Less than $1. 0001801834 2022-01-01 2022-06-30 0001801834 2021-01-01 2021-06-30 0001801834 2020-12-31 0001801834 2021-12-31 0001801834 2021-06-30 0001801834 2022-06-30 0001801834prfx:FirstAgreementMember 2020-12-28 0001801834prfx:FirstAgreementMember 2021-09-30 0001801834prfx:SecondAgreementMember 2021-01-01 0001801834prfx:TwoZeroOneNinePlanMember 2022-04-30 0001801834prfx:ConsultantMember 2022-04-30 0001801834 2020-08-01 2020-08-31 0001801834prfx:AugustTwoThousandNineteenWarrantsMember 2022-01-01 2022-06-30 0001801834prfx:AugustTwoThousandNineteenWarrantsMember 2022-06-30 0001801834prfx:DecemberTwoThousandNinteenWarrantsMember 2022-01-01 2022-06-30 0001801834prfx:DecemberTwoThousandNinteenWarrantsMember 2022-06-30 0001801834prfx:WarrantsToUnderwriterIssuedOnSeptemberThreeTwoThousandTwentyMember 2022-01-01 2022-06-30 0001801834prfx:WarrantsToUnderwriterIssuedOnSeptemberThreeTwoThousandTwentyMember 2022-06-30 0001801834prfx:WarrantsToUnderwriterIssuedOnOctoberFiveTwoThousandTwentyMember 2022-01-01 2022-06-30 0001801834prfx:WarrantsToUnderwriterIssuedOnOctoberFiveTwoThousandTwentyMember 2022-06-30 0001801834prfx:IpoWarrantsMember 2022-01-01 2022-06-30 0001801834prfx:IpoWarrantsMember 2022-06-30 0001801834prfx:PipeWarrantsMember 2022-01-01 2022-06-30 0001801834prfx:PipeWarrantsMember 2022-06-30 0001801834prfx:WarrantsToPipePlacementAgentMember 2022-01-01 2022-06-30 0001801834prfx:WarrantsToPipePlacementAgentMember 2022-06-30 0001801834prfx:TwoThousandEightStockIncentivePlanMember 2021-12-31 0001801834prfx:TwoThousandEightStockIncentivePlanMember 2021-01-01 2021-12-31 0001801834prfx:TwoThousandEightStockIncentivePlanMember 2022-06-30 0001801834prfx:TwoThousandEightStockIncentivePlanMember 2022-01-01 2022-06-30 0001801834prfx:TwoThousandNineteenStockIncentivePlanMember 2021-12-31 0001801834prfx:TwoThousandNineteenStockIncentivePlanMember 2021-01-01 2021-12-31 0001801834prfx:TwoThousandNineteenStockIncentivePlanMember 2022-06-30 0001801834prfx:TwoThousandNineteenStockIncentivePlanMember 2022-01-01 2022-06-30 0001801834prfx:TwoThousandNineteenStockIncentivePlanMemberus-gaap:EmployeeStockMember 2022-04-01 2022-04-30 0001801834us-gaap:RetainedEarningsMember 2020-12-31 0001801834us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001801834us-gaap:CommonStockMember 2020-12-31 0001801834us-gaap:RetainedEarningsMember 2021-01-01 2021-06-30 0001801834us-gaap:RetainedEarningsMember 2022-06-30 0001801834us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001801834us-gaap:CommonStockMember 2022-06-30 0001801834us-gaap:RetainedEarningsMember 2022-01-01 2022-06-30 0001801834us-gaap:RetainedEarningsMember 2021-06-30 0001801834us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001801834us-gaap:CommonStockMember 2021-06-30 0001801834us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-06-30 0001801834us-gaap:CommonStockMember 2022-01-01 2022-06-30 0001801834us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-06-30 0001801834us-gaap:CommonStockMember 2021-01-01 2021-06-30 0001801834us-gaap:CommonStockMember 2021-12-31 0001801834us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001801834us-gaap:RetainedEarningsMember 2021-12-31 iso4217:ILSxbrli:shares xbrli:pure xbrli:shares iso4217:USD iso4217:USDxbrli:shares
Exhibit 99.1

 

PAINREFORM LTD.

 

CONDENSED FINANCIAL STATEMENTS

 

AS OF JUNE 30, 2022

 

UNAUDITED

 

U.S. DOLLARS IN THOUSANDS

 

INDEX

 

 Page
  
Condensed Balance SheetsF-2
  
Condensed Statements of Comprehensive LossF-3
  
Condensed Statements of Changes in Shareholders’ Equity

F-4

  
Condensed Statements of Cash Flows

F-5

  
Notes to Condensed Financial StatementsF-6 - F-11
  
 

 

PAINREFORM LTD.
 
CONDENSED BALANCE SHEETS (UNAUDITED)
U.S. dollars in thousands (except share and per share data)
 
 
        
As of
June 30,
    
As of
December 31,
  
 
  
Note
    
2022
    
2021
  
Assets
                  
Current assets:
                  
Cash and cash equivalents
        
$
13,845
    
$
16,537
  
Restricted cash
          
24
      
34
  
Prepaid clinical trial expenses and deferred clinical trial costs
  
7
      
1,728
      
1,728
  
Prepaid expenses and other current assets
          
337
      
721
  
Total current assets
          
15,934
      
19,020
  
 
                      
Property and equipment, net
          
54
      
53
  
 
                      
Total assets
        
$
15,988
    
$
19,073
  
 
                      
Liabilities and shareholders’ equity
                      
 
                      
Current liabilities:
                      
Trade payables
        
$
212
    
$
136
  

Employees and related liabilities

           284       423  
Accrued expenses
          
53
      
198
  
Total current liabilities
          
549
      
757
  
 
                      
Non-current liabilities:
                      
Provision for uncertain tax positions
          
238
      
234
  
 
                      
Total liabilities
          
787
      
991
  
                       

Commitments and contingencies (Note 7)

                      
                       
Shareholders’ equity:
                      
Ordinary shares, NIS 0.03 par value; Authorized: 26,666,667 shares as of June 30,
2022 and December 31, 2021; Issued and outstanding: 10,634,166 and 10,482,056
shares as of June 30, 2021 and December 31, 2021, respectively.
          
94
      
94
  
Additional paid-in capital
          
42,351
      
41,715
  
Accumulated deficit
          
(27,244
)
    
(23,727
)
 
                      
Total shareholders’ equity
  
4
      
15,201
      
18,082
  
 
                      
Total liabilities and shareholders’ equity
        
$
15,988
    
$
19,073
  
 
The accompanying notes are an integral part of the unaudited condensed financial statements.

 

F - 2

 
PAINREFORM LTD.
 
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
U.S. dollars in thousands (except share and per share data)
 
 
        
Six months ended
June 30,
  
 
  
Note
    
2022
    
2021
  
 
                  
Operating expenses:
                  
Research and development expenses
        
$
(1,423
)
  
$
(1,731
)
General and administrative expenses
          
(2,094
)
    
(1,968
)
 
                      
Operating loss
          
(3,517
)
    
(3,699
)
 
                      
Financial expense, net
  
6
      
-
 
    
(43
)
 
                      
Net loss and comprehensive loss
        
$
(3,517
)
  
$
(3,742
)
                       
Basic and diluted net loss per share
  
 
    
$
(0.33
)
  
$
(0.39
)
 
                      
Weighted average number of shares of ordinary share used in computing basic and diluted net loss per share
          
10,634,166
      
9,562,384
  
 
The accompanying notes are an integral part of the unaudited condensed financial statements.

 

F - 3

 
PAINREFORM LTD.
 
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
U.S. dollars in thousands (except share data)
  
 
  
Ordinary shares
    
Additional
paid-in
    
Accumulated
    
Total
shareholders’
  
 
  
Number
    
Amount
    
capital
    
deficit
    
Equity
  
 
                              
Balance as of January 1, 2021
    
8,758,037
    
$
78
    
$
33,023
    
$
(16,481
)
  
$
16,620
  

Shares and warrants issuance - Private Investment in Public Equity ("PIPE"), net

    
1,304,346
      
12
      
5,542
      
-
      
5,554
  
Share-based compensation to employees and directors
    
-
      
-
      
367
      
-
      
367
  

Share-based compensation to service providers

    
-
      
-
      
206
      
-
      
206
  
Net loss and comprehensive loss
     -       -       -      
(3,742
)
    
(3,742
)
Balance as of June 30, 2021
    
10,062,383
    
$
90
    
$
39,138
      
(20,223
)
  
$

19,005

  
                         
 
  
Ordinary shares
    
Additional
paid-in
    
Accumulated
    
Total
shareholders’
  
 
  
Number
    
Amount
    
capital
    
deficit
    
Equity
  
 
                              
Balance as of January 1, 2022
    
10,482,056
    
$
94
    
$
41,715
    
$
(23,727
)
  
$
18,082
 
Share-based compensation to service providers
    
-
      
-
      
206
      
-
      
206
  

Share-based compensation to employees and directors

    
-
      
-
      
430
      
-
      
430
  

Shares issuance to service providers

     152,110       *       -       -       *  
Net loss and comprehensive loss
    
-
      
-
      
-
      
(3,517
)
    
(3,517
)
Balance as of June 30, 2022
    
10,634,166
    
$
94
    
$
42,351
    
$
(27,244
)
  
$
15,201
 
 

(*)

Less than $1.
 
The accompanying notes are an integral part of the unaudited condensed financial statements.

 

F - 4

 
PAINREFORM LTD.
 

  CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
U.S. dollars in thousands
 
 
  
Six months ended
June 30,
  
 
  
2022
    
2021
  
 
      
Cash flows from operating activities
            
 
            
Net loss
  
$
(3,517
)
  
$
(3,742
)
Adjustments to reconcile net loss to net cash used in operating activities:
                
Depreciation
    
2
      
2
 
Share-based compensation to employees and directors
    
430
      
367
  
Share-based compensation to service providers
    
206
       206  
Change in:
                
Other current assets
    
384
      
90
  
Trade payables
    
76
 
    
(663
 )
Other accounts payable
    
(280
 )    
316
 
 
                
Net cash used in operating activities
    
(2,699
)
    
(3,424
)
 
                
Cash flows from investing activities
                
 
                
Purchase of property and equipment
    
(3
)
    
(16
)
Net cash used in investing activities
    
(3
)
    
(16
)
 
                
Cash flows from financing activities
                
 
                
Proceeds from issuance of ordinary shares under Private Investment in Public Equity
    
-
      
6,000
  
Issuance costs     -       (446 )
 
                
Net cash provided by financing activities
    
-
      
5,554
 
 
                
Change in cash, cash equivalents and restricted cash
    
(2,702
 )    
2,114
 
Cash, cash equivalents and restricted cash at the beginning of the year
    
16,571
      
15,690
  
 
                
Cash, cash equivalents and restricted cash at the end of the period
  
$
13,869
    
$
17,804
  

 

The below table reconciles cash, cash equivalents and restricted cash as reported in the balance sheets to the total of the same amounts shown in the statements of cash flows:

 

   
As of June 30,
    
As of January 1,
  
   
2022
    
2021
    
2022
    
2021
  
                         
Cash and cash equivalents
  
$
13,845
    
$
17,787
    
$
16,537
    
$
15,677
  
Restricted cash
    
24
      
17
      
34
      
13
  
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows
  
$
13,869
    
$
17,804
    
$
16,571
    
$
15,690
  

 

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

F - 5

 

PAINREFORM LTD.
 
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
U.S. dollars in thousands, except share and per share data
 

NOTE 1:

GENERAL
     
 

a.

PainReform Ltd. (the "Company") was incorporated under the laws of the State of Israel in November 2007. The Company is a clinical stage specialty pharmaceutical company focused on the reformulation of established therapeutics. The Company’s proprietary extended release drug-delivery system is designed to provide an extended period of post-surgical pain relief without the need for repeated dose administration while reducing the potential need for the use of opiates.
     
 
b.

Liquidity

 

Since its inception, the Company has devoted substantially all of its efforts to research and development, clinical trials, and capital raising activities. The Company is still in its development and clinical stage and has not yet generated revenues.
 

The Company has incurred losses of $3,517 and $3,742 for the six months periods ended on June 30, 2022 and 2021, respectively and has negative cash outflow from operating activities, the company expect to continue to incur losses and negative cash flows from operations until its product reaches profitability. As of June 30, 2022, the Company’s accumulated deficit was $27,244. The Company has funded its operations to date primarily through equity financing, and has cash on hands as of June 30, 2022 of $13,845. Additional funding will be required to complete the Company’s research and development and clinical trials, to attain regulatory approvals, to begin the commercialization efforts of the Company’s product and to achieve a level of sales adequate to support the Company’s current and planned cost structure.

 
The company monitors its cash flow projections on a current basis and based on the Company's current operating plan, the Company believes that its existing capital resources will be sufficient to fund operations for at least twelve months after the date the financial statements are issued.
     
  c.

In late 2019, a novel strain of COVID-19, was reported in Wuhan, China. While initially the outbreak was largely concentrated in China, it rapidly spread across the globe, including in Israel and the United States. The extent to which the COVID-19 pandemic impacts the Company’s operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, and the actions that may be required to contain the COVID-19 or treat its impact. Through August 15, 2022, the Company has not experienced a significant impact on its operations due to the COVID-19 pandemic.
     
  d.

In April 2022, the Company's board of directors increased the number of reserved ordinary shares under the 2019 Plan by an additional amount of 1,000,000 ordinary shares. (Note 4b)
     
  e.

In April 2022, the Company issued 152,110 shares to a consultant pursuant to an agreement signed in August 2020. Since August 2020, the company has recognized $742 ($206 for the six months ended 30 June 2022) as shares-based compensation expenses related to the shares issued to consultant.
 

F - 6

 

PAINREFORM LTD.
 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands, except share and per share data

 

NOTE 2:

UNAUDITED CONDENSED FINANCIAL STATEMENTS
   
 
The unaudited condensed financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and, on the same basis as the audited financial statements included in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2021 (the “2021 Form 20-F”).
   
 

Certain information and disclosures normally included in annual financial statements have been omitted in this interim period report pursuant to the rules and regulations of the Securities and Exchange Commission. Because the unaudited condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for annual financial statements, they should be read in conjunction with the audited financial statements and notes included in the 2021 Form 20-F.
   
 

The year-end balance sheet data were derived from the audited financial statements as of December 31, 2021, but not all disclosures required by generally accepted accounting principles in the United States (“U.S. GAAP”) are included.
   
 

In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair statement of the Company’s financial position as of June 30, 2022 and its results of operations and cash flows for the six months ended June 30, 2022 and 2021 have been included. Operating results for the six months ended June 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any other interim period or for any other future year.
 
NOTE 3:
SIGNIFICANT ACCOUNTING POLICIES
 
 
The significant accounting policies that have been applied in the preparation of the unaudited condensed financial statements are identical to those that were applied in preparation of the Company’s most recent annual financial statements in connection with its Annual Report on Form 20-F, except for the following:
   
 
-
In August 2020, the FASB issued guidance ASU 2020-06 that is expected to reduce complexity and improve comparability of financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity. This guidance is effective for the Company from January 1, 2022 and did not have a material impact on the Company’s financial statements and disclosures.

 

F - 7

 

PAINREFORM LTD.
 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands, except share and per share data

 

NOTE 4:

SHAREHOLDERS’ EQUITY

 

a.       Warrants and warrants units

 

The following table summarizes the warrants outstanding as of June 30, 2022:

 

Type

Issuance Date

Number of warrants

Exercise price

Exercisable through

August 2019 warrants

August 22, 2019

205,268

$6.72 (*)

August 22, 2024

December 2019 warrants

December 9, 2019

148,106

$6.72 (*)

December 8, 2024

Warrants to underwriters

September 3, 2020

125,000

$10.00

September 1, 2025

Warrants to underwriters

October 5, 2020

375,000

$8.80

September 3, 2025

IPO warrants

September 3, 2020

2,812,170

$8.80

September 3, 2025

PIPE warrants

March 11, 2021

232,500

$4.60

September 10, 2026

Warrants to PIPE placement agent

March 11,2021

52,173

$5.06

March 8, 2026

TOTAL

 

3,950,217

 

 

 

(*) Each warrant is exercisable into one IPO unit consisting of one share and one IPO warrant with an exercise price of $8.80.

 

F - 8

 

PAINREFORM LTD.
 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands, except share and per share data

 

NOTE 4:      SHAREHOLDERS’ EQUITY (Cont.)

 

                     b.       Share-based compensation:

 

          Share options outstanding and exercisable to employees and directors under the 2008 Plan as of June 30, 2022 and December 31, 2021 were as follows:

 
 

 

 

Number of
options

 

 

Weighted
average
exercise
price

 

 

Weighted
average
remaining
contractual
life

 

 

 

 

 

 

 

 

 

 

 

Options outstanding as of December 31, 2021

 

 

153,882

 

 

$

0.24

 

 

 

2.25

 

Options granted

 

 

-

 

 

 

-

 

 

 

-

 

Options exercised

 

 

-

 

 

 

-

 

 

 

-

 

Options forfeited

 

 

- 

 

 

 

-

 

 

 

-

 

Options outstanding as of June 30, 2022

 

 

153,882

 

 

$

0.24

 

 

 

1.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options exercisable as of June 30, 2022

 

 

153,882

 

 

$

0.24

 

 

 

1.75

 

 

Share options outstanding and exercisable to employees and directors under the 2019 Share Option Plan (the “2019 Plan”) as of June 30, 2022 and December 31, 2021, were as follows:

 

 

 

Number of
options

 

 

Weighted
average
exercise
price

  

 

Weighted
average
remaining
contractual
life

 

 

 

 

 

 

 

  

 

 

 

Options outstanding as of December 31, 2021

 

 

971,476

 

 

$

4.51

  

 

 

8.72

 

Options granted

 

 

164,455

 

 

 

1.06

  

 

 

9.79

 

Options exercised

 

 

-

 

 

 

-

  

 

 

-

 

Options forfeited

 

 

-

 

 

 

-

  

 

 

-

  

Options outstanding as of June 30, 2022

 

 

1,135,931

 

 

$

4.01

  

 

 

8.87

  

 

 

 

 

 

 

 

 

  

 

 

 

 

Options exercisable as of June 30, 2022

 

 

490,874

 

 

$

3.96

  

 

 

7.89

 

 

In April 2022, the Company’s board of directors approved the grant of options to purchase 164,455 ordinary shares of the Company to employees. The options were granted under the Company's 2019 plan. The fair value of share options granted was estimated using the Black Scholes model, which requires a number of assumptions, of which the most significant are the expected share price, volatility, and the expected option term. The options vest over a four-year period, 4/16 of the options shall vest following the lapse of a period of twelve months commencing at the date of grant. The remaining 12/16 of the options shall vest on quarterly basis, so that 1/16 of the options shall vest on the expiry of each quarter. The grant date fair value of per options was $0.89.

 

F - 9

 

PAINREFORM LTD.
 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands, except share and per share data

 

NOTE 4:      SHAREHOLDERS’ EQUITY (Cont.)

 

The following table summarizes information about share options that were granted in 2022 as part of 2019 plan as follows:

 

   

2022

  

Share price at grant day (USD)

  

$

1.22

  

Expected life (years)

  

 

6.12

  

Risk-free interest rates

    

2.69

%

Expected volatility

    

79.30

%

Dividend yield

    

-

  

Exercise price

  

$

1.057

  

Grant date fair value per option

  

$

0.89

  

 

NOTE 5:
LOSS PER SHARE
   
 
Basic loss per share is computed by dividing the loss for the period applicable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. 
 
For the periods ended June 30, 2022 and 2021, all outstanding share options and warrants have been excluded from the calculation of the diluted net loss per share as all such securities are anti-dilutive for all periods presented.
 
NOTE 6:
FINANCIAL EXPENSES, NET
 
 
  
Six months ended
June 30,
  
 
  
2022
    
2021
  
 
            
Bank fees
    
(7
)
    
(3
 )
Exchange rate differences
    
7
 
    
(40
)
                 
Total financial expenses, net
  
$
-
 
  
$
(43
 )

 

F - 10

 

PAINREFORM LTD.
 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands, except share and per share data

 

NOTE 7:

COMMITMENTS AND CONTINGENCIES

 

 

On November 13, 2020, the Company entered into a Master Clinical Research Organization Agreement (the "First Agreement"), and on December 3, 2020, the Company entered into a Master Clinical Trial Agreement (the "Second Agreement") both with Lotus Clinical Research as the Company's clinical research organization for the Company's planned Phase 3 trial of PRF-110, which is expected to commence in the fourth quarter of 2022.

 

Under the First Agreement, the Company paid the first milestone of $581 on December 28, 2020 and paid additional milestone of $581 during the first nine months of 2021.

 

In addition, the Company paid a non-refundable deposit of $710 under the Second Agreement in January 2021.

 

As of June 30, 2022, the Company accounted for these amounts of net $1,728 as prepaid clinical trial expense and deferred clinical trial costs after recognition of $144 clinical trials expenses in 2021.

 

NOTE 8:

FINANCIAL INSTRUMENTS
   
 

The carrying amount of cash equivalents, restricted cash, trade payables and accrued expenses approximate their fair value due to their short-term characteristics.

 

NOTE 9:

SUBSEQUENT EVENTS
   
 

The Company has evaluated subsequent events occurring through August 15, 2022, the date that these financial statements were originally available to be issued, and determined that no subsequent events occurred that would require disclosure in these financial statements
 
 
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