qron_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended June 30, 2022

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

For the transition period from __________ to __________

000-55800

(Commission File Number)

QRONS INC.

(Exact name of registrant as specified in its charter)

Wyoming		81-3623646
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

28-10 Jackson Avenue #26N Long Island City, New York		11101
(Address of principal executive offices)		(Zip Code)

(212)-945-2080

(Registrant’s telephone number, including area code)

50 Battery Place, #7T, New York, New York 10280

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		N/A		N/A

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, 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.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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 7(a)(2)(B) of the Securities Act. ☐

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

As of August 15, 2022, there were 13,289,789 shares of the registrant’s common stock outstanding.

QRONS INC.

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	28

	SIGNATURES	29

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

QRONS INC.

CONDENSED BALANCE SHEETS

(Unaudited)

	June 30, 2022			December 31, 2021

ASSETS
Current assets
Cash and cash equivalents	$	8,354		$	35,065
Total current assets		8,354			35,065

TOTAL ASSETS	$	8,354		$	35,065

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities
Accounts payable and accrued liabilities	$	117,521		$	90,976
Accounts payable and accrued liabilities – related party		38,772			38,192
Demand loans, related party		50,000			50,000
Advances from related party		336,000			286,000
Unsecured short-term advances		100,000			100,000
Convertible notes – related party		25,000			25,000
Convertible notes, net of debt discount		195,000			141,685
Derivative liabilities		441,262			405,957
Total current liabilities		1,303,555			1,137,810

Total liabilities		1,303,555			1,137,810

Stockholders’ deficit
Series A Preferred stock: $0.001 par value; 10,000 shares authorized; 2,000 shares issued and outstanding		2			2
Common stock, $0.0001 par value: 100,000,000 shares authorized; 13,289,789 shares issued and outstanding		1,329			1,329
Additional paid-in capital		7,697,351			7,697,351
Accumulated deficit		(8,993,883	)		(8,801,427	)
Total stockholders’ deficit		(1,295,201	)		(1,102,745	)
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT	$	8,354		$	35,065

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

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QRONS INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months ended						Six Months ended
	June 30,						June 30,
	2022			2021			2022			2021

Net sales	$	-		$	-		$	-		$	-

Operating expenses:
Research and development expenses		8,414			11,350			17,346			23,186
Professional fees		9,039			8,300			53,905			23,940
General and administrative expenses		13,611			23,148			23,369			34,035
Total operating expenses		31,064			42,798			94,620			81,161

Income (loss) from operations		(31,064	)		(42,798	)		(94,620	)		(81,161	)

Other income (expense)
Interest expense		(27,914	)		(111,758	)		(62,531	)		(122,744	)
Change in fair market value of derivative liabilities		130,650			189,130			(35,305	)		3,170
Total other income (expense)		102,736			77,372			(97,836	)		(119,574	)

Net income (loss)	$	71,672		$	34,574		$	(192,456	)	$	(200,735	)

Net income (loss) per common share - basic	$	0.01		$	0.00		$	(0.01	)	$	(0.02	)
Net income (loss) per common share - diluted	$	0.00		$	0.00		$	(0.01	)	$	(0.01	)

Weighted average shares outstanding
Basic		13,289,789			13,089,789			13,289,789			13,089,789
Diluted		18,761,704			17,610,815			18,761,704			17,610,815

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

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QRONS INC.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

	Series A Preferred				Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance, December 31, 2021		2,000	$	2		13,289,789	$	1,329	$	7,697,351	$	(8,801,427	)	$	(1,102,745	)

Net loss for the period		-		-		-		-		-		(264,128	)		(264,128	)
Balance, March 31, 2022		2,000		2		13,289,789		1,329		7,697,351		(9,065,555	)		(1,366,873	)

Net loss for the period		-		-		-		-		-		71,672			71,672
Balance, June 30, 2022		2,000	$	2		13,289,789	$	1,329	$	7,697,351	$	(8,993,883	)	$	(1,295,201	)

	Series A Preferred				Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance, December 31, 2020		2,000	$	2		13,289,789	$	1,329	$	7,037,796	$	(7,733,443	)	$	(694,316	)
Stock options granted to non-employees as research and development costs		-		-		-		-		3,100		-			3,100
Net loss for the period		-		-		-		-		-		(235,309	)		(235,309	)
Balance, March 31, 2021		2,000		2		13,289,789		1,329		7,040,896		(7,968,752	)		(926,525	)
Stock options granted to non-employees as research and development costs		-		-		-		-		3,100		-			3,100
Net loss for the period		-		-		-		-		-		34,574			34,574
Balance, June 30, 2021		2,000	$	2		13,289,789	$	1,329	$	7,043,996	$	(7,934,178	)	$	(888,851	)

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

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QRONS INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months ended June 30,
	2022			2021
Cash Flows From Operating Activities
Net loss	$	(192,456	)	$	(200,735	)
Adjustments to reconcile net loss to net cash used by operating activities:
Stock options issued for research and development expense		-			6,200
Non cash interest		-			94,332
Accretion of debt discount		53,315			22,490
Change in derivative liabilities		35,305			(3,170	)
Changes in operating assets and liabilities:
(Increase) in prepaid expenses		-			(4,000	)
Increase in accounts payable and accrued liabilities		26,545			14,141
(Decrease) increase in accounts payable and accrued liabilities, related party		580			(2,507	)
Net cash used by operating activities		(76,711	)		(73,249	)

Cash Flows From Investing Activities
Net cash provided from (used by) investing activities		-			-

Cash Flows From Financing Activities
Advances from related party		50,000			-
Proceeds from convertible note		-			100,000
Net cash provided from financing activities		50,000			100,000

(Decrease) increase in cash and cash equivalents		(26,711	)		26,751

Cash at beginning of year		35,065			57,632
Cash at end of period	$	8,354		$	84,383

SUPPLEMENTAL DISCLOSURES
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-

SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES
Derivative liability associated with debt discount	$	-		$	51,009
Derivative liability associated with warrants	$	-		$	143,323

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

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 1 – Description of Business and Basis of Presentation

Organization and Nature of Business:

Qrons Inc. (“Qrons” or the “Company”) was incorporated under the laws of the State of Wyoming on August 22, 2016 under the name BioLabMart Inc. and changed its name to Qrons Inc., effective August 8, 2017.

The Company’s common stock was approved by the Financial Industry Regulatory Authority (“FINRA”) for quotation on the OTC pink sheets under the symbol “BLMB” as of July 3, 2017. FINRA announced the Company’s name change to Qrons Inc. on August 9, 2017. The new name and symbol change to “QRON” for the OTC Market was effective August 10, 2017. The Company’s common stock commenced trading on the OTCQB Venture Market on August 12, 2019.

The Company is an innovative biotechnology company dedicated to developing biotech products, treatments and technologies to combat neuronal diseases, which are an enormous social and economic burden on society. The Company seeks to engage in strategic arrangements with companies and institutions that are developing breakthrough technologies in the fields of artificial intelligence, machine learning, molecular biology, stem cells and tissue engineering, for deployment in the fight against neuronal diseases. The Company’s search is currently focused on researchers based in Israel, a country which is world-renowned for biotech innovations.

The Company’s principal executive office is located at 28-10 Jackson Avenue, Long Island City, #26N, New York 1-1101

Note 2 – Summary of Significant Accounting Policies

Financial Statements: The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three and nine-month periods have been made. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year.

Fiscal year end: The Company has selected December 31 as its fiscal year end.

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from these estimates.

Cash Equivalents: The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents.

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 $17,346 and $23,186 for the six months ended June 30, 2022 and 2021, respectively.

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 2 – Summary of Significant Accounting Policies (continued)

Advertising and Marketing Costs: Advertising and marketing costs are expensed as incurred. The Company incurred no advertising and marketing costs during the six months ended June 30, 2022 and 2021.

Related Parties: For the purposes of these financial statements, parties are considered to be related if one party has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

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, as described in Note 9, Stock Plan.

Fair Value of Financial Instruments

ASC 820, Fair Value Measurements, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level of input that is significant to the fair value measurement of the instrument.

The following table provides a summary of the fair value of the Company’s derivative liabilities as of June 30, 2022 and December 31, 2021:

	Fair value measurements on a recurring basis
	Level 1		Level 2		Level 3
As of June 30, 2022:
Liabilities
Derivative liabilities	$	-	$	-	$	441,262

As of December 31, 2021:
Liabilities
Derivative liabilities	$	-	$	-	$	405,957

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 2 – Summary of Significant Accounting Policies (continued)

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.

Income taxes: The Company has adopted ASC 740, Income Taxes, which requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Basic and Diluted Loss Per Share: In accordance with ASC 260, Earnings Per Share, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common stock outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock had been issued and if the additional shares of common stock were dilutive.

Potential common stock consists of the incremental common stock issuable upon the exercise of common stock warrants (using the if-converted method), convertible notes, classes of shares with conversion features, and stock awards and stock options.

The table below reflects the potentially dilutive securities outstanding during each reporting period:

	Six Months Ended June 30, 2022		Six Months Ended June 30, 2021
Research warrants at 3% of issued and outstanding shares		398,694		398,694
Convertible notes		689,189		634,966
Series A preferred shares		700		700
Stock options vested		4,088,332		3,191,666
Stock purchase warrants		295,000		295,000
Total		5,471,915		4,521,026

New Accounting Pronouncements: Certain new accounting pronouncements that have been issued are not expected to have a material effect on the Company’s financial statements.

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 3 – Going Concern

The Company has experienced net losses to date and has not generated revenues from operations. While the Company raised proceeds of $100,000 during the year ended December 31, 2021 through the issuance of a convertible promissory note, and a further $50,000 in unsecured advances from related parties in the current six months ended June 30, 2022, it does not believe its resources will be sufficient to meet its operating and capital needs beyond the third quarter of 2022. The Company expects it will require additional capital to fully implement the scope of its proposed business operations, which raises substantial doubt about its ability to continue as a going concern. The Company will have to continue to rely on equity and debt financing, and continued support from its officers and directors. There can be no assurance that financing, whether debt or equity, will be available to the Company in the amount required at any particular time or for any particular period or, if available, that it can be obtained on favorable terms. In addition, if the Company is unable to obtain adequate financing due to the continued effect of COVID-19 on the capital markets, the Company may be required to reduce the scope, delay, or eliminate some or all of its planned operations.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amount and classification of liabilities that might cause results from this uncertainty.

Covid-19 Pandemic

The COVID-19 pandemic has had an adverse impact on the research and development of our product candidates. Research facilities at Dartmouth were subject to closures as well as laboratories at Ariel in Israel during fiscal 2020. This resulted in our discontinuing our research at these universities and was part of our decision to adjust our research to be collaborative and to seek aligning with third parties to advance our expanded goals. The ultimate impact on our research relationships is currently uncertain. We do not currently know the full extent of potential delays of research in the future as a result of the continuing pandemic restrictions.

COVID-19 has also caused significant disruptions to the global financial markets, which severely impacts our ability to raise additional capital. We terminated our employees in April 2020 in an effort to conserve resources as we evaluated our business development efforts. We may be required to further reduce operations or cease operations if we are unable to finance our operations.

Management is actively monitoring the situation but given the daily evolution of the COVID-19 outbreak, the Company is not able to fully estimate the effects of the COVID-19 outbreak on its planned operations or financial condition in the next 12 months. However, while significant uncertainty remains, the Company believes it is likely that the COVID-19 outbreak will have a negative impact on its ability to raise additional financing and will result in delays as it continues to impact the Company’s workforce and its collaborative development efforts.

Note 4 – Convertible Note – Related Party and Derivative Liabilities

On September 1, 2016, the Company entered into a convertible debenture agreement with Decagon LLC, doing business as CubeSquare, LLC (“CubeSquare”), of which the Company’s Chief Executive Officer is the managing partner and its President is a 25% owner of CubeSquare. The Company received proceeds of $10,000 during fiscal 2016 (“Note 1”). Note 1 bears interest at 8% per annum and was due on September 1, 2017. Interest accrues from September 1, 2016 and is payable on maturity. Interest is payable, at the lender’s option, in cash or common stock. Any portion of the loan and unpaid interest is convertible at any time at the option of CubeSquare into shares of common stock of the Company at a conversion price of the greater of (i) $0.0625 per share if the Company’s shares are not trading on a public market and; (ii) in the event the Company’s shares are listed for trading on a public market, the conversion price shall be equal to a 50% discount to the average of the five lowest trading prices during the previous twenty trading days prior to the date of the notice of conversion from the lender.

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 4 – Convertible Note – Related Party and Derivative Liabilities (continued)

On September 29, 2017, the Company and CubeSquare amended Note 1 to extend the maturity date from September 1, 2017 to September 1, 2018; on September 9, 2018, the Company further amended Note 1 to extend the maturity date to September 1, 2019; on November 6, 2019, the Company further amended Note 1 to extend the maturity date to September 1, 2020; on October 30, 2020, the Company further amended Note 1 to extend the maturity date to September 1, 2021; and on October 7, 2021, the Company further amended Note 1 to extend the maturity date to September 1, 2022 under the same terms and conditions.

On September 27, 2017, the Company entered into a second convertible debenture agreement with CubeSquare under which the Company received proceeds of $15,000 (Note 2). Note 2 bears interest at 8% per annum and was due on September 27, 2018. Interest accrues from September 27, 2017 and is payable on maturity. Any portion of the principal and unpaid interest under the note is convertible at any time at the option of CubeSquare into shares of common stock of the Company at a conversion price equal to a 50% discount to the average of the five lowest trading prices during the previous twenty trading days prior to the date of the notice of conversion from CubeSquare. On September 9, 2018, Note 2 was amended to extend the maturity date to September 27, 2019. On November 6, 2019, Note 2 was amended to extend the maturity date to September 27, 2020; on October 30, 2020 Note 2 was amended to extend the maturity date to September 27, 2021; and further on October 7, 2021 Note 2 was amended to extend the maturity date to September 27, 2022.

The Company analyzed the amendment to Note 1 and Note 2 under ASC 815-10-15-83 and concluded that the conversion feature within these two convertible Notes meet the definition of a derivative. The Company estimated the fair value of the derivative at each report date using the Black-Scholes valuation model to value the derivative liability related to the variable conversion rate.

The carrying value of these convertible notes is as follows:

June 30,

2022

December 31,

2021

Face value of certain convertible notes

25,000

Carrying value

25,000

For Three Months Ended

June 30,

For Six Months Ended

June 30,

2022

2021

2022

2021

Interest on the convertible notes

499

992

As of June 30, 2022 and December 31, 2021, the unpaid interest balance under Accounts payable and accrued liabilities – related party was $10,441 and $9,449, respectively.

As a result of the application of ASC 815, the fair value of the derivative liability associated with the conversion feature is summarized as follows:

Balance at December 31, 2020	$	61,682
Change in fair value		11,417
Balance at December 31, 2021		73,099
Change in fair value		(38,190	)
Balance at June 30, 2022	$	34,909

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 4 – Convertible Note – Related Party and Derivative Liabilities (continued)

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of June 30, 2022 and December 31, 2021 and the commitment date:

	Commitment Date	December 31, 2021	June 30, 2022
Expected dividends	0	0	0
Expected volatility	101% ~103%	181%~ 182%	75% ~ 202%
Expected term	0.92 ~ 1 year	0.67 ~ 0.74 year	0.17 ~ 0.24 year
Risk free interest rate	1.33%	1.06%	1.28%

Note 5 – Convertible Note and Derivative Liabilities

(1) 8% Convertible notes with warrants issued in December 2019 and February 2020

In December 2019, we issued and sold in a private offering 8% convertible notes in the aggregate principal amount of $70,000. Such notes were due on December 31, 2021 and are convertible into shares of our common stock at a conversion price for each share of common stock equal to the lesser of: (a) $0.50; (b) the lowest price at which the Company has converted any convertible security of the Company (to the holder or to any third party) within 30 trading days prior to the date of delivery of the applicable notice of conversion; and (c) so long as lower than (a) or (b), such other price as the Company and the holder may agree. In connection with the 8% convertible note issuance, we issued warrants to purchase an aggregate of 70,000 shares of common stock at an exercise price of $1.00.

On February 19, 2020 we issued and sold in a private offering an 8% convertible note in the principal amount of $10,000. The note is due on February 19, 2022 and is convertible into shares of common stock at a conversion price per share equal to the lesser of: (a) $0.50; (b) the lowest price at which the Company has converted any convertible security of the Company within 30 trading days prior to the date of delivery of the applicable notice of conversion; or (c) such other price as the Company and the holder may agree. In connection with the 8% convertible note issuance, we issued warrants to purchase an aggregate of 10,000 shares of common stock at an exercise price of $1.00.

The carrying value of these convertible notes is as follows:

	June 30, 2022		December 31, 2021
Face value of certain convertible notes	$	80,000	$	80,000
Less: unamortized discount		-		(541	)
Carrying value	$	80,000	$	79,459

Interest expenses associated with the convertible notes are as follows:

	For Three Months Ended June 30,				For Six Months Ended June 30,
	2022		2021		2022		2021
Interest on the convertible notes	$	1,596	$	1,895	$	3,174	$	2,569
Amortization of debt discount		-		8,931		541		17,764
Total	$	1,591	$	10,826	$	3,715	$	20,333

As of June 30, 2022 and December 31, 2021, the unpaid interest balance under Accounts payable and accrued liabilities was $16,043 and $12,869, respectively.

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 5 – Convertible Note and Derivative Liabilities (continued)

(1) 8% Convertible notes with warrants issued in December 2019 and February 2020 (continued)

The convertible notes qualify for derivative accounting and bifurcation under ASC 815. The derivative liability of the $80,000 convertible notes was calculated using the Black-Scholes pricing model to be $72,689.

As a result of the application of ASC 815, as of June 30, 2022 and December 31, 2021, the fair value of the derivative liability associated with the conversion feature is summarized as follows:

Balance at December 31, 2020	$	92,803
Change in fair value		64,687
Balance at December 31, 2021		157,490
Change in fair value		(69,796	)
Balance at June 30, 2022	$	87,694

	Commitment Date	December 31, 2021	June 30, 2022
Expected dividends	0	0	0
Expected volatility	154% ~173%	203%~301%	262%~237%
Expected term	2.10 years	1.08 ~ 1.22 years	0.58 ~ 0.72 years
Risk free interest rate	1.42 ~ 1.65%	0.39%	1.72%

(2) 8% Convertible note with warrants issued on June 15, 2021

On June 15, 2021, the Company entered into a note purchase agreement with Quick Capital, LLC (“Quick Capital”) pursuant to which the Company issued a twelve-month convertible promissory note in the principal amount of $115,000 for a $100,000 investment (the “Quick Note”), which included an original issuance discount of 10% and a $3,500 credit for legal and transaction costs. In connection with the Quick Note issuance, Quick Capital was also issued a five-year warrant (the “Quick 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 “Quick Warrant Shares”) subject to adjustments for dilutive issuances at lower prices.

The Quick Note is convertible into shares of common stock at a conversion price of $0.50 per share. If delivery of the conversion shares is not timely made, the Company is obligated to pay Quick Capital $2,000 for each day that the delivery is late as liquidated damages. The conversion price of the Quick 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 Quick Note may not be prepaid.

The Company is subject to significant cash penalties if the Company defaults on the Quick Note or in the event shares are not issued timely when a notice of conversion is provided. If an event of default occurs, the Quick Note will become immediately due and payable in an amount equal to 150% of the then outstanding principal amount of the Quick Note plus any interest or amounts owing to Quick Capital. The default provisions are based on the type of default and include a penalty of 50% of the principal plus accrued interest due (the “Default Sum”) and a parity value of the Default Sum based on the effective conversion of the Quick Note on the date of payment of the default and the maximum stock value during the period between the default date and the payment date.

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 5 – Convertible Note and Derivative Liabilities (continued)

(2) 8% Convertible note with warrants issued on June 15, 2021 (continued)

The Company valued the embedded default derivative liability of the Quick Note and the Quick Warrant liability, including the full ratchet reset feature, using Monte Carlo models.

While the Company has not received a notice of default, the Quick Note matured on June 15, 2022, and the fair value of the Quick Note and Quick Warrant embedded default derivatives liability has been valued as of June 30, 2022.

The carrying value of the Quick Note is as follows:

	June 30, 2022		December 31, 2021
Face value of Quick Note	$	115,000	$	115,000
Less: unamortized discount		-		(52,774	)
Carrying value	$	115,000	$	62,226

Interest expenses associated with the conversion feature is as follows:

	For Three Months Ended June 30,				For Six Months Ended June 30,
	2022		2021		2022		2021
Interest on Quick Note	$	2,294	$	378	$	4,562	$	378
Day one loss associated with derivatively liability		-		79,332		-		79,332
Amortization of debt discount		24,024		4,726		52,774		4,726
Total	$	26,318	$	84,436	$	57,336	$	84,436

As a result of the application of ASC 815 as of June 30, 2022 and December 31, 2021, the fair value of the derivative liability associated with the conversion feature is summarized as follows:

Derivative liability associated with convertible note on commitment date	$	51,009
Derivative liability associated with warrants on commitment date		143,323
Change in fair value – convertible note		(21,597	)
Change in fair value – warrants		2,633
Balance at December 31, 2021		175,368
Change in fair value – convertible note		50,282
Change in fair value – warrants		93,009
Balance at June 30, 2022	$	318,659

Convertible note:	Commitment Date	December 31, 2021		June 30, 2022
Expected dividends	0		0		0
Expected volatility	307.10%		215.70%		196.50%
Expected term	1 years	0.45 years		0.01 years
Risk free interest rate	0.18%		0.43%		1.28%

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 5 – Convertible Note and Derivative Liabilities (continued)

(2) 8% Convertible note with warrants issued on June 15, 2021 (continued)

Warrants:	Commitment Date	December 31, 2021	June 30, 2022
Expected dividends	0	0	0
Expected volatility	201.70%	200.90%	229.40%
Expected term	5 years	4.45 years	3.9 years
Risk free interest rate	0.65%	0.82%	2.430%

Note 6 – Unsecured Short-Term Advance from Third Party

On June 20, 2019, the Company received $100,000 from a third party in the form of an unsecured, demand, non-interest-bearing, short-term advance to meet its operating needs. The advance remains outstanding at June 30, 2022 and December 31, 2021.

Note 7 – Related Party Transactions

(1) Demand Loan from related party

On May 1, 2019, the Company issued a promissory note (the “Note”) to CubeSquare in the principal amount of $50,000. The Note bears interest at the rate of 8% per annum and is due and payable by the Company upon demand from CubeSquare. The Company recorded interest expenses of $997 and $1,983 for the three and six months ended June 30, 2022 and 2021. As of June 30, 2022 and December 31, 2021, the unpaid interest balance under Accounts payable and accrued liabilities – related party was $12,657 and $10,674, respectively.

(2) Advances from Related Parties

During the year ended December 31, 2019, the Company received $135,000 from Jonah Meer, its Chief Executive Officer, in the form of an unsecured, demand, non-interest-bearing, short-term advance to help meet its operating needs. During the year ended December 31, 2020, the Company received an additional $70,000 from Jonah Meer. An additional $50,000 in advances was received from Mr. Meer during the six months ended June 30, 2022. Mr. Meer is owed $255,000 and $205,000 in respect to these advances at June 30, 2022 and December 31, 2021, respectively.

On August 20, 2019, the Company received $50,000 from Ido Merfeld, its President, in the form of an unsecured, demand, non-interest-bearing, short-term advance to help meet its operating needs. During the year ended December 31, 2020, the Company received an additional $21,000 from Ido Merfeld. There were no additional advances from Mr. Merfeld during the six months ended June 30, 2022, as well as during the year ended December 31, 2021. Mr. Merfeld is owed $71,000 in respect to these advances at June 30, 2022 and December 31, 2021.

During the year ended December 31, 2020, the Company received $10,000 from CubeSquare in the form of an unsecured, demand, non-interest-bearing, short-term advance to help meet its operating needs which amount is outstanding as of June 30, 2022 and December 31, 2021. The Company’s Chief Executive Officer is the managing partner and the Company’s President is a 25% owner of CubeSquare.

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 7 – Related Party Transactions (continued)

(3) Others

Jonah Meer, the Company’s Chief Executive Officer, made payments to various vendors during the years ended December 31, 2020 and 2019. During the six months ended June 30, 2022 and during the year ended December 31, 2021, the Company repaid $900 and $11,575, respectively, of these advances leaving a balance payable to Mr. Meer of $16,000 at June 30, 2022 (December 31, 2021 - $16,900), which amount is reflected in accounts payable, related party.

During the year ended December 31, 2019, Ido Merfeld, the Company’s President, made payments to various vendors in the aggregate amount of $1,169. The balance payable to Mr. Merfeld of $1,169 is reflected in accounts payable, related party as of June 30, 2022 and December 31, 2021.

Note 8 – Intellectual Property License Agreement and Sponsored Research Agreement

Dartmouth College – Intellectual Property License Agreement

On October 2, 2019, the Company entered into an intellectual property license agreement (the “Intellectual Property License 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 includes 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.

Failure to timely make any payment due under the Agreement will result in interest charges to the Company of the lower of 10% per year or the maximum amount of interest allowable by applicable law.

The Agreement may be terminated by Dartmouth if the Company is in material breach of the Agreement which is not cured after 30 days of notice thereof or if the Company becomes insolvent. Dartmouth may terminate the Agreement if the Company challenges a Dartmouth patent or does not terminate a sublicensee that challenges a Dartmouth patent, except in response to a valid court or governmental order. The Company may terminate the Agreement at any time upon six months written notice to Dartmouth.

If the Company or any sublicensee or affiliate institutes or participates in a licensed patent challenge, the then current earned royalty rate for licensed products covered by Dartmouth patents will automatically be increased to three times the then current earned royalty rate.

On March 23, 2021, the United States Patent and Trademark Office issued U.S. Patent No. 10,954,315 to the Trustees of Dartmouth College, which is directed to mechanically interlocked, molecules-based materials for 3-D printing. The patent’s inventors are Professor Chenfeng Ke, a member of the Company’s Scientific Advisory Board and Qianming Lin, Professor Ke’s assistant. The patent grant is the culmination of the Intellectual Property License Agreement between the Company and Dartmouth with respect to an exclusive world-wide license of intellectual property related to 3D printable materials in the fields of human and animal health.

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 8 – Intellectual Property License Agreement and Sponsored Research Agreement (continued)

Dartmouth College – Intellectual Property License Agreement

The Company expensed $12,500 as license fees during the six months ended June 30, 2022 and 2021 with respect to such annual fee.

Note 9 – Stock Plan

2016 Stock Option and Stock Award

On December 14, 2016, the Board adopted the Company’s 2016 Stock Option and Stock Award Plan (the “Plan”). The Plan provides for the award of stock options (incentive and non-qualified), stock awards and stock appreciation rights to officers, directors, employees and consultants who provide services to the Company. The terms of awards under the Plan are made by the Board. The Company has reserved 10 million shares for issuance under the Plan.

(a) Stock Options granted to Science Advisors and Business Advisors

On February 10, 2020 under the Plan, the Company granted three-year options to purchase an aggregate of 50,000 shares of its common stock at an exercise price of $2.00 per share, to a Business Advisor. 25,000 of such shares subject to the option were immediately exercisable and expire on February 10, 2023, and 25,000 shares vest on February 10, 2021 and expire on February 10, 2024. On July 15, 2020, 25,000 unvested options were forfeited. In January 2021, 25,000 vested options were forfeited.

(b) Stock Options granted to Employees:

On December 10, 2018, the Board awarded an employee the following three-year stock options under the Plan: (i) an option to purchase 33,334 shares of common stock, exercisable on December 10, 2018 at an exercise price of $2.00 per share (ii) an option to purchase 33,333 shares of common stock exercisable on December 10, 2019 at an exercise price of $2.00 per share, and (iii) an option to purchase 33,333 shares of common stock exercisable on December 10, 2020 at an exercise price of $2.00 per share, provided the employee is providing services to the Company at the time of exercise. On March 23, 2020, the Company accelerated the vesting provision to provide for the immediate vesting of such options. 33,333 of such shares subject to the option were forfeited unexercised on December 10, 2021. The remaining option expires on March 23, 2023.

On December 10, 2019, the Board awarded an employee, the following three-year stock options under the Plan: (i) an option to purchase 33,334 shares of common stock, exercisable on December 10, 2019 at an exercise price of $2.00 per share (ii) an option to purchase 33,333 shares of common stock exercisable on December 10, 2020 at an exercise price of $2.00 per share, and (iii) an option to purchase 33,333 shares of common stock exercisable on December 10, 2021 at an exercise price of $2.00 per share, provided the employee is providing services to the Company at the time of exercise. On March 23, 2020, the Company accelerated the vesting provision to provide for the immediate vesting of such options. Such options expire on March 23, 2023.

On December 10, 2020, under the Plan, the Board awarded an employee, an immediately exercisable three-year stock option to purchase 100,000 shares of the common stock of the Company at an exercise price of $2.00 per share.

On December 22, 2021, under the Plan, the Board awarded an employee, an immediately exercisable three-year stock option to purchase 325,000 shares of the common stock of the Company at an exercise price of $2.00 per share.

On April 16, 2022, a three-year stock option to purchase 10,000 shares of common stock of the Company granted to a Science Advisor expired unexercised.

The following table is the recognized compensation in respect of the above stock option compensation ((a) and (b)) which amount has been allocated as below:

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 9 – Stock Plan (continued)

(b) Stock Options granted to Employees:

	Three Months ended				Six Months ended
	June 30,				June 30,
	2022		2021		2022		2021
Research and development expenses	$	-	$	3,100	$	-	$	6,200

As of June 30, 2022 and December 31, 2021, there was no unrecognized compensation remaining to be recognized in future periods.

On June 25, 2019, the Company appointed John N. Bonfiglio, PhD as its chief operating officer, effective July 1, 2019. As compensation, Dr. Bonfiglio was granted a three-year stock option to purchase 100,000 shares of common stock at an exercise price of $2.00 per share, 50,000 of which shares vested upon grant and 25,000 shares vested on each of July 1, 2020 and July 1, 2021, provided Dr. Bonfiglio was in the employ of the Company on such dates. Mr. Bonfiglio was terminated as chief operating officer as of November 30, 2019. Accordingly, all unvested stock options terminated on such date. In January 2021, 50,000 vested options were forfeited.

On December 10, 2020, the Board granted five-year options to purchase 325,000 shares of common stock to each of its two officers. The options have an exercise price of $2.00 per share and are immediately exercisable.

On December 22, 2021, the Board granted five-year options to purchase 325,000 shares of common stock to each of its two officers. The options have an exercise price of $2.00 per share and are immediately exercisable.

The following table is the recognized compensation in respect of the above stock option compensation, which amounts have been allocated as general and administrative expenses:

	For Three and Six Months ended
	June 30,
	2022		2021

General and administrative expenses	$	-	$	-

The fair value of each option award referenced above is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions at the measurement date(s):

		Measurement date
Dividend yield		0%
Expected volatility		114.69~198.38%
Risk-free interest rate		0.39%~2.68%
Expected life (years)		3 ~ 5
Stock Price		$ 0.38 ~ 2.80
Exercise Price		$ 0.40 ~ 2.00

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 9 – Stock Plan (continued)

A summary of the activity for the Company’s stock options at June 30, 2022 and December 31, 2021, is as follows:

	June 30, 2022							December 31, 2021
				Weighted Average Exercise		Weighted Average Remaining Contractual Life					Weighted Average Exercise		Weighted Average Remaining Contractual Life
	Shares			Price		(in years)		Shares			Price		(in years)
Outstanding, beginning of period		4,098,332		$	2		3.08		3,276,666		$	1.98		3.28
Granted		-			-		-		975,000		$	2		-
Exercised		-			-		-		-		$	-		-
Canceled/forfeited		(10,000	)	$	-		-		(153,334	)	$	2		-
Outstanding, end of period		4,088,332		$	2		2.51		4,098,332		$	2		3.08
Options exercisable, end of period		4,088,332		$	2		2.51		4,098,332		$	2		3.08
Weighted average fair value of options granted				$	2						$	1.98

Note 10 – Capital Stock

Authorized:

The Company has authorized 100,000,000 shares of common stock, par value $0.0001, and 10,000 shares of preferred stock which is designated as Series A Preferred Stock, par value $0.001.

Series A Preferred Stock:

The Series A Preferred Stock is redeemable at the option of the Company at any time, in whole or in part, upon 10 trading days prior notice, at a price of $1.00 per share plus 4% per annum from the date of issuance (the “Stated Value”). The holders of the Series A Preferred Stock are entitled to a liquidation preference equal to the Stated Value, prior to the holders of other preferred stock or common stock. The holders of the Series A Preferred Stock have the right to convert such stock into common stock at a conversion rate equal to the Stated Value as of the conversion date divided by the average closing price of the common stock for the five previous trading days. The Company is required to reserve sufficient number of shares for the conversion of the Series A Preferred Stock. The holders of Class A Preferred Stock shall vote together as a single class with the holders of the Company’s common stock and the holders of any other class or series of shares entitled to vote with the common stock, with the holders of Class A Preferred Stock being entitled to 66 2/3% of the total votes on all such matters, regardless of the actual number of shares of Class A Preferred Stock then outstanding.

There were 2,000 shares of Series A Preferred Stock issued and outstanding as of June 30, 2022 and December 31, 2021.

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QRONS INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022 and 2021

Note 10 – Capital Stock (continued)

Common Stock

There were 13,289,789 shares of common stock issued and outstanding as of June 30, 2022 and December 31, 2021.

Common Stock Purchase Warrants

As of June 30, 2022 and December 31, 2021, the following common stock purchase warrants were outstanding:

	Warrants			Weighted Average Exercise Price
Outstanding – December 31, 2020		180,000		$	1.00
Granted		115,000	(1)		1.00
Canceled/forfeited		-			-
Exercised		-			-
Outstanding – December 31, 2021		295,000			1.00
Granted		-			-
Canceled/forfeited		-			-
Exercised		-			-
Outstanding – June 30, 2022		295,000		$	1.00

(1) On June 15, 2021, the Company granted a convertible noteholder a warrant to purchase 115,000 shares of common stock at an exercise price of $1.00, subject to adjustments for full ratchet resets for dilutive issuances at lower prices. (See Note 5(2) above.)

Note 11 – Subsequent Events

The Company has evaluated events for the period through the date of the issuance of these financial statements and determined that there are no additional events requiring disclosure.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 prospectus, as filed with the Securities and Exchange Commission (the “SEC”) on March 28, 2022, 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 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 unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The following discussion of our financial condition and results of operations should be read in conjunction with the notes to the unaudited financial statements appearing elsewhere in this Report and the Company’s audited financial statements for the fiscal year ended December 31, 2021, as filed with the SEC in its Annual Report on Form 10-K on March 11, 2022, along with the accompanying notes. As used in this Quarterly Report, the terms “we,” “us,” “our” and the “Company” means Qrons Inc.

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 and has outsourced 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.

Plan of Operations

We are an innovative biotechnology company dedicated to developing biotech products, treatments and technologies that create a platform to combat neuronal diseases. We seek to engage in strategic arrangements with companies and institutions that are developing breakthrough technologies in the fields of artificial intelligence and machine learning, molecular biology, stem cells and tissue engineering, for deployment in the fight against neuronal diseases. Our search is focused on researchers based in Israel, a country which is world-renowned for biotech innovations.

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, engineer mesenchymal stem cells (“MSCs”), 3D printable implant, smart materials and a novel delivery system and has two product candidates for treating penetrating and non-penetrating (concussion-like) traumatic brain injuries, both integrating proprietary, anti-brain inflammation synthetic hydrogel and modified MSCs.

As a result of the Company's multidiscipline research effort in the field of supramolecular and polymeric materials chemistry and neuronal tissue engineering, on April 3, 2022, the Company filed a US provisional patent application for inventions of therapeutic polypseudorotaxane hydrogels, thereby providing the Company with the option to, in the future, seek protection for these inventions globally. The patent application relates generally to the treatment of pathological central nervous system conditions such as traumatic injury or neurodegenerative disease and the applications of uses of hydrogels in the treatment of such conditions.

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

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Results of Operations

Three Months Ended June 30, 2022 and June 30, 2021

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 net income of $71,672 in the three months ended June 30, 2022 compared to net income of $34,574 in the three months ended June 30, 2021, as follows:

	Three Months ended
	June 30,
	2022			2021

Net sales	$	-		$	-

Operating expenses:
Research and development expenses		8,414			11,350
Professional fees		9,039			8,300
General and administrative expenses		13,611			23,148
Total operating expenses		31,064			42,798

Income (loss) from operations		(31,064	)		(42,798	)

Other income (expense)
Interest expense		(27,914	)		(111,758	)
Change in fair market value of derivative liabilities		130,650			189,130
Total other income (expense)		102,736			77,372

Net income (loss)	$	71,672		$	34,574

Operating Expenses

Total operating expenses for the three months ended June 30, 2022 were $31,064 compared to total operating expenses of $42,798 for the three months ended June 30, 2021. The decrease in operating expenses during the three months ended June 30, 2022 is due to an decrease in general and administrative fees from $23,148 for the three months ended June 30, 2021 to $13,611 for the three months ended June 30, 2022, as well as a decrease in research and development expenses from $11,350 for the three months ended June 30, 2021 to $8,414 for the three months ended June 30, 2022, offset by a small increase in professional fees from $8,300 during the three months ended June 30, 2021 to $9,039 for the three months ended June 30, 2022. During the three months ended June 30, 2021, the Company incurred $11,350 of research and development expenses which included service fees related to certain research and development agreements of $3,100 and technology licensing fees of $8,250 as compared to $8,414 in research and development fees for the three months ended June 30, 2022 which included licensing fees of $6,250 and software license and equipment costs of $2,164. The decrease in general and administrative fees for the three months ended June 30, 2022 is due to a decrease in branding and marketing expenses in the three month period ended June 30, 2022.

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Other Income (Expense)

Other income in the three months ended June 30, 2022 was $102,736, which included an increase of $130,650 as a result of the change in value of derivative liabilities, offset by interest expense of $27,914 which is comprised of accretion of convertible notes of $24,024 and accrued interest on convertible notes payable of $3,890. Other income in the three months ended June 30, 2021 was $77,372, which included an increase of $189,130 as a result of the change in value of derivative liabilities, and interest expense of $111,758 which is comprised of accretion of convertible notes of $13,657, a day 1 loss on the valuation of convertible notes of $94,332 and accrued interest on convertible notes payable of $3,769.

Six Months Ended June 30, 2022 and June 30, 2021

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 $192,456 in the six months ended June 30, 2022 compared to $200,735 in the six months ended June 30, 2021, as follows:

	For the Six Months Ended
	June 30,
	2022			2021

Net sales	$	-		$	-

Operating expenses:
Research and development expenses		17,346			23,186
Professional fees		53,905			23,940
General and administrative expenses		23,369			34,035
Total operating expenses		94,620			81,161

Income (loss) from operations		(94,620	)		(81,161	)

Other income (expense)
Interest expense		(62,531	)		(122,744	)
Change in fair market value of derivative liabilities		(35,305	)		3,170
Total other income (expense)		(97,836	)		(119,574	)

Net (loss)	$	(192,456	)	$	(200,735	)

Operating Expenses

Total operating expenses for the six months ended June 30, 2022 were $94,620 compared to total operating expenses of $81,161 for the six months ended June 30, 2021. The increase in operating expenses during the six months ended June 30, 2022 is due to a substantial increase in professional fees from $23,940 in the six months ended June 30, 2021 to $53,905 in the six months ended June 30, 2022 due to an increase in legal and accounting fees in connection with the Company’s filing of a registration statement and prospectus in the six months ended June 30, 2022, offset by a decrease in research and development activities and general and administrative expenses. During the six months ended June 30, 2022 the Company incurred $17,346 of research and development expenses which included service fees related to certain research and development agreements of $4,327, technology licensing fees of $12,500 and purchases of lab supplies and equipment of $519 as compared to $23,186 of research and development expenses which included service fees related to certain research and development agreements of $6,200, technology licensing fees of $16,500, and purchases of lab supplies and equipment of $486 in the six months ended June 30, 2021. The decrease in general and administrative fees for the three months ended June 30, 2022 from $34,035 for the six months ended June 30, 2021 to $23,369 in the six months ended June 30, 2022 is due to a decrease in branding and marketing expenses.

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Other Income (Expense)

Other expense in the six months ended June 30, 2022 was $97,836 and included a loss of $35,305 as a result of the change in value of derivative liabilities and interest expense of $62,531, which is comprised of accretion of convertible notes of $53,315 and accrued interest on convertible notes of $9,216. Other expense in the six months ended June 30, 2021 was $119,574, which included an increase of $3,170 as a result of the change in value of derivative liabilities and interest expense of $122,744, which is comprised of accretion of convertible notes of $22,490, a day 1 loss on the valuation of a convertible note of $94,332 and accrued interest on convertible notes payable of $5,922.

Operating Activities

Net cash used in operating activities was $76,711 for the six months ended June 30, 2022 compared to $73,249 for the six months ended June 30, 2021. Net cash used in operating activities for the six months ended June 30, 2022 was primarily the result of net loss, offset by non-cash items, accretion of debt discount of $53,315, an increase in derivative liabilities of $35,305 and changes to operating assets and liabilities, including an increase to accounts payable of $26,545 and an increase to accounts payable-related parties of $580. Net cash used in operating activities for the six months ended June 30, 2021 was primarily the result of net loss, offset by non-cash items, including compensation in the form of stock options for research and development expense totaling $6,200, accretion of debt discount of $22,490, a decrease in derivative liabilities of $3,170, a day 1 loss on certain convertible notes of $94,332 and changes to operating assets and liabilities, including an increase to prepaid expenses of $4,000, an increase to accounts payable of $14,141 and a decrease to accounts payable-related parties of $2,507.

Investing Activities

There were no investing activities during the six months ended June 30, 2022 and 2021.

Financing Activities

Net cash provided by financing activities was $100,000 for the six months ended June 30, 2021 compared to $50,000 for the six months ended June 30, 2022. During the six months ended June 30, 2021, the Company received net proceeds of $100,000 from a convertible note. During the six months ended June 30, 2022 the Company received $50,000 in proceeds from a related party in the form of unsecured advances.

Liquidity and Capital Resources

As of June 30, 2022, we had cash of $8,354. 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 successful development of product candidates, which includes clinical trials, FDA approval, demonstration of effectiveness sufficient to generate commercial orders by customers, establishing production capabilities 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 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.

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As we continue to monitor the 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. However, without additional financing, we do not believe our resources will be sufficient to meet our operating and capital needs beyond the third quarter of 2022.

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, 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 December 31, 2021 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 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.

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 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, as described in Note 9, Stock Plan.

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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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company and are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, as of June 30, 2022, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, based on the material weaknesses discussed below, our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Act Commission’s rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our internal controls and procedures are not effective for the following reasons: (i) there is an inadequate segregation of duties consistent with control objectives as management is comprised of only two persons, one of which is the Company’s principal executive officer and principal financial officer and, (ii) the Company does not have a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.

In order to mitigate the foregoing material weakness, we have engaged an outside accounting consultant with significant experience in the preparation of financial statements in conformity with GAAP to assist us in the preparation of our financial statements to ensure that these financial statements are prepared in conformity with GAAP. We will continue to monitor the effectiveness of this action and make any changes that our management deems appropriate.

We would need to hire additional staff to provide greater segregation of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management will continue to reassess this matter to determine whether improvement in segregation of duty is feasible. In addition, we would need to expand our board to include independent members.

Going forward, we intend to evaluate our processes and procedures and, where practicable and resources permit, implement changes in order to have more effective controls over financial reporting.

Changes in Internal Control over Financial Reporting

During the period covered by this report, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

ITEM 1A. RISK FACTORS

The Company is a smaller reporting company and is not required to provide this information.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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 Current Report on Form 8-K filed by the Company.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

None

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ITEM 6. EXHIBITS

Exhibit Number		Exhibit
31		Certification of the Principal Executive Officer and Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certification of the Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
101.INS		XBRL INSTANCE DOCUMENT
101.SCH		XBRL TAXONOMY EXTENSION SCHEMA
101.CAL		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF		XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB		XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	QRONS INC.

Date: August 15, 2022	By:	/s/ Jonah Meer
		Jonah Meer
		Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer)

qron_ex31.htm

EXHIBIT 31

Certification Pursuant to pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

I, Jonah Meer (Principal Executive Officer and Principal Financial and Accounting Officer), certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Qrons Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

As the registrant’s certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15 (f) for the registrant and I have:

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.

As the registrant’s certifying officer, I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 15, 2022

By:

/s/ Jonah Meer

Jonah Meer

Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer)

qron_ex32.htm

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Jonah Meer, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer) of Qrons Inc. (the “Company”), certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350) that, to his knowledge, the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (the “Report”):

(1)

fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Jonah Meer

Jonah Meer

Chief Executive Officer and Chief Financial Officer

(Principal Executive Officer and Principal Financial and Accounting Officer)

Date: August 15, 2022

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