Qrons Inc. [QRON] Filings

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ______

Commission File Number: 000-55800

28-10 Jackson Avenue #26N

Long Island City, New York 11101

(Address of principal executive office)

Registrant’s telephone number, including area code: (212)-945-2080

 Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.0001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐     No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐     No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐     No ☒

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐     No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter was $1,327,916.

As of April 10, 2024, there were 13,649,789 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

PART I

Item 1. Business

As used in this Annual Report on Form 10-K (this “Report”), references to the “Company,” the “registrant,” “we,” “our” or “us” refer to Qrons Inc. unless the context otherwise indicates.

Forward-Looking Statements

This Report contains predictions, estimates and other forward-looking statements that relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Annual Report. You should read this Report and the documents that we have filed as exhibits to this Report completely and with the understanding that our actual future results may be materially different from what we expect.

All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by applicable law.

Overview

We were incorporated under the laws of the State of Wyoming on August 22, 2016, as BioLabMart Inc. and changed our name to Qrons Inc. on August 8, 2017.

We are an innovative biotechnology company dedicated to developing biotech products, treatments and technologies to combat neuronal and infectious diseases with a focus on antibiotic resistant bacteria, which is becoming the most prominent and rapidly growing worldwide cause of illness and death. Our approach is to seek to engage in strategic arrangements with companies universities and, scientists that are developing unique know how and intellectual properties in the fields of, stem cells, antibiotic resistant drug development and tissue engineering, for deployment in the fight against neuronal and infectious diseases.  Our search is focused on researchers based in Israel, a country which is world-renowned for biotech innovations and where our researchers are based.

To date, the Company has collaborated with universities and scientists in the fields of regenerative medicine, tissue engineering and 3D printable hydrogels to develop a treatment that integrates proprietary, engineered mesenchymal stem cells (“MSCs”), 3D printable implant, smart materials and a novel delivery system. The Company has developed two product candidates for treating penetrating and non-penetrating (concussion-like) traumatic brain injuries (“TBIs”), both integrating proprietary, anti-brain inflammation synthetic hydrogel and modified MSCs. QS100TM is an injury specific, 3D printable, implantable MSCs-synthetic hydrogel, to treat penetrating brain injuries and QS200TM is an injectable MSCs-synthetic hydrogel for the treatment of diffused injuries commonly referred to as concussions.

In early 2022, the Company began collaborating with scientists at Bar Ilan University,  a leading University in Israel to conduct preliminary experiments to confirm that a combination of certain molecule compounds that they invented which contain immunomodulating properties when integrated with ingredients in our QS200™ product candidate may substantially improve its solubility and allow very high dosage treatments which we believe offers treatment options to diffused axonal injuries. These molecules are being tested for certain indication in various Phase II trials conducted by others.

We also believe that the improved dosage delivery may present a unique treatment option to patients who suffer from antibiotic resistant bacteria infection and Sepsis. We have developed a research plan   to conduct such in vitro tests, which if successful we believe may provide an expedited pathway to human trials.

On July 17, 2023, the Company entered into a License Agreement Term Sheet (the "Agreement”) with Professors Benjamin Sredni and Michael Albeck (the "Professors”) and Dr. Ido Merfeld ("Merfeld), the Company’s President and co-Founder.

Under the Agreement the Professors, inventors of certain patents, applications, processes and who possess certain related know-how particularly as to AS101 Tellurium based compounds, (the "Background IP”) agreed to license the Background IP to Qrons.

The Background IP, independently or together with the Qrons IP will be used as part of a new research program allowing for the use of all Background IP by Qrons to experiment and commercialize the therapeutic effect of certain Tellurium based compounds on antibiotic resistance bacterial infections, Sepsis and Traumatic brain injuries ("Tellurium Research”).

Previously, under an intellectual property license agreement (the “Intellectual Property Agreement”) with the Trustees of Dartmouth College (“Dartmouth”) to develop innovative 3D printable, biocompatible advanced materials, Dartmouth granted the Company an exclusive worldwide, royalty bearing license for 3D printable materials in the field of human and animal health and certain additional patent rights to use and commercialize licensed products and services. As the Company’s short-term focus and deployment of resources has pivoted to developing a treatment for Sepsis, which the Company believes has the potential to reach commercialization in a shorter time span, the Company in 2023 entered into discussions with Dartmouth as to a range of issues including the termination of the license. In February 2024 the Company reached agreements with Dartmouth as to open issues and the license has been terminated.

The Company has relied primarily on its two co-founders, Jonah Meer, Chief Executive Officer, and Ido Merfeld, President, who are its sole directors, to manage its day-to-day business. The Company currently outsources professional services to third parties in an effort to maintain lower operational costs.

Messrs. Meer and Merfeld, as the holders of the Company’s issued and outstanding shares of the Company’s Class A Preferred Stock, collectively have 66 2/3% of the voting rights of the Company. Acting together, they will be able to influence the outcome of all corporate actions requiring approval of our stockholders.

The Company’s common stock has traded on the OTCQB Venture Market since August 12, 2019 under the symbol “QRON”.

Agreements for Sepsis Program

On July 17, 2023, the Company entered into a License Agreement Term Sheet with Professors Benjamin Sredni and Michael Albeck and Dr. Ido Merfeld the Company’s President and co-Founder.

Under the Agreement the Professors, inventors of certain patents, applications, processes and who possess certain related know-how particularly as to AS101 Tellurium based compounds, agreed to license the Background IP to Qrons.

Merfeld is the inventor of certain patents and possesses certain related know-how particularly as to Pseudopolyrotaxanes and Cyclodextrins, all owned by the Company ("Qrons IP”).

The Professors granted Qrons an exclusive world-wide, perpetual license to the Background IP, unless the Background IP is returned should Qrons fail to meet certain fundraising and prosecution milestones.

The Background IP, independently or together with the Qrons IP will be used as part of a new research program allowing for the use of all Background IP by Qrons to experiment and commercialize the therapeutic effect of certain Tellurium based compounds on antibiotic resistance bacterial infections, Sepsis and Traumatic brain injuries.

The Tellurium Research will be allowed to expand to include other indications as progress warrants and agreed by the parties. The Professors and Merfeld as co-inventors will enter into a new patent filing for treating sepsis with certain Tellurium based compounds independently and in combination with Cyclodextrins, to be known as the "New Patent”. The New Patent will be assigned to Qrons, subject to Qrons rights under the Agreement.

As part of the Tellurium Research program the Professors joined Qrons’ Scientific Advisory Board.

All new intellectual properties and/or Know-how discovered and/or generated by The Tellurium Research ("Forward IP”) will be the sole property of Qrons. All the Background IP will remain to be the sole property of the Professors until an Exit Event occurs.

All additional patents developed, invented or otherwise during the course of the Tellurium Research will be filed, prosecuted, and maintained by Qrons.

Qrons and the Professors will share the expenses relating to the filing, prosecution and maintenance of the provisional period of the New Patent. Thereafter, all expenses related to the New Patent shall be the sole responsibility of Qrons.

Qrons is tasked with raising $2 million funds to support Tellurium Research. If within a year after the commencement of the Agreement, Qrons fails to raise at least $2 million, the license will be terminated unless agreed otherwise by the parties.

If Qrons shall (i) fail to prosecute and maintain in due order the New Patent or (ii) fail to launch a Phase 1 program with the FDA or a comparable European regulatory agency for at least one Tellurium based treatment on or before the three-year (3) anniversary of the date of the Agreement, then the Professors may terminate the license.

In the case of termination of the Agreement, Qrons shall at the request of the Professors transfer to the Professors & Merfeld ownership of the New Patent as well as the files, documents, research and new know how, in relation to the sepsis research.

As consideration for joining the Scientific Advisory Board, The Professors each received a grant of 150,000 common stock options exercisable at $0.50 (half dollar) with one-third (1/3) being immediately exercisable, and an additional one-third (1/3) exercisable on each of the first- and second-year anniversary dates of the Agreement. Each option has  a 3-year term for which to exercise the option.

As part of the Agreement Adv. Avichai Isaschar and Hananel Levy joined the Company’s Business Advisory Board and as consideration each receive a grant of 50,000 common stock options exercisable at $1.00 (One dollar) each with one-third (1/3) being immediately exercisable, and an additional one-third (1/3) exercisable on each of the first- and second-year anniversary dates of the Agreement. Each option has a 3-year term for which to exercise the option.

In consideration of the Background IP, Qrons will issue to the Professors a total of 800,000 common stock options exercisable to purchase shares of Qrons common stock at an exercise price of $1.00 per share, fifty percent (50%) which is exercisable on the date of execution of the Agreement and the balance exercisable 1 years from the date of the Agreement. Should the Professors request to receive back the rights to the New Patent "all un-exercised options will expire.”

In consideration of licensing the Background IP, Qrons is obligated to pay the Professors an earned Royalty of 2% (1% each) Net Sales of any Tellurium based transactions, anywhere in the World and pay to the Professors fifteen percent (15%) of all Sublicense Consideration received by Qrons and each Affiliate under a Sublicense.

In the case of a Qrons Exit Event (as defined in the Agreement) the Professors are required to transfer full ownership of the Background IP to Qrons and in exchange receive two percent (2%) (1% each) of any consideration received by Qrons as part of such Exit Event.

Agreements with Dartmouth

On October 2, 2019, the Company entered into the Intellectual Property Agreement pursuant to which Dartmouth granted the Company an exclusive world-wide license under the patent application entitled “Mechanically Interlocked Molecules-based Materials for 3D Printing” in the field of human and animal health and certain additional patent rights to use and commercialize licensed products and services. The license grant included the right of the Company to sublicense to third parties subject to the terms of the Agreement.

The Agreement provided  for : (i) a $25,000 license issue fee; (ii) an annual license maintenance fee of $25,000, until the first commercial sale of a licensed product or service; (iii) an earned royalty of 2% of net sales of licensed products and services by the Company or a sublicensee; (iv) 15% of consideration received by the Company under a sublicense; and (v) beginning in the first calendar year after the first commercial sale, an annual minimum royalty payment of $500,000, $1,000,000 in the second calendar year, and $2,000,000 in the third calendar year and each year thereafter. The Company will also reimburse Dartmouth for all patent preparation, filing, maintenance and defense costs.

Under the Agreement, the Company was required to diligently proceed with the development, manufacture and sale of licensed products and licensed services, including funding at least $1,000,000 of research in each calendar year beginning in 2019 and ending with the first commercial sale of a licensed product; filing an IND/BLA (or equivalent) with the FDA or a comparable European regulatory agency before the four-year anniversary and make the first commercial sale of a licensed product before the twelve-year anniversary of the effective date of the Agreement and achieve annual net sales of at least $50,000,000 by 2033. If the Company failed to perform any of these obligations, Dartmouth had the option to terminate the Agreement or change the exclusive license to a nonexclusive license.

As the Company failed to fulfill its requirements under the Agreement Dartmouth declared the Company in default in in August 2023, as had terminated the license. The Company is indebted to Dartmouth for $50,000 of unpaid annual license fees and $4,877 of unpaid reimbursable patent maintenance costs.

The Company and Dartmouth also agreed in February 2024 to add Professor Chenfeng Ke and Qianming Lin, both formerly of Dartmouth as co-inventors of the patent entitled Techniques for Promoting Neuronal Recovery and to add Dartmouth as co-owner of the patent together with Qrons.

The Company’s sponsored research agreement, pursuant to which the Company funded research conducted by Dartmouth of mutual interest to the parties terminated by its terms in July 2020.

Business Description

The Company’s initial focus at its formation was traumatic brain injury (“TBI”), a severe form of neuronal damage caused by powerful head impacts. Patients can experience transient symptoms, profound disability or death. TBI is generally caused by violent acts, motor vehicle accidents, falls and sports-related concussions.

TBI can be characterized into two distinct subtypes, penetrating injuries, in which an object pierces the skull and directly damages the brain causing extensive damage to the neuronal tissue or diffused axonal injuries (commonly referred to as concussions) that are non-penetrating blows that push the brain against the skull, inflicting neuronal damage. Diffused axonal injuries account for approximately 89% of all TBIs.

Neuronal cells interconnect to create the gigantic network that drives core brain functions. Unfortunately, neurons rarely regenerate after an injury. As a result, following a severe brain injury, neural connectivity is lost and brain function compromised.

TBI patients can become blind, deaf, paralyzed and experience cognitive and psychological issues. There is also evidence that TBI patients may be more likely to develop Alzheimer’s, Huntington’s, Parkinson’s and other neurodegenerative diseases. Repeated head injuries may induce brain pathologies associated with chronic traumatic encephalopathy (“CTE”) a neurodegenerative disease associated with multiple head injuries. CTE is often discovered in athletes, post-mortem.

There are no effective approved FDA treatments to help patients regain function of which we are aware. Current treatments focus on reducing secondary injuries. They can partially reduce further damage but do little or nothing to heal the brain. Most strategies are rehabilitative, helping patients adjust to their impaired cognitive state by creating workarounds, such as taking notes to compensate for lost short-term memory.

The Company developed two product candidates, QS100TM for treating penetrating brain injuries and QS200TM, for treating concussions and other diffused axonal injuries. Both QS100TM and QS200TM integrate proprietary, anti-brain inflammation synthetic hydrogel and modified MSCs and smart synthetic material. QS100TM is an injury specific, 3D printable, implantable MSCs-synthetic hydrogel to treat penetrating brain injuries (such as gunshot wounds, motor vehicle accidents and falls) and QS200TM is an injectable MSCs-synthetic hydrogel for the treatment of diffused axonal injuries.

QS100TM has demonstrated astrogliosis inhibition and induction of neuronal differentiation in our in-vivo animal experiment penetrating injury animal model. QS200TM research has shown efficacy for concussions and diffused brain injuries.

We believe that QS100TM’s advances provide a superior stem cells/synthetic hydrogel integration which will enable the unleashing of a precise, effective and controlled delivery of our proprietary MSCs so as to induce neuronal growth.

We further believe that QS200™  may substantially improve solubility of certain molecules that have been identified and allow very high dosage treatments which we believe offers treatment options to diffused axonal injuries.

We also believe that the improved dosage delivery may present a unique treatment option to patients who suffer from antibiotic resistant bacteria infection and sepsis. Sepsis is a life threatening medical emergency that arises when the body’s response to infection causes injury to its own tissues and organs.

There remains no effective treatment for sepsis worldwide and high mortality rate persists. It is a leading cause of death in hospitals. It is also the main reason why people are readmitted to hospital.

Although TBI and neuronal diseases occur in different regions and display different causes or origins, they share common cellular and molecular mechanisms. Building on the Company’s activities in its research activities for TBI’s and its activities and interactions in Israel, the Company has expanded its proprietary TBI research, to create a platform making use of synergic technologies to combat a broader range of additional neuronal diseases.

The nervous system is comprised of the brain, spinal cord and nerves. Together they control all of the workings of the body. When something goes awry with a part of the nervous system, one can experience difficulties with movement, speech, swallowing, breathing or learning. Problems may also develop that affect memory, senses or mood.

Four decades of intense research and development efforts have failed to yield effective interventions for neuronal diseases. The lack of success in the search for a drug or treatment to improve the devastating symptoms of chronic neuronal diseases has been one of modern medicine’s greatest frustrations. 

The lack of effective therapies for neuronal diseases creates an enormous social and economic burden on society.

Major types of neuronal diseases include:

Although these diseases occur in different regions and display different causes or origins, they share common cellular and molecular mechanisms.

Our Mission and Approach

Our goal is to develop and license biotech products, treatments and technologies to combat neuronal and infectious diseases with a focus on antibiotic resistant bacteria, which is becoming the most prominent and rapidly growing worldwide cause of illness and death. Our approach is to seek to engage in strategic arrangements with companies universities and, scientists that are developing unique know how and intellectual properties in the fields of, stem cells, antibiotic resistant drug development and tissue engineering, for deployment in the fight against neuronal and infectious diseases.

Our search is focused on researchers based in Israel, a country which is world-renowned as having a long track record of successful and ground-breaking innovations.

We believe we have assembled a talented and experienced development team, comprised of scientists, doctors and finance professionals, who can identify and evaluate promising product and treatment candidates and partner companies for potential acquisition. The core of our team consists of seasoned Israelis making us well positioned to mine Israel’s emerging technologies.

Our search is for value accretive transactions with high growth, and clinical and commercial potential. Following the exclusive license or acquisition of the intellectual property underpinning a product candidate, we will seek to leverage our business, scientific, regulatory, legal and finance expertise to help partner companies and entrepreneurs achieve their goals while providing us a platform to advance treatments of unmet neuronal diseases.

To date, we have two product candidates, QS100TM for treating penetrating brain injuries and QS200TM, for treating concussions and other diffused axonal injuries. Both QS100TM and QS200TM integrate proprietary, anti-brain inflammation synthetic hydrogel and modified MSCs and smart synthetic material. QS100TM is an injury specific, 3D printable, implantable MSCs-synthetic hydrogel to treat penetrating brain injuries (such as gunshot wounds, motor vehicle accidents and falls) and QS200TM is an injectable MSCs-synthetic hydrogel for the treatment of diffused injuries commonly referred to as concussions.

In early 2022, the Company began collaborating with scientists at Bar Ilan University,  a leading University in Israel to conduct preliminary experiments to confirm that a combination of certain molecule compounds that they invented which contain immunomodulating properties when integrated with ingredients in our QS200™ product candidate may substantially improve its solubility and allow very high dosage treatments which we believe offers treatment options to diffused axonal injuries. These molecules are being tested for certain indication in various Phase II trials conducted by others.

We also believe that the improved dosage delivery may present a unique treatment option to patients who suffer from antibiotic resistant bacteria infection and Sepsis. We have developed a research plan   to conduct such in vitro tests, which if successful we believe may provide an expedited pathway to human trials.

Our Market

There are various estimates of the size of the neurological disorder market as individual reports focus on particular segments or disorder, geographical area or treatment in the broad neurological disorder market. According to some reports, one in six people live with a neurological disease or disorder in the United States.

Continued growth of the global neurological disorder drugs market has been projected and can be attributed to the rise in prevalence of neurology diseases among the geriatric population across the globe and is expected to substantially increase as the population ages.

The market for TBI, which had been the Company’s focus to date, has been analyzed by the Center for Disease Control and Prevention (the “CDC”), which sees TBI as a major cause of death and disability in the United States with TBI contributing about 30% of all injury deaths. According to the CDC, in 2020 there were over 64,000 deaths in the United States from injuries that include TBI, with people aged 75 years or older accounting for about 32% of TBI related hospitalizations and 28% of TBI related deaths. Annually in the U.S. there are more than 2.5 million reported cases with 223,000 hospitalizations. CDC data indicates that the economic cost of TBI in 2010, including direct and indirect medical costs, is estimated to be approximately $76.5 billion. According to the European CENTER, the global annual burden of TBI was estimated at $400 billion.

The Sepsis Therapeutics market in the U.S. is estimated at $1.1 Billion in the year 2022. China, the world’s second largest economy, is forecast to reach a projected market size of $59.1 Billion by the year 2030 trailing a CAGR of 74.2% over the analysis period 2022 to 2030. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 70.3% and 67.1% respectively over the 2022-2030 period. Within Europe, Germany is forecast to grow at approximately 63% CAGR.

In the changed post COVID-19 business landscape, the global market for Sepsis Therapeutics estimated at $3.9 Billion in the year 2022, is projected to reach a revised size of $433.2 Billion by 2030, growing at a CAGR of 80.4% over the period 2022-2030.

Factors, such as the high prevalence of sepsis, increasing awareness, and the introduction of technologically advanced diagnostic solutions are expected to significantly fuel the market growth over the forecast period. Recent studies have shown an increasing prevalence of this life-threatening disease around the globe.

Market Competition

The biotechnology and pharmaceutical industries are characterized by intense and rapidly changing competition to develop new technologies and proprietary products, and any product candidates that we successfully develop and commercialize will have to compete with existing therapies and new therapies that may become available in the future.

We believe that our approach of creating a platform to combat neuronal diseases making use of next generation treatments through our development team based in Israel can provide us with a competitive intellectual and cost advantage. We face potential competition from many different sources, including larger and better-funded pharmaceutical, specialty pharmaceutical and biotechnology companies, as well as from academic institutions and governmental agencies and public and private research institutions that may develop potentially competitive products or technologies. To the extent that we develop product candidates for indications with larger patient populations, we expect to experience particularly intense competition from larger and better funded pharmaceutical and biotechnology companies. Any product candidate that we may develop will compete with such larger and better funded pharmaceutical and biotechnology companies, established drugs or solutions and new drug candidates being developed by others, that may currently be in clinical trials.

Currently there are no approved products for our two product candidates. We believe the key competitive factors that will affect the success of our product candidates, if approved, are likely to be their effectiveness, efficacy, safety, convenience of administration and delivery, price, level of generic competition and the availability of reimbursement from government and other third-party payors.

In the search for treatments for additional neuronal diseases there are many product candidates in development. While competition may be intense there are many indications that still remain untreated and we will seek out those indications where we believe we can bring a therapeutics and/or cost advantage versus competitors.

Many of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of treatments and the commercialization of those treatments. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of competitors. Our commercial opportunity could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in competitors establishing a strong market position before we are able to enter the market.

Intellectual Property

Our intellectual property is critical to our business, and we will strive to protect it, including by seeking, obtaining and maintaining patent protection for our product candidates, novel discoveries and technology, including new targets and applications, and other inventions that are important to our business. We also rely on trademarks, trade secrets, know-how, continuing technological innovation and licensing opportunities to develop and maintain our proprietary position.

We also depend upon the skills, knowledge, experience and know-how of our advisers, consultants and other contractors. To help protect our proprietary know-how, which is not patentable, and for inventions for which patents may be difficult to enforce, we currently rely and will in the future rely on trade secret protection and confidentiality agreements to protect our interests. To this end, we require all of our employees, consultants, advisers and other contractors to enter into confidentiality agreements that prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business. Our agreements also provide that all intellectual property created under such agreements belong to us.

Dartmouth had granted the Company an exclusive worldwide, royalty bearing license for such 3D printable materials in the field of human and animal health and certain additional patent rights to use and commercialize licensed products and services pursuant to the Intellectual Property Agreement. As the Company’s short-term focus and  deployment of resources has pivoted to devote research resources  to treating infectious disease we failed to devote the necessary  resources to commercialize the patent. In August 2023 Dartmouth declared us in default and has terminated the license. 

On April 9, 2018, the Company filed a provisional patent application with the USPTO entitled ‘Techniques for Promoting Neuronal Recovery” and on January 22, 2019, filed a second application that included further technological developments and data. In addition, on April 7, 2019, the Company filed a Patent Cooperation Treaty (“PCT”) application with the World Intellectual Property Organization to allow the Company to file patent applications and seek protection in most major market countries throughout the world. On September 23, 2020, the Company filed with the USPTO the US National Phase of its international PCT application thereby initiating its application for a United States Patent.

On February 4, 2024, the patent application was updated to include Professor Chenfeng Ke and Qianming Lin both formerly of Dartmouth as additional inventors together with Dr. Ido Merfeld, Qrons President and co-founder. In addition, Dartmouth was added as a co-owner with Qrons.  

On April 3, 2022, the Company filed a provisional patent application with the USPTO entitled ‘Therapeutic Polypseudorotaxane Hydrogels’. The patent relates generally to the treatment of pathological central nervous system conditions such as traumatic injury or neurodegenerative disease. More specifically some applications of the invention relate to uses of hydrogels in the treatment of such conditions. Further the Company has filed an International Patent Application at the International Bureau, for inventions of Therapeutic Polypseudorotaxane Hydrogels in order to provide the Company with the option to, in the future, seek protection for these inventions globally. This International Patent Application was filed on March 12, 2023, and was assigned application number PCT/IB2023/052368. The application was published on October 12, 2023.

On August 9, 2023, the Company filed a provisional patent application with the USPTO entitled ‘Tellurium Compositions and Techniques For Use Therewith.’ The patent relates generally to the therapeutic effect of certain Tellurium based compounds on antibiotic resistance bacterial infections, Sepsis and Traumatic Brain Injuries.

Subject to sufficient resources the Company plans to file several additional patents relating to the integration of its QS200™ with certain molecules to treat sepsis and separately to treat diffused axonal injuries.

On November 15, 2017, Dartmouth filed a utility patent application with the USPTO for “Mechanically Interlocked Molecules-Based Materials” for 3-D printing, which the Company financed by reimbursing Dartmouth for patent filing costs.

We cannot guarantee that our pending patent applications, or any patent applications that we may in the future file or license from third parties, will result in the issuance of patents. We also cannot predict the scope of claims that may be allowed or enforced in our patents. In addition, the coverage claimed in a patent application can be significantly reduced before a patent is issued, and its scope can be reinterpreted after issuance. Consequently, we may not be able to maintain adequate patent protection for any of our product candidates.

The Company’s strategy of creating a platform through development, acquisition and investment is to enable it to obtain access to patented intellectual property in a more streamlined and cost-effective fashion as the patent process will have either been already granted or be at a later stage in the application process.

Government Regulation

The research, testing, manufacturing, labeling, approval, selling, import, export, marketing, and distribution of drug products, including biologics, are subject to extensive regulation by the FDA and other regulatory authorities in the United States. We are not permitted to market any biological drug product in the United States until we receive a Biologics License from the FDA. We have not previously submitted a Biologics License Application (“BLA”) to the FDA, or similar approval filings to comparable foreign authorities. A BLA must include extensive preclinical and clinical data and supporting information to establish that the product candidate is safe, pure, and potent for each desired indication. The BLA must also include significant information regarding the chemistry, manufacturing, and controls for the product, and the manufacturing facilities must complete a successful pre- license inspection. We expect the novel nature of our product candidates to create further challenges in obtaining regulatory approval. The FDA may also require a panel of experts, referred to as an Advisory Committee, to deliberate on the adequacy of the safety and efficacy data to support licensure. The opinion of the Advisory Committee, although not binding, may have a significant impact on our ability to obtain licensure of the product candidates based on the completed clinical trials. Accordingly, the regulatory approval pathway for our product candidates may be uncertain, complex, expensive, and lengthy, and approval may not be obtained.

We will also be required to comply with costly and time-consuming compliance by foreign regulatory authorities if we want to sell our products outside of the United States.

Ethical, social and legal concerns about research regarding stem cells, could result in regulations restricting or prohibiting the processes we may use. Federal and state agencies, congressional committees and foreign governments have expressed interest in further regulating biotechnology. More restrictive regulations or claims that our products are unsafe or pose a hazard could prevent us from commercializing any products. New government requirements may be established that could delay or prevent regulatory approval of our product candidates under development. It is impossible to predict whether legislative changes will be enacted, regulations, policies or guidance changed, or interpretations by agencies or courts changed, or what the impact of such changes, if any, may be.

FDA Review, Clearance and Approval Process

In the US, an Investigational New Drug application (“IND”) or BLA is required for nearly all new drugs or biologics entering clinical trials. The IND or BLA comprises three sections: chemistry and manufacturing controls (“CMC”), clinical study design, and nonclinical studies. The nonclinical studies section mainly concerns safety and toxicity in animals using the clinically intended route of administration and a product very similar, if not identical, to that which will be used in the clinic. This section typically includes a description of efficacy studies in relevant disease models. The CMC section pertains to manufacturing processes and quality control systems for ensuring consistency and the absence of potentially deleterious agents in the final product. Each of the sections of the IND or BLA must provide reviewers with a sufficient amount of detail to determine the potential safety of any product before allowing evaluation in humans.

The regulatory route for licensure of an eventual product based on MSCs will likely require a BLA as opposed to a New Drug Application (“NDA”), the latter which generally pertains to drugs of well-defined composition. Within the FDA there are two centers responsible for oversight and approval of new drugs, The Center for Biologics Evaluation and Research (“CBER”) and the Center for Drug Evaluation and Research (“CDER”). Jurisdictional oversight of biologics generally falls to CBER: with important exceptions for less complex entities, such as monoclonal antibodies and recombinant proteins. Therefore, the complexity of MSCs whether wholly or partially fractioned, likely will place it under the review of CBER.

Clinical Trials

The first step, a preclinical phase, is to find a promising agent, which involves taking advantage of the advances made in understanding a disease, pharmacology, computer science, and chemistry. Breaking down a disease process into its components can provide clues for targeting drug development. For example, if an enzyme is determined to be a key component of a disease process, a researcher might seek ways to inhibit this enzyme. Advances in basic science might help by ascertaining the active enzyme site. Numerous compounds might be synthesized and tested before a promising agent emerges. Computer modeling often helps select what compounds might be the most promising.

The next step before attempting a clinical trial in humans is to test the drug in living animals, usually rodents. The FDA requires that certain animal tests be conducted before humans are exposed to a new molecular entity. The objectives of early in vivo testing are to demonstrate the safety of the proposed medication. For example, tests should prove that the compound does not cause chromosomal damage and is not toxic at the doses that would most likely be effective. The results of these tests are used to support the IND or BLA application that is filed with the FDA. The IND application includes chemical and manufacturing data, animal test results, including pharmacology and safety data, the rationale for testing a new compound in humans, strategies for protection of human volunteers, and a plan for clinical testing. If the FDA is satisfied with the documentation, the stage is set for phase 1 clinical trials.

Phase 1 studies focus on the safety and pharmacology of a compound. During this stage low doses of a compound are administered to a small group of healthy volunteers who are closely supervised. In cases of severe or life-threatening illnesses, volunteers with the disease may be used. Generally, 20 to 100 volunteers are enrolled in a phase 1 trial. These studies usually start with very low doses, which are gradually increased. On average, about two thirds of phase 1 compounds will be found safe enough to progress to phase 2.

Phase 2 studies examine the effectiveness of a compound. To avoid unnecessarily exposing a human volunteer to a potentially harmful substance, studies are based on an analysis of the fewest volunteers needed to provide sufficient statistical power to determine efficacy. Typically, phase 2 studies involve 100 to 300 patients who suffer from the condition the new drug is intended to treat. During phase 2 studies, researchers seek to determine the effective dose, the method of delivery (e.g., oral or intravenous), and the dosing interval, as well as to reconfirm product safety. Patients in this stage are monitored carefully and assessed continuously. A substantial number of these drug trials are discontinued during phase 2 studies. Some drugs turn out to be ineffective, while others have safety problems or intolerable side effects.

Phase 3 trials are the final step before seeking FDA approval. During phase 3, researchers try to confirm previous findings in a larger population. These studies usually last from 2 to 10 years and involve thousands of patients across multiple sites. These studies are used to demonstrate further safety and effectiveness and to determine the best dosage. Despite the intense scrutiny a product receives before undergoing expensive and extensive phase 3 testing, approximately 10% of medications fail in phase 3 trials.

If a drug or biologic survives the clinical trials, an NDA or BLA is submitted to the FDA. An NDA or BLA contains all the preclinical and clinical information obtained during the testing phase. The application contains information on the chemical makeup and manufacturing process, pharmacology and toxicity of the compound, human pharmacokinetics, results of the clinical trials, and proposed labeling. An NDA can include experience with the product from outside the United States as well as external studies related to the drug.

After receiving an NDA or BLA, the FDA completes an independent review and makes its recommendations. The Prescription Drug User Fee Act of 1992 (“PDUFA”) was designed to help shorten the review time. This Act allowed the agency to collect user fees from pharmaceutical companies as financial support to enhance the review process. The 1992 act specifies that the FDA reviews a standard drug or biologic application within 12 months and a priority application within 6 months. The FDA does not always meet its PDUFA goal dates for standard and priority NDAs or BLAs, and the review process may be extended by FDA requests for additional information or clarification. Application for drugs or biologics similar to those on the market are considered standard, whereas priority applications represent drugs or biologics offering important advances in addition to existing treatments. If during the review the FDA staff feels there is a need for additional information or corrections, they will make a written request to the applicant. During the review process it is not unusual for the FDA to interact with the applicant staff.

Once the review is complete, the NDA or BLA might be approved or rejected. If the drug or biologic is not approved, the applicant is given the reasons why and what information could be provided to make the application acceptable. Sometimes the FDA makes a tentative approval recommendation, requesting that a minor deficiency or labeling issue be corrected before final approval. Once a drug or biologic is approved, it can be marketed.

Some approvals contain conditions that must be met after initial marketing, such as conducting additional clinical studies. For example, the FDA might request a post-marketing, or phase 4, study to examine the risks and benefits of the new drug or biologic in a different population or to conduct special monitoring in a high-risk population. Alternatively, a phase 4 study might be initiated by the sponsor to assess such issues as the longer-term effects of exposure, to optimize the dose for marketing, to evaluate the effects in pediatric patients, or to examine the effectiveness of the drug or biologic for additional indications. Post-marketing surveillance is important, because even the most well-designed phase 3 studies might not uncover every problem that could become apparent once a product is widely used. Furthermore, the new product might be more widely used by groups that might not have been well studied in the clinical trials, such as elderly patients. A crucial element in this process is that physicians report any untoward complications. The FDA has set up a medical reporting program called Medwatch to track serious adverse events. The manufacturer must report adverse reactions at quarterly intervals for the first 3 years after approval including a special report for any serious and unexpected adverse reactions.

Employees

Our two executive officers, Jonah Meer and Ido Merfeld, who are our sole executive officers and directors, are responsible for the day-to-day operations of our company. Dr. Liat Hammer continues to serve as our Director of Research on an as-needed basis to assist in our development goals. We currently outsource all professional services to third parties.

Research and Development

Research and development costs were $462,459 for the year ended December 31, 2023 and $194,406 for the year ended December 31, 2022, respectively.

Item 1A. Risk Factors

As a smaller reporting company, we are not required to provide the information required by this Item.

For risks relating to our operations, see “Risk Factors” contained in our prospectus filed with the S-1 on January 14, 2022.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 1C. Cybersecurity

Risk management and strategy.

We recognize the importance of developing, implementing, and maintaining robust cybersecurity measures to protect our information systems and protect the confidentiality, integrity, and availability of our data. Presently our information systems are limited to databases maintained by third parties.  As a result we have established limited policies and procedures to assess, identify, and manage material risk from cybersecurity threats. We assess risks from cybersecurity threats against our third-party information systems that may result in adverse effects on our information systems or any information residing therein. We conduct periodic and ad-hoc assessments to identify cybersecurity threats. Presently we do not believe there are any material threats to our systems.

Following these risk assessments, if needed, we evaluate whether and/or how to re-design, implement, and maintain reasonable safeguards to mitigate identified risks and reasonably address any identified gaps in existing safeguards. We do not yet have an IT manager given our limited exposure to risks, and therefore the review of our limited systems is undertaken by our Chief Executive Officer (CEO) to manage the risk assessment and mitigation process. When applicable to our corporate structure and when we believe exposure to risks within our systems exceeds the current limited levels of exposure, we will monitor and test our safeguards and train our employees on the implementation of such safeguards, in collaboration with human resources, IT, and management, as available. We aim to promote a company-wide culture of cybersecurity risk management as we grow in size.

Risks from Cybersecurity Threats

We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing during the financial year ended December 31, 2023.

Governance

Our board of directors, also acting as our audit committee, is responsible for monitoring and assessing strategic risk exposure. Our board of directors administers its cybersecurity risk oversight function directly as a whole. Our CEO is responsible for assessing and managing our material risks from cybersecurity threats and conducts this assessment on a regular basis, or at least once per year.

Item 2. Properties

The Company’s principal executive office is located at 28-10 Jackson Avenue #26N, Long Island City, New York 11101in space currently provided by the Company’s Chief Executive Officer at no cost. The Company believes that this space is adequate for its current needs.

Item 3. Legal Proceedings

There are no pending legal proceedings to which we are a party or in which any director, officer or affiliate of ours, any owner of record or beneficially of more than 5% of any class of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our shares of common stock are quoted on the OTCQB under the symbol “QRON”. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

The last reported sales price of our common stock on the OTCQB on April 10, 2024 was $0.1855.

Holders

As of April 10, 2024, there were 37 stockholders of record of our common stock.

Dividends

The Company has never paid dividends on its common stock and does not anticipate that it will pay dividends in the foreseeable future. It intends to use any future earnings for the expansion of its business. Any future determination of applicable dividends will be made at the discretion of the board of directors and will depend on the results of operations, financial condition, capital requirements and other factors deemed relevant. 

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information regarding our equity compensation plans as of December 31, 2022:

Equity Compensation Plan Information

_____________ 

(1) On December 14, 2016, the Board adopted the Plan as described in Item 10 of this Annual Report on Form 10-K. 10,000,000 shares are reserved for issuance under the Plan. 

(2)  Represents (i) five-year options granted to each of Jonah Meer and Ido Merfeld to purchase an aggregate of 1,300,000 shares of common stock at $2.00 per share ( (iii) five-year options to purchase an aggregate of 750,000 shares of common stock at $2.00 per share to Liat Hammer our Director of Research and Development, and (iv) three-year options to purchase an aggregate of 33,333 shares and five-year options to purchase an aggregate of 50,000 shares of common stock at $2.00 per share, to Motti Ratmansky, a Science Advisor, (v) five- year options to purchase an aggregate of 800,000 shares of common stock at $1.00 per share  to Bengamin Sreni and Michael Albeck in consideration for transferring background IP to the Company (vi)  five-year options to purchase an aggregate of 150,000 shares of common stock at $0.50  per share to Benjamin Sredni , a Science Advisor  (vii) five-year options to purchase an aggregate of 150,000 shares of common stock at $0.50  per share to Michael Albeck, a Science Advisor (viii) five-year options to purchase an aggregate of 50,000 shares of common stock at $1.00  per share to Avichai Isaschar, a Business Advisor (ix) ) five-year options to purchase an aggregate of 50,000 shares of common stock at $1.00  per share to Hananel Levy  a Business Advisor  (x) ) five-year options to purchase an aggregate of 100,000 shares of common stock at $0.50  per share to Shir Navon Venezia, a Science Advisor (xi)  five-year options to purchase an aggregate of 50,000 shares of common stock at $2.00  per share to Paul Kaye a Science Advisor as set forth in Note 9 to the financial statements under Item 8 of this Annual Report on Form 10-K. 

Recent Sales of Unregistered Securities

Except as set forth below, there were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company. 

On November 20, 2023 the Company issued 60,000 shares of restricted common stock to Pavel Hilman, pursuant to an Advisory Board Agreement valued at fair market value or $0.278 per share.

On November 1, 2023, the Company granted five -year options to purchase an aggregate of 50,000 shares of its common stock at an exercise price of $2.00 per share, to Paul Kaye for serving as a Scientific Advisor to the Company. 16,667 of such shares subject to the option are immediately exercisable and expire on November 1, 2026, 16,667 shares vest on November 1, 2024, and expire on November 1, 2027 and 16,666 shares vest on November 1, 2025 and expire on November 1, 2028.

On October 1, 2023, we granted a five-year option to purchase 50,000 shares of common stock, at an exercise price of $2.00 per share, to Motti Ratmanski for serving as a Science Advisor to the Company

On October 1, 2023, the Company granted five -year options to purchase an aggregate of 100,000 shares of its common stock at an exercise price of $0.50 per share, to Shiri Navon Venezia for serving as a Science Advisor to the Company. 33,334 of such shares subject to the option are immediately exercisable and expire on October 1, 2026, 33,333 shares vest on October 1, 2024, and expire on October 1, 2027 and 33,333 shares vest on October 1, 2025 and expire on October 1, 2028.

The above issuances did not involve any underwriters, underwriting discounts or commissions, or any public offering and we believe is exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof.

Item 6. Selected Financial Data

As a smaller reporting company, we are not required to provide the information required by this Item. 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Annual Report. Actual future results may be materially different from what we expect. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by federal securities and any other applicable law.

The management’s discussion and analysis of our financial condition and results of operations are based upon our audited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, the audited financial statements and related notes elsewhere in this Annual Report on Form 10-K.

Plan of Operations

We are an innovative biotechnology company dedicated to developing biotech products, treatments and technologies to combat neuronal and infectious diseases with a focus on antibiotic resistant bacteria, which is becoming the most prominent and rapidly growing worldwide cause of illness and death. Our approach is to seek to engage in strategic arrangements with companies universities and, scientists that are developing unique know how and intellectual properties in the fields of, stem cells, antibiotic resistant drug development and tissue engineering, for deployment in the fight against neuronal and infectious diseases.  Our search is focused on researchers based in Israel, a country which is world-renowned for biotech innovations and where our researchers are based.

diseases Our search is focused on researchers based.

To date, the Company has collaborated with universities and scientists in the fields of regenerative medicine, tissue engineering and 3D printable hydrogels to develop a treatment that integrates proprietary, engineered MSCs, 3D printable implant, smart materials and a novel delivery system and has two product candidates for treating penetrating and non-penetrating (concussion-like) TBIs, both integrating proprietary, anti-brain inflammation synthetic hydrogel and modified MSCs.

In early 2022, the Company began collaborating with scientists at Bar Ilan University,  a leading University in Israel to conduct preliminary experiments to confirm that a combination of certain molecule compounds that they invented which contain immunomodulating properties when integrated with ingredients in our QS200™ product candidate may substantially improve its solubility and allow very high dosage treatments which we believe offers treatment options to diffused axonal injuries. These molecules are being tested for certain indication in various Phase II trials conducted by others.

We also believe that the improved dosage delivery may present a unique treatment option to patients who suffer from antibiotic resistant bacteria infection and Sepsis. We have developed a research plan to conduct such in vitro tests, which if successful we believe may provide an expedited pathway to human trials.

We have not generated any revenue from the sale of products.

Results of Operations

Revenue

We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products in the near future.

Operating Expenses

For the years ended December 31, 2023 and 2022 we had the following operating expenses:

Total operating expenses for the year ended December 31, 2023 were $643,677 as compared to $629,629 for the year ended December 31, 2022. During the year ended December 31, 2023, the Company incurred $462,459 of research and development expenses which included service fees related to certain research and development agreements of $465,345, software fees of $4,877, a refund of previously accrued technology licensing fees of $8,333 and purchases of expendable lab supplies and equipment of $570, as compared to $194,406 of research and development expenses which included service fees related to certain research and development agreements of $160,210, software fees of $8,677, technology licensing fees of $25,000 and purchases of expendable lab supplies and equipment of $519 incurred during the year ended December 31, 2022. The Company incurred general and administrative expenses of $110,272 for the year ended December 31, 2023 compared to general and administrative expenses of $365,024 for the year ended December 31, 2022. The decrease in general and administrative expense from $365,024 in the year ended December 31, 2022 to $110,272 for the year ended December 31, 2023 was primarily due to a decrease in stock-based compensation costs of $320,420 related to the issuance of stock options to our officers and certain advisors, compared to $62,491 in stock-based compensation to consultants and advisors in the year ended December 31, 2022.  Professional fees were $70,946 for the year ended December 31, 2023 compared to professional fees of $70,199 in the year ended December 31, 2022.

Other Income (Expense)

Other expenses were $145,670 in the year ended December 31, 2023, which included a loss of $6,149 as a result of the change in value of derivative liabilities, a loss upon extinguishment of debt of $33,932 and interest expense of $105,589, which is comprised of accretion of convertible notes of $35,091, financing costs of $38,000 and interest on convertible notes of $32,498.  Other expenses were $103,888 in the year ended December 31, 2022, which included a gain of $31,766 consisting of a gain of $54,559 as a result of the change in value of derivative liabilities due to the amendment and revaluation of a convertible note payable offset by the associated loss upon extinguishment of debt of $22,793 and interest expense of $135,654, which is comprised of accretion of convertible notes of $56,196 and interest on convertible notes of $79,458.

Net Loss

We had a net loss of $789,347 in the year ended December 31, 2023 compared to a net loss of $733,517 in the year ended December 31, 2022.  The increase to the reported loss in the current year end is primarily due to a decrease in general and administrative expenses, an increase in research and development expenses and changes to other expenses as a result of a loss from extinguishment of debt and a change in the value of our derivative liabilities.  

Statement of Cash Flows

The following table summarizes our cash flows for the period presented:

During the year ended December 31, 2023 we used cash of $2,649 as compared to the year ended December 31, 2022, where we used cash of $31,996.

Cash Used in Operating Activities

Cash used in operating activities for the year ended December 31, 2023 was $68,649 as compared to $104,496 used in the year ended December 31, 2022.

Cash used in operating activities for the year ended December 31, 2023 was the result of net loss of $789,347, offset by non-cash items including compensation in the form of stock options for research and development of $465,345, stock options granted for consulting and advisory services of $45,811, stock award of $16,680, loss on debt extinguishment of $33,932, non-cash interest expense of $38,000, accretion of debt discount of $35,091, change in derivative liabilities of $6,149 and increases to our operating assets and liabilities of $1,550.

Cash used in operating activities for the year ended December 31, 2022 was the result of net loss of $733,517, offset by non-cash items including compensation in the form of stock options for research and development of $160,210, stock options granted for management and advisory services of $320,420, accretion of debt discount of $56,196, a gain from the change in derivative liabilities and extinguishment of debt of $31,766, non-cash interest expenses of $62,100 and changes to our operating assets and liabilities of $61,861.

Cash Provided by Investing Activities

There was no cash provided by investing activities for the years ended December 31, 2023 and 2022.

Cash Provided by Financing Activities

During the year ended December 31, 2023, financing activities provided cash of $66,000 as a result of related party advances for ongoing operations.

During the year ended December 31, 2022, financing activities provided cash of $72,500 as a result of related party advances for ongoing operations.

Liquidity and Capital Resources

As of December 31, 2023, we had cash of $420. We are in the early stage of development and have experienced net losses to date and have not generated revenue from operations which raises substantial doubt about our ability to continue as a going concern. There are a number of conditions that we must satisfy before we will be able to commercialize potential products and generate revenue, including identifying and establishing strategic partners and technologies for the successful development of product candidates, which includes clinical trials, FDA approval, demonstration of effectiveness sufficient to generate commercial orders by customers and licensing or acquiring intellectual property, as well as effective marketing and sales capabilities for our product. We do not currently have sufficient resources to accomplish any of these conditions necessary for us to generate revenue and expect to incur increasing operating expenses. We will require substantial additional funds for operations, the service of debt and to fund our business objectives. There can be no assurance that financing, whether debt or equity, will always be available to us in the amount required at any particular time or for any particular period or, if available, that it can be obtained on terms favorable to us. If additional funds are raised by the issuance of equity securities, such as through the issuance and exercise of warrants, then existing stockholders will experience dilution of their ownership interest. If additional funds are raised by the issuance of debt or other equity instruments, we may be subject to certain limitations in our operations, and issuance of such securities may have rights senior to those of the then existing stockholders. We currently have no agreements, arrangements or understandings with any person or entity to obtain funds through bank loans, lines of credit or any other sources.

We continue exploring sources of debt and equity financing as well as available grants. We are currently exploring and are in discussions for potential strategic alternatives in the biotechnology field which could advance our MSCs and neurodegenerative research. There can be no assurance the necessary financing will be available or that a suitable strategic partner will be identified. In such event, we may explore relationships with third parties to develop or commercialize products or technologies that we have not previously sought to develop or commercialize, decide to exit our existing business, cease operations altogether or pursue an acquisition of our company. At present, the Company relies on loans and advances from officers and shareholders to continue operations which raises substantial doubt about our ability to continue as a going concern.

Quick Capital Financing

On June 15, 2021, the Company entered into a note purchase agreement with Quick Capital, LLC, a Wyoming limited liability company (“Quick Capital”), pursuant to which the Company issued Quick Capital a twelve-month convertible promissory note in the principal amount of $115,000 (the “Note”) for a $100,000 investment, which included an original issuance discount of 10% and a $3,500 credit for Quick Capital’s legal and transaction costs. In connection with the Note issuance, Quick Capital was also issued a five-year warrant (the “Warrant”) to purchase up to an aggregate of 115,000 shares of the Company’s common stock at an exercise price of $1.00 per share (the “Warrant Shares”). If there is no effective registration statement covering the Warrant Shares, Quick Capital may exercise the Warrant on a cashless basis. The Note is convertible into shares of common stock at a conversion price of $0.50 per share. The Note may not be converted, and the Warrant may not be exercised if after giving effect to such conversion or exercise, as the case may be, Quick Capital and its affiliates would beneficially own more than 4.99% of the outstanding common stock of the Company. For twelve months following the issuance of the Quick Note, Quick Capital will have the right of first refusal to participate in future financings proposed to the Company on the same terms and participation rights to purchase up to $115,000 of securities in other offerings. The conversion price of the Note will be reduced if the Company issues common stock or grants derivative securities for consideration at a price less than the conversion price to the amount of the consideration of such dilutive issuance. The Note contains certain restrictive covenants limiting the Company’s ability to make distributions or dividends, repurchase its securities, incur debt, sell assets, make loans, or engage in exchange offers. If an event of default (as described in the Note) occurs, the Note will become immediately due and payable in an amount equal to 150% of the then outstanding principal amount of the Note plus any interest or amounts owing to Quick Capital. Quick Capital is entitled to the same terms of future financings of the Company that are more favorable than the terms of the Quick Note.

The Note and accrued interest totaling $124,200 was not repaid on maturity, constituting an event of default increasing the repayment value of the note to an amount equal to 150% of the balance outstanding or $186,300.  On December 7, 2022, the Company and Quick Capital amended the Note to extend the maturity date thereof to June 15, 2023 and amended the Warrant maturity date to June 15, 2027, Further Quick Capital agreed to reduce the outstanding balance of the note from $186,300 to $150,000 in consideration for the issuance of 150,000 shares of unregistered, restricted common stock valued at $76,350.  The unpaid balance of the Note continues to accrue interest at 8% per annum.

As of June 15, 2023, the Note and accrued interest totaling $162,000 was not repaid on maturity, constituting an event of default increasing the repayment value of the note to an amount equal to 150% of the principal balance and accrued interest outstanding, or $243,000.  On June 15, 2023, the Company and Quick Capital amended the Note to extend the maturity date thereof to June 15, 2024, and amended the Warrant maturity date to June 15, 2028.  Further Quick Capital agreed to reduce the outstanding balance of the Note from $243,000 to $200,000 in consideration for the issuance of 150,000 shares of unregistered, restricted common stock valued at $52,500. The unpaid balance of the Note continues to accrue interest at 8% per annum.

Offering

The Company filed a registration statement on Form S-1 with the SEC on January 11, 2022, to offer and sell up to 2,500,000 shares of common stock in a self-underwritten primary offering at a fixed price of $0.70 per share which was declared effective on January 11, 2022. To date, no shares have been sold and there can be no assurance that the Company will be successful in selling any of the shares being offered. 

Going Concern

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, does not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. Our report from our independent registered public accounting firm for the fiscal year ended December 31, 2023 includes an explanatory paragraph stating the Company has recurring losses and limited operations which raise substantial doubt about its ability to continue as a going concern. If the Company is unable to obtain adequate capital. the Company may be required to reduce the scope, delay, or eliminate some or all of its planned operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

Off Balance Sheet Arrangements

We currently have no off-balance sheet arrangements. 

Critical Accounting Policies

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements. 

Research and Development Costs: The Company charges research and development costs to expense when incurred in accordance with FASB ASC 730, Research and Development. Research and development costs were $462,459 for the year ended December 31, 2023. Research and development costs were $194,406 for the year ended December 31, 2022.

Stock Based Compensation and Other Share-Based Payments: The Company records stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation, using the fair value method of the award on grant date. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the equity instruments issued. The expense attributable to the Company’s directors is recognized over the period the amounts are earned and vested, and the expense attributable to the Company’s non-employees is recognized when vested.

Warrants: The Company accounts for common stock warrants in accordance with applicable accounting guidance provided in ASC 815 Derivatives and Hedging, as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement. For warrants classified as equity instruments the Company applies the Black Scholes model and expenses the fair value as financing costs. For warrants classified as derivative financial instruments the Company applies the Monte Carlo model to value the warrants. 

Recent Accounting Pronouncements

Recent accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”), (including its EITF, the AICPA and the SEC), did not or are not believed by management to have a material effect on the Company’s present or future financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, we are not required to provide the information required by this Item.

Item 8. Financial statements and Supplemental Data

Qrons Inc.

Index to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Qrons, Inc.

Long Island City, New York

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Qrons, Inc. (the Company) as of December 31, 2023, and the related statement of operations, changes in stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Consideration of the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. 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.

We conducted our audit in accordance with the standards of the PCAOB. 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. 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. Accordingly, we express no such opinion.

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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. 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. We believe that our audit provide a reasonable basis for our opinion.

Green Growth CPAS

April 15, 2024                                                                                                                                                              

We have served as the Company’s auditor since 2023.

Los Angeles, California                                                                                                                                              

PCAOB ID Number 6580

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Qrons Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Qrons Inc. (the Company) as of December 31, 2022, and the related statements of operations, stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). 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 then ended, 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. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. 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.

We conducted our audit in accordance with the standards of the PCAOB. 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. 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. Accordingly, we express no such opinion.

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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. 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. We believe that our audit provides a reasonable basis for our opinion.

/s/ Heaton & Company, PLLC

We have served as the Company’s auditor since 2016.

Heaton & Company, PLLC

Farmington, Utah

March 31, 2023

 QRONS INC. 

BALANCE SHEETS

The accompanying notes are an integral part of these audited financial statements.

QRONS INC.

STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these audited financial statements.

QRONS INC. 

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT 

Years ended December 31, 2023 and 2022

The accompanying notes are an integral part of these audited financial statements.

QRONS INC.

STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these audited financial statements.

QRONS INC.

NOTES TO AUDITED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022