fair value of option
+Added: Fair value of common stock
+Added: Estimate fair value of option
+Added: Stock based compensation expense was approximately $ 1.09 million ($ 152,000 included in research and development expense and $ 942,000 included in general and administrative expenses) in the year ended December 31, 2023.
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.
−Removed: There was no stock-based compensation in the year ended December 31, 2021.
−Removed: 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.
+Added: At December 31, 2023, the total unrecognized compensation expense related to non-vested options was approximately $ 3.0 million and is expected to be recognized over the remaining weighted average service period of approximately 3.7 years.
QUOIN PHARMACEUTICALS LTD.
1 unchanged sentence
December 31, 2023 and 2022
−Removed: NOTE 8 – PREPAID EXPENSES
−Removed: Prepaid expenses are as follows:
+Added: NOTE 8 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
+Added: Prepaid expenses and other current assets are as follows:
Prepaid R&D costs
1 unchanged sentence
Prepaid expense
+Added: Deferred offering costs (note 18)
Short-term portion
5 unchanged sentences
Payroll taxes (note 12)
−Removed: Investor Relation firm fees (note 13)
Professional fees
6 unchanged sentences
commercializes products using the technology developed by the Seller.
−Removed: 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.
−Removed: 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 % .
−Removed: If, during the royalty period, two or more generic products are introduced, the royalty fees shall be reduced from 2 % to 0 % .
−Removed: also entered into a research and consulting agreement which committed Quoin Inc.
−Removed: to pay the Seller for additional research and development consulting services (See Notes 13 and 15).
+Added: There were no royalty obligations due at December 31, 2023 and December 31, 2022.
+Added: As of December 31, 2023 the Company determined that the Polytherapeutics asset was no longer of use and reduced the carrying value to zero, see Note 11.
In October 2019, Quoin Inc.
entered into the Exclusive Licensing Agreement (as amended from time to time, the “License Agreement”) with Skinvisible Pharmaceuticals, Inc.
−Removed: (“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.
+Added: (“Skinvisible”), under which Skinvisible granted the Company an 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.
−Removed: The Company also agreed
+Added: 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.
+Added: The License Agreement also requires that the Company make a $ 5 million payment to Skinvisible upon receiving approval in the U.S.
+Added: or European Union, whichever occurs first, for the first drug product developed using intellectual property licensed thereunder.
+Added: There were no milestone or royalty obligations due at December 31, 2023 and December 31, 2022.
QUOIN PHARMACEUTICALS LTD.
1 unchanged sentence
December 31, 2023 and 2022
−Removed: 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.
−Removed: The License Agreement also requires that the Company make a $ 5 million payment to Skinvisible upon receiving approval in the U.S.
−Removed: or European Union, whichever occurs first, for the first drug product developed using intellectual property licensed thereunder.
NOTE 11 - INTANGIBLE ASSETS
5 unchanged sentences
The Company recorded amortization expense of approximately $ 104,000 and $ 104,000 in the years ended December 31, 2023 and 2022, respectively.
+Added: As of December 31, 2023 the Company determined that the Polytherapeutics asset was no longer of use and reduced the carrying value to zero, which resulted in an impairment expense of approximately $ 18,000 recorded in research and development expenses in the year ended December 31, 2023.
The annual amortization expense expected to be recorded for existing intangible assets for the years 2024 through 2027, and thereafter, is approximately $ 100,000 , $ 100,000 , $ 100,000 , 100,000 and $ 183,000 , respectively.
NOTE 12 – RELATED PARTY TRANSACTIONS
−Removed: Employment Agreements and Due to Officers/Founders:
+Added: Due to Officers/Founders:
Due to the limited funding of Quoin Inc.
22 unchanged sentences
Long-term portion
−Removed: 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.
−Removed: Myers’ son, who has been consulting for the Company on research and development matters from time to time.
+Added: Research and development expense of $ 12,000 and $ 48,000 were paid during the years ended December 31, 2023 and 2022, respectively, to Dr.
+Added: Myers’ son, who had been consulting for the Company on matters from time to time.
+Added: As of March 31, 2023, Dr.
+Added: Myers’ son no longer provided consulting services to the Company.
+Added: Interest Payable:
+Added: See Note 4 for interest payable on the 2020 Notes.
QUOIN PHARMACEUTICALS LTD.
3 unchanged sentences
Research and consulting agreement
−Removed: 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).
−Removed: 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.
−Removed: Pursuant to an amendment, the Post-Closing Period was revised to terminate on December 31, 2020.
−Removed: 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.
−Removed: See Note 16 for Consultant’s notification of breach of contract.
−Removed: Other research consulting agreements
−Removed: 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.
−Removed: The combined fees of the three agreements are approximately $ 270,000 , payable as milestones were met.
−Removed: The Company incurred accrued expenses of approximately $ 194,000 in relation to Axella consulting agreements as of December 31, 2021.
−Removed: In August 2022, the Company issued 44,187 ADSs to one of Axella ’ s principals to settle the outstanding liability in full.
−Removed: To date the Company has incurred no research and development expenses in connection with these agreements, as no services have been provided.
In November 2020, Quoin Inc.
−Removed: entered into a Master Service Agreement for an initial term of three years with Therapeutics Inc.
−Removed: for managing preclinical and clinical development for new products in the field of dermatology.
−Removed: The agreement required the execution of individual work orders.
+Added: entered into a Master Service Agreement with Therapeutics Inc.
+Added: for the management of the preclinical and clinical development of QRX003 for Netherton Syndrome.
+Added: The initial term of the agreement was three years with automatic one year extensions, and the agreement required the execution of individual work orders.
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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The Company incurred research and development expenses of approximately $ 276,000 for the year ended December 31, 2022.
+Added: 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.
+Added: An additional work order was entered into in December 2022 for a second QRX003 clinical study at an expected estimated cost of approximately $ 830,000 .
+Added: In the years ended December 31, 2023 and 2022, the Company incurred a research and development expense under these agreements of approximately $ 1.5 million and $ 1.2 million respectively.
+Added: During the year ended December 31, 2023, the Company received a credit of approximately $ 278,000 applied to prior expenses incurred during the period of March 2023 to July 2023.
+Added: In November 2021, the Company entered into a research agreement with Queensland University of Technology (QUT) for a pre-clinical research program for the development of a product to treat Netherton Syndrome of approximately $ 250,000 .
+Added: In May 2022, the Company entered into a second research agreement with QUT for the development of a product to treat Scleroderma of approximately $ 610,000 .
+Added: Each agreement remains in place until the completion of the research program, which in each case was initially anticipated to be 18 months from execution.
+Added: For the years December 31, 2023 and 2022, the Company incurred research and development costs related to these agreements of approximately $ 361,000 and $ 353,000 respectively.
Consulting agreement:
4 unchanged sentences
For the years ended December 31, 2023 and 2022, the Company incurred expenses of $ 0 and $ 112,000 , respectively.
+Added: As of December 31, 2023 and December 31, 2022 the Company has $- 0 - and $ 56,000 in accrued balances, respectively.
+Added: Performance milestones and Royalties
+Added: See Note 10 for asset and in-licensed technology commitments.
+Added: NOTE 14 – SHAREHOLDERS’ EQUITY
+Added: Historical authorized shares amounts in this Note 14 were not retroactively adjusted to reflect the number of ordinary shares and ADSs resulting from the ordinary share reverse split and ADS ratio changes discussed herein.
+Added: On April 12, 2022, the Company held a Special General Meeting, at which the Company’s shareholders approved, among other items, to increase the Company’s registered share capital from 12,500,000,000 ordinary shares (without any nominal value) to 50,000,000,000 ordinary shares (without any nominal value).
+Added: Effective August 1, 2022, the ratio of 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.
+Added: Subsequent thereto, on November 3, 2022, the Company held its Annual General Meeting, at which the Company’s shareholders approved, among other items, an increase in the registered share capital of the Company from 50,000,000,000 ordinary shares without any nominal value each to 500,000,000,000 ordinary shares (without any nominal value).
QUOIN PHARMACEUTICALS LTD.
1 unchanged sentence
December 31, 2023 and 2022
−Removed: Performance milestones and Royalties
−Removed: See Note 10 for asset and in-licensed technology commitments.
−Removed: Merger agreement commitment
−Removed: 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.
−Removed: Cellect entered into a CVR Agreement with Mr.
−Removed: 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”).
−Removed: 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.
−Removed: CVRs were recorded in a register administered by the Rights Agent but were not certificated.
−Removed: Since the Company will not receive any net proceeds from the CVRs, there is no asset or liability recorded in the consolidated financial statements.
−Removed: NOTE 14 – SHAREHOLDERS’ EQUITY AND SHARE OWNERSHIP AND RIGHTS
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: These ordinary shares are not redeemable and do not have any preemptive rights.
−Removed: 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.
+Added: On or about July 18, 2023, the Company changed the ratio of ADSs evidencing ordinary shares from one ADS representing five thousand ( 5,000 ) ordinary shares to one ADS representing sixty thousand ( 60,000 ) ordinary shares (the “Ratio Change”).
+Added: The Ratio Change resulted in a one for twelve split of issued and outstanding ADSs, however it had no effect on the Ordinary Shares.
+Added: On October 26, 2023, the Company held its Annual General Meeting (“2023 Meeting”), at which the Company’s shareholders approved, among other items, an increase in the Company’s registered share capital from 500,000,000,000 ordinary shares, no par value, to 6,000,000,000,000 ordinary shares, no par value.
+Added: Moreover, at the 2023 Meeting, the Company’s shareholders approved a reverse share split (“Reverse Split”) of the Company’s ordinary shares on a date to be determined by the Board, at a ratio of 1 -for- 60,000 .
+Added: On November 5, 2023, the Board approved November 8, 2023 as the effective date of the Reverse Split.
+Added: Effective as of November 8, 2023, the number of authorized ordinary shares through the Reverse Split was reduced to 100,000,000 ordinary shares, combining every 60,000 outstanding ordinary shares into one ordinary share, with each ADS representing one ordinary share.
+Added: Each holder of a Company’s ordinary share has one vote for each ordinary share held on all matters submitted to a vote of shareholders at each 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.
+Added: In November 2023 the company retired 45 ordinary shares of treasury stock.
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.
2 unchanged sentences
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.
−Removed: The Bank of New York Mellon, as depositary, has registered and delivered American Depositary Shares, also referred to as ADSs.
−Removed: 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).
−Removed: Each ADS will also represent any other securities, cash or other property which may be held by the depositary.
−Removed: 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.
+Added: On August 9, 2022, the Company completed the 2022 Offering of 184,167 ordinary shares represented by 184,167 ADSs at a purchase price of $ 60.00 per ADS and pre-funded warrants (the “2022 Pre-Funded Warrants”) to purchase 93,833 ordinary shares represented by 93,833 ADSs at a per pre-funded warrant price of $ 59.998 , with each ADS and 2022 Pre-Funded Warrant accompanied by an ordinary warrant (the “2022 Common Warrant”), for aggregate gross proceeds of $ 16.8 million, resulting in net proceeds of approximately $ 14.9 million.
+Added: Each 2022 Common Warrant had an exercise price of $ 60.00 per ADS and was to expire on the fifth anniversary of the Closing Date.
+Added: On the Closing Date, the holder of 2022 Pre-Funded Warrants sold in the 2022 Offering exercised its Pre-Funded Warrants in full.
+Added: The 2022 Common Warrant exercise price and expiration date were subsequently amended for investors who participated in both the 2022 Offering and 2023 Offering (Note 5).
+Added: 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.
+Added: The combined fees of the three agreements are approximately $ 270,000 , payable as milestones were met.
+Added: The Company incurred accrued expenses of approximately $ 194,000 in relation to Axella consulting agreements as of December 31, 2021.
+Added: In August 2022 the Company issued 3,682 ADSs to one of Axella’s principals to settle the outstanding liability in full.
+Added: The Company has no ongoing relationship with Axella Research and no further services will be provided.
+Added: On February 24, 2023 (the “2023 Closing Date”), the Company completed an offering (the “2023 Offering”) of 412,500 ordinary shares represented by 412,500 ADSs at a purchase price of $ 12.00 per ADS and a pre-funded warrant (the “Pre-Funded Warrant”) to purchase 170,833 ordinary shares represented by 170,833 ADSs at a per pre-funded warrant price of $ 11.9988 , with each ADS and Pre-Funded Warrant accompanied by an ordinary warrant (the “Common Warrant”) for aggregate gross proceeds of $ 7.0 million, resulting in net proceeds of approximately $ 5.8 million, after deducting the placement agent’s fees and offering expenses.
+Added: Each Common Warrant has an exercise price of $ 12.00 per ADS and expires on the fifth anniversary of the 2023 Closing Date.
+Added: On the 2023 Closing Date, the
QUOIN PHARMACEUTICALS LTD.
1 unchanged sentence
December 31, 2023 and 2022
−Removed: 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.
−Removed: 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.
−Removed: On the Closing Date, the holder of August Pre-Funded Warrants sold in the August Offering exercised its Pre-Funded Warrants in full.
−Removed: 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.
−Removed: In connection with the August Offering, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors.
−Removed: 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.
−Removed: 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.
−Removed: The Purchase Agreement also contained representations, warranties, indemnification and other provisions customary for transactions of this nature.
+Added: holder of the Pre-Funded Warrant exercised its Pre-Funded Warrants in full.
+Added: In connection with the 2023 Offering, the Company entered into an Amendment No.
+Added: 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 2022 Offering and 2023 Offering.
+Added: The Warrant Amendments amended certain terms of the Warrants issued in the 2022 Offering to such 2022 Purchasers.
+Added: Specifically, the Warrant Amendments reduced the exercise price of Warrants to purchase 236,670 ADSs out of the total 280,000 issued in the 2022 Offering from $ 60.00 to $ 13.20 and extended the term during which those warrants could remain exercisable until February 24, 2028.
+Added: The incremental fair value of the modified warrants was approximately $ 238,000 , which was accounted for as an offering expense in connection with the 2023 Offering.
The following table summarizes warrant activities during the year ended December 31, 2022 and the year ended December 31, 2023:
1 unchanged sentence
Outstanding at December 31, 2021
−Removed: Outstanding at December 31, 2021
+Added: Granted Common Warrants
Exercised - Cashless and Pre Funded Warrants
−Removed: ( 1,921,487 )
+Added: Outstanding at December 31, 2022
+Added: Granted Common Warrants
+Added: Granted Pre-Funded Warrants
+Added: Exercised Pre-Funded Warrants
Outstanding and exercisable at December 31, 2023
1 unchanged sentence
Note that the exercise price of certain warrants was reduced from $ 597 to $ 0 on July 14, 2022 and to refer to Note 5
−Removed: 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
−Removed: QUOIN PHARMACEUTICALS LTD.
−Removed: Notes to Consolidated Financial Statements
−Removed: December 31, 2022 and 2021
+Added: Note that the exercise price of certain warrants were reduced from $ 60.00 to $ 13.20 per ADS for Common Warrants issued in the 2022 Offering to investors who participated in both the Company’s 2022 Offering and 2023 Offering, see above.
NOTE 15 – INCOME TAXES
2 unchanged sentences
Net operating losses
−Removed: Due to Officers
Accrued Expenses and Other
R&D Credit Carryforward
−Removed: Debt related activities
Stock Compensation
3 unchanged sentences
Net deferred tax assets/(liabilities)
+Added: QUOIN PHARMACEUTICALS LTD.
+Added: Notes to Consolidated Financial Statements
+Added: December 31, 2023 and 2022
The income tax benefit for the years ended December 31, 2023 and December 31, 2022 differed from the amounts computed by applying the U.S.
7 unchanged sentences
Deferred True Up
−Removed: Effect of Tax Act
Effective Tax
10 unchanged sentences
The income tax benefit for the years ended December 31, 2023 and 2022 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.
−Removed: QUOIN PHARMACEUTICALS LTD.
−Removed: Notes to Consolidated Financial Statements
−Removed: December 31, 2022 and 2021
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.
6 unchanged sentences
Management is unaware of any matters requiring accrual for related losses in the financial statements.
−Removed: In February 2020, the Seller of the equity interests in Polytherapeutics and party to the Research Agreement communicated with Quoin Inc.
−Removed: 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).
−Removed: 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.
−Removed: 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.
−Removed: No lawsuits have been filed as of the financial statement issuance date.
−Removed: Should a formal claim or lawsuit be filed, the Company believes it has meritorious defenses.
NOTE 17 – LICENSE AGREEMENTS
−Removed: 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.
−Removed: No royalty revenues have been received through December 31, 2022 under any of these agreements.
+Added: As of December 31, 2023 and December 31, 2022, the Company had nine and eight commercial license and supply agreements outstanding, whereby the Company will receive a royalty or other proceeds from the specified product revenues from the licensor, if and when the underlying products are approved and commercialized or sold via compassionate use or early access programs.
+Added: No revenues have been received through December 31, 2023 from any of these agreements.
QUOIN PHARMACEUTICALS LTD.
2 unchanged sentences
NOTE 18 - SUBSEQUENT EVENTS
−Removed: 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.
−Removed: Each February Common Warrant has an exercise price of $ 1.00 per ADS and expires on the fifth anniversary of the February Closing Date.
−Removed: On the February Closing Date, the holder of the February Pre-Funded Warrant exercised its Pre-Funded Warrant in full.
−Removed: In connection with the February Offering, the Company entered into a Securities Purchase Agreement (the “February Purchase Agreement”) with certain institutional investors.
−Removed: Under the February Purchase Agreement, subject to certain exemptions, the Company agreed not to:
−Removed: (i) for a period of ninety ( 90 ) days after the closing date of the Offering, issue, enter into any agreement to issue or announce the issuance or proposed issuance of any ADSs, ordinary shares or ordinary share equivalents or (ii) file any registration statement or amendment or supplement thereto, other than a registration statement on Form S-8 in connection with any employee benefit plan or any post-effective amendment to a registration statement declared effective by the Securities and Exchange Commission (the “SEC”) and (ii) for a period of 180 days after the closing date of the Offering, enter into an agreement to effect a “variable rate transaction” as defined in the Purchase Agreement.
−Removed: In connection with the February Offering, the Company entered into an Amendment No.
−Removed: 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.
−Removed: The Warrant Amendments amended certain terms of the August Common Warrants issued to such 2022 Purchasers.
−Removed: 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.
+Added: Alumni Equity Line and Purchase Agreement
+Added: On January 25, 2024, the Company entered into a purchase agreement (the “Alumni Purchase Agreement”) with Alumni Capital LP (“Alumni”).
+Added: Pursuant to the Alumni Purchase Agreement, the Company has the right to sell to Alumni up to $ 8,000,000 (the “Commitment Amount”) of newly issued ordinary shares that are represented by ADS, subject to certain conditions and limitations, from time to time during the term of the Alumni Purchase Agreement.
+Added: The Company has agreed to issue purchase notices for an aggregate of at least $ 4,000,000 of the Commitment Amount pursuant to the Alumni Purchase Agreement.
+Added: If shareholder approval of the issuance of ADSs under the Purchase Agreement is not obtained by April 30, 2024, the Company may terminate the Alumni Purchase Agreement by written notice to Alumni and neither party shall have any obligation or liability to the other party.
+Added: There is no upper limit on the price per share that Alumni could be obligated to pay for the ADSs under the Alumni Purchase Agreement;
+Added: provided, however at no time can the purchase price be below a floor price of $ 1.00 per share (subject to adjustment as provided in the Alumni Purchase Agreement).
+Added: As consideration for Alumni’s irrevocable commitment to purchase ADSs under the Alumni Purchase Agreement, the Company agreed to issue to Alumni, at the times set forth in the Alumni Purchase Agreement a number of ADSs with a value at the time of issuance not to exceed $ 240,000 in the aggregate (the “Commitment Securities”).
+Added: The Company may pay cash in lieu of issuing all or any portion of the Commitment Securities.
+Added: In connection with the 2024 Offering, the Company agreed not to sell any ADSs to Alumni under the Alumni Purchase Agreement for a period of 180 days from the closing date of the 2024 Offering.
+Added: Public Offering
+Added: On March 7, 2024, (the “2024 Closing Date”) the Company completed an offering (the “2024 Offering”) of the following securities (i) 811,250 ordinary shares represented by ADSs, (ii) 4,062,500 Series D warrants (the “Series D Warrants”) to purchase 4,062,500 ordinary shares represented by ADSs, (iii) 4,062,500 Series E warrants (the “Series E Warrants” and together with the Series D Warrants, the “2024 Warrants”) to purchase 4,062,500 ordinary shares represented by ADSs, and (iv) 3,251,250 pre-funded warrants (the “2024 Pre-Funded Warrants”) to purchase 3,251,250 ordinary shares represented by ADSs for aggregate gross proceeds of approximately $ 6.5 million, resulting in net proceeds of approximately $ 5.6 million, after deducting the placement agent’s fees and offering expenses paid by us.
+Added: Each ADS (or 2024 Pre-Funded Warrant to purchase one ADS in lieu thereof) was sold together with a Series D Warrant to purchase one ADS and a Series E Warrant to purchase one ADS.
+Added: The ADSs and accompanying 2024 Warrants were sold at a combined public offering price of $ 1.60 and the 2024 Pre-Funded Warrants and accompanying 2024 Warrants were sold at a combined public offering price of $ 1.5999 , which is equal to the combined purchase price per ADS and accompanying 2024 Warrants, minus the exercise price of each 2024 Pre-Funded Warrant of $ 0.0001 .The Series D and Series E warrants have an exercise price of $ 1.60 per share, are exercisable immediately following the 2024 Closing Date and expire in two years and five years , respectively, from the closing of the 2024 Offering.
+Added: In connection with the 2024 Offering, the Company entered into a Securities Purchase Agreement (the “2024 Purchase Agreement”) dated March 4, 2024, with certain institutional investors signatory thereto, pursuant to which the Company agreed to issue and sell to such investors, certain of the ADSs, 2024 Pre-Funded Warrants and 2024 Warrants sold in the 2024 Offering.
+Added: Pursuant to the terms of the 2024 Purchase Agreement, the Company agreed, subject to certain exceptions, (i) to not enter into variable rate financings for a period of 180 days following the closing of the 2024 Offering, and (ii) to not enter into any equity financings for 90 days from closing of the 2024 Offering.
+Added: On March 7, 2024, the Company also entered into privately negotiated agreements with the holders of certain existing outstanding warrants to purchase up to 638,834 ADSs (the “Prior Warrants”) to, among other things, reduce the exercise price of such Prior Warrants to $ 1.60 and to extend the current expiration date of the Prior Warrants until March 7, 2029.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.