QRONS INC. This Quarterly Report on Form 10-Q contains predictions, estimates and other
forward-looking statements relating to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as "may", "should", "intends", "expects", "plans",
"anticipates", "believes", "estimates", "predicts", "potential", or "continue"
or the negative of these terms or other comparable terminology. Forward-looking
statements involve known and unknown risks, uncertainties and other factors
including the risks set forth in the section entitled "Risk Factors" in our
Post-Effective Amendment No. 1 to our Registration Statement on Form S-1, as
filed with the
Forward-looking statements represent our management's beliefs and assumptions only as of the date of this Report. You should read this Report 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 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 condensed financial statements, which have been
prepared in accordance with accounting principles generally accepted in
The following discussion of our financial condition and results of operations
should be read in conjunction with our unaudited condensed financial statements
for the nine months ended
Overview
The Company is a preclinical stage biotechnology company developing advanced stem cell synthetic hydrogel-based solutions to combat neuronal injuries and other nervous system pathologies focused on achieving a breakthrough in the treatment of traumatic brain injuries ("TBIs") for both concussions and penetrating injuries, an unmet medical need. We believe that our approach is pushing the boundaries of science by using the latest advances in molecular biology and chemistry. 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.
To date, the Company has two product candidates for treating penetrating and non-penetrating (concussion-like) 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.
The Company has relied primarily on its two co-founders,
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 was approved by the
Recent Developments
Covid-19 Pandemic
The recent COVID-19 pandemic has resulted in a delay of our planned research and
development activities. As a result in
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Plan of Operations
To date, we have two product candidates for treating penetrating and non-penetrating (concussion-like) TBIs. We have completed an in-vivo efficacy experiment with QS100TM for treating penetrating brain injuries in an animal model that was successful in substantiating our theories and practices regarding cell regeneration. We have completed animal in-vivo efficacy experiments with QS200TM for treating concussions and other diffused axonal injuries. Prior to the COVID-19 pandemic, we planned to continue working with Dartmouth to develop innovative 3D printable biocompatible advanced materials and stem cell delivery techniques for our product candidates and with our stem cells team on the development of our proprietary, neuro-regenerative MSC lines at Ariel's laboratories. We are currently exploring alternative laboratories and strategies to maximize our development efforts in the field of neuronal injuries and nervous system pathologies.
We have not generated revenues from the sales of products and we do not currently have sufficient resources to accomplish the conditions necessary for us to generate revenue.
As we monitor the full impact of the COVID-19 outbreak, we continue exploring sources of debt and equity financings 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.
Results of Operations
Three Months Ended
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.
Net Loss
We had a net loss of
For Three Months Ended
September 30,
2020 2019
Net sales $ - $ -
Operating expenses:
Research and development expenses 33,441 136,080
Professional fees 9,010 14,928
General and administrative expenses 20,977 308,735
Total operating expenses 63,428 459,743
Income (loss) from operations (63,428 ) (459,743 )
Other income (expense)
Interest expense (12,460 ) (1,243 )
Change in derivative liabilities (78,045 ) 6,828
Total other income (expense) (90,505 ) 5,585
Net (loss) $ (153,933 ) $ (454,158 )
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Operating Expenses
Total operating expenses for the three months ended
Other Income (Expense)
Other expense in the three months ended
Nine Months Ended
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.
Net Loss
We had a net loss of
For Nine Months Ended
September 30,
2020 2019
Net sales $ - $ -
Operating expenses: Research and development expenses 207,900 439,608 Professional fees
39,526 58,154
General and administrative expenses 48,528 424,652
Total operating expenses 295,954 922,414
Income (loss) from operations (295,954 ) (922,414 )
Other income (expense)
Interest expense (39,559 ) (3,159 )
Change in derivative liabilities (75,283 (7,629 )
Total other income (expense) (114,842 ) (10,788 )
Net (loss) $ (410,796 ) $ (933,202 )
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Operating Expenses
Total operating expenses for the nine months ended
Other Income (Expense)
Other expense in the nine months ended
Working Capital
September 30, December 31,
2020 2019
Current Assets $ 94,201 $ 123,290
Current Liabilities 792,608 631,412
Working Capital (Deficiency) $ (698,407 ) $ (508,122 )
Cash Flows
At September At September
30, 2020 30, 2019
Net cash (used in) operating activities $ (185,567 ) $ (411,366 )
Net cash provided by investing activities - -
Net cash provided by financing activities $ 211,000 $ 315,000
Net increase (decrease) in cash during period $ 25,433 $ (96,366 ) Operating Activities
Net cash used in operating activities was
Investing Activities
There were no investing activities during the nine months ended
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Financing Activities
Net cash provided by financing activities was
Liquidity and Capital Resources
As of
Going Concern
Our financial statements have been prepared assuming that we will continue as a
going concern and, accordingly, do 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
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
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 Note 2 to our unaudited financial statements contained herein.
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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
Stock-Based Compensation and Other Share-Based Payments: The Company records stock-based compensation in accordance with ASC 718, Share-Based Payments, using the fair value method 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 consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. 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, as described in Note 11, Stock Plan.
Warrants: The Company accounts for common stock warrants in accordance with applicable accounting guidance provided in ASC Topic 815 "Derivatives and Hedging - Contracts in Entity's Own Equity" (ASC Topic 815), 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.
Recent Accounting Pronouncements
There were various accounting standards and interpretations issued recently, none of which are expected to have a material effect on the Company's operations, financial position or cash flows.
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