UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2017
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______ to ______
 
Commission File Number: 000-55800
 
QRONS INC.
(Exact name of registrant as specified in its charter)
 
W yoming
 
81-3623646
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
777 Brickell Avenue, Suite 500, Miami, Florida 33131
(Address of principal executive office)
 
Registrant's telephone number, including area code: (786)-620-2140
 
Securities registered pursuant to Section 12(b) of the Act:
None
 
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.0001 par value
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
 
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 13(a) of the Exchange Act. Yes     No 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No
 
There was no trading market for the registrant's common stock as of June 30, 2017, the last business day of the registrant's most recently completed second fiscal quarter.  Therefore, there was no aggregate market value of the voting and non-voting common equity as of such date.
 
As of February 26, 2018, there were 12,729,125 shares of the registrant's common stock outstanding. 

 
TABLE OF CONTENTS
 
Item No.
 
 
 
Page No.
 
PART I
1
 
Business
 
3
 
1A
 
Risk Factors
 
7
 
1B
 
Unresolved Staff Comments
 
7
 
2
 
Properties
 
7
 
3
 
Legal Proceedings
 
7
 
4
 
Mine Safety Disclosures
 
7
 
 
 
 
 
 
 
PART II
5
 
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
8
 
6
 
Selected Financial Data
 
9
 
7
 
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
9
 
7A
 
Quantitative and Qualitative Disclosures About Market Risk
 
12
 
8
 
Financial Statements and Supplementary Data
 
13
 
9
 
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
14
 
9A
 
Controls and Procedures
 
14
 
9B
 
Other Information
 
14
 
 
 
 
 
 
 
PART III
10
 
Directors, Executive Officers and Corporate Governance
 
15
 
11
 
Executive Compensation
 
17
 
12
 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
18
 
13
 
Certain Relationships and Related Transactions, and Director Independence
 
18
 
14
 
Principal Accounting Fees and Services
 
19
 
 
 
 
 
 
 
PART IV
15
 
Exhibits, Financial Statement Schedules
 
20
 
 
 
 
 
 
 
 
 
SIGNATURES
 
21
 
 
2

 
 
PART I
 
Item 1. Business
 
As used in this Annual Report on Form 10-K (this "Report"), references to the "Company," the "registrant," "we," "our" or "us" refer to BioLabMart Inc. prior to August 8, 2017 and Qrons Inc. since August 8, 2017, unless the context otherwise indicates.
 
Forward-Looking Statements
 
This Report contains predictions, estimates and other forward-looking statements that relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology.
 
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our management's beliefs and assumptions only as of the date of this Annual Report. You should read this Report and the documents that we have filed as exhibits to this Report completely and with the understanding that our actual future results may be materially different from what we expect.
 
All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by federal securities and any other applicable law.
 
Overview
 
We were incorporated under the laws of the State of Wyoming on August 22, 2016 as BioLabMart Inc. and changed our name to Qrons Inc. on August 8, 2017.

We are a preclinical stage biotechnology company developing advanced cell-based solutions to combat neuronal injuries with a laser focus on traumatic brain injuries. The technology could potentially treat a wide range of neurodegenerative diseases. Our treatment integrates proprietary, engineered mesenchymal stem cells ("MSC"s), 3D printable scaffolding, smart materials and a novel delivery system.

The Company raised an aggregate of $281,000 between November 2, 2016 and January 27, 2017 from 37 accredited investors and $500,000 in January 2018 from an accredited investor in private placement offerings under Regulation D and Regulation S under the Securities Act of 1933, respectively.

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

The Company's common stock was approved by the Financial Industry Regulatory Authority ("FINRA") for quotation on the OTC pink sheets under the symbol "BLMB" as of July 3, 2017. On July 6, 2017, the Company's board of directors and shareholders approved an amendment to the Company's Articles of Incorporation changing the name of the Company from "BioLabMart Inc." to "Qrons Inc. The Secretary of State of the State of Wyoming approved the Company's Amendment to its Articles of Amendment reflecting the change of the Company's name from BioLabMart Inc. to Qrons Inc., effective August 8, 2017.  FINRA announced the Company's name change to Qrons Inc. on its Daily List on August 9, 2017. The new name and symbol change to "QRON" for the OTC market became effective on August 10, 2017.

License Agreement with Ariel

On December 14, 2016, the Company entered into a license and research funding agreement ("License Agreement") with Ariel University R&D Co., Ltd., ("Ariel"), a wholly owned subsidiary of Ariel University of Samaria, based in Ariel, Israel ("AU"). Under the terms of the License Agreement, the Company paid Ariel $100,000 to fund and further research for 12 months (with an option to extend such research financing and research period) by Professor Danny Baranes, the principal investigator and his research team relating to cell treatment with conditioned medium for neuronal tissue regeneration and repair. In consideration therefor and for other payments under the License Agreement, the Company received an exclusive worldwide royalty-bearing license in Ariel patents and know-how to develop and commercialize products based on or incorporating conditioned medium for neuronal tissue regeneration and/or repair, resulting from Ariel's research or technology or the Company's research funding (the "Products").

Under the License Agreement, the Company is required to use its best efforts to develop and commercialize the Products in accordance with development milestones set forth in the Agreement.  The License Agreement provides that the Company make royalty payments of 4% of net sales (which may be increased if any patent is challenged by the Company or its affiliates or decreased if there is a valid patent claim) within 30 days of each calendar quarter for the later of (i) 15 years from the date of the first sale in a country and (ii) until the last to expire of Ariel's patents in a country. The Company may provide a sublicense for cash in a bonafide arm's length transaction. The Company agreed to pay Ariel 15% of any consideration received by the Company in connection with any such sublicense (except royalties on net sales) within 30 days of receipt. The Company is also required to make milestone payments of (i) $130,000 upon the successful completion of clinical U.S. Food and Drug Administration ("FDA") Phase II trials and (ii) $390,000 upon the successful completion of clinical FDA Phase III trials, within 6 months of completion. Any late payments under the License Agreement will bear interest at 3% plus LIBOR.

 Upon the earliest occurrence of the Company's (or any affiliates of the Company): (i) underwritten public offering with proceeds of at least $25 million, (ii) consolidation, merger or reorganization, or (iii) sale of all or substantially all of its shares or assets, the Company is obligated to issue to Ariel an immediately exercisable warrant for that number of shares equal to 4% of (a) the issued and outstanding shares of the Company at the time of issuance. The License Agreement provides that the Company is obligated, at its expense, to register shares exercised pursuant to the warrant by Ariel within 6 months of a request by Ariel by either "piggyback" or a demand registration.

Patent expenses incurred by Ariel under the License Agreement will be reimbursed by the Company. Any infringement action instituted by a party to the License Agreement that results in a recovery in excess of such party's expenses will belong 85% to the party bringing such action and 15% to the other party.

Under the License Agreement, at the Company's discretion, Ariel will transfer its technology to the Company upon the earliest to occur of (i) a successful Phase II FDA trial of a product developed under the Agreement; (ii) the acquisition of the Company by a third party of at least 45% of the share capital of the Company in a bonafide transaction valued at least at $100 million and the assumption of the License Agreement by such third party, or (iii) Ariel's written consent.
3


 The License Agreement provides that each of the Company and Ariel are required to keep the other party's proprietary information confidential for the longer of (i) the term of the License Agreement and seven years from the date of disclosure. The License Agreement shall continue in effect until all of the Company's payment obligations under the Agreement have been made. After the expiration of the License Agreement, the Company will have a non-exclusive worldwide license to the Ariel technology. The Company can terminate the License Agreement for any reason upon 60 days prior written notice in which event Ariel will be required to reimburse the Company for any unused research funds. The License Agreement will terminate upon a material breach of either party that is not cured in 30 days from notice thereof, or by bankruptcy, dissolution, liquidation or the discontinuance of business. Ariel may immediately terminate the License Agreement upon a challenge to its patent validity by the Company or an affiliate of the Company. Without Ariel's prior written consent, the Company may not assign the License Agreement except to an affiliate or to a successor entity in a merger or acquisition provided the assignee assumes the License Agreement obligations.

The Company and Ariel Scientific Innovations Ltd., formerly known as Ariel University R&D Co., Ltd. entered into Addendum #1, effective December 13, 2017 (the "Addendum") to the License Agreement pursuant to which Ariel was permitted to exercise a portion of the warrant granted pursuant to the License Agreement. On December 13, 2017, the Company issued 119,950 shares of common stock to Ariel, representing 1% of the issued and outstanding shares of the Company on such date. The right to the balance of the shares subject to the warrant remains subject to the terms of the License Agreement and the occurrence of an Exit Event (as described in the License Agreement). In addition, the Addendum provides that Ariel may not request a demand registration until the balance of the shares subject to the warrant is exercised.

The issuance of shares upon exercise of the balance of the warrant in the future will result in dilution to the interests of other stockholders.

Services Agreement with Ariel

In lieu of extending the research financing and research period under the License Agreement beyond the initial 12 months, on December 14, 2017, the Company entered into a 12-month services agreement with Ariel (the "Services Agreement") pursuant to which a team at Ariel University under the direction of Prof. Danny Baranes will conduct molecular biology research activities involving the testing of scaffold materials for the Company. If Prof. Baranes ceases to provide services, the Company must be notified and a replacement acceptable to the Company must be found within 30 days or the Company may terminate the Services Agreement. As compensation for such services, the Company paid Ariel (i) $17,250 on December 192017 and is obligated to pay Ariel an additional $17,250 by May 1, 2018.

The Services Agreement may be terminated by a non-breaching party upon a material breach that is not cured within 30 days by the other party. The Services Agreement may also be terminated by the Company upon thirty days' written notice to Ariel. Ariel must keep confidential information of the Company confidential for five years after the term of the Services Agreement.

Option Agreement with Dartmouth

On October 17, 2017, the Company entered into an option agreement (the "Option Agreement") with the Trustees of Dartmouth College ("Dartmouth") which provides for, among other things, the grant to the Company of a one-year exclusive option to negotiate a worldwide, royalty bearing, exclusive license with Dartmouth for 3D printable materials in the field of human and animal health. During the option period, the Company agreed to use all commercially reasonable resources to evaluate the intellectual property and provide quarterly milestone reports and a commercialization plan upon exercise of the option. Pursuant to the Option Agreement, the Company agreed to finance the prosecution of patents by Dartmouth to protect its intellectual property.  Further, the Agreement provides for the payment by the Company of an option fee and certain license fees and royalty payments based upon the Company's product sales, as part of a final negotiated license agreement.
Business Description
Traumatic brain injury ("TBI") is a severe form of neuronal damage caused by powerful head impacts. Patients can experience transient symptoms, profound disability or death . TBI is generally caused by violent acts, motor vehicle accidents, falls and sports-related concussions.
TBI can be caused by penetrating injuries, in which an object pierces the skull and directly damages the brain, or non-penetrating blows that push the brain against the skull, inflicting neuronal damage
Neuronal cells interconnect to create the gigantic network that drives core brain functions. Unfortunately, neurons rarely regenerate after an injury. As a result, following a severe brain injury, neural connectivity is lost and brain function compromised.
TBI patients can become blind, deaf, paralyzed and experience cognitive and psychological issues. There is also evidence that TBI patients may be more likely to develop Alzheimer's, Huntington's, Parkinson's and other neurodegenerative diseases.
There are no effective treatments to help patients regain function of which we are aware. Current treatments focus on reducing secondary injuries. They can partially reduce further damage but do little or nothing to heal the brain. Most strategies are rehabilitative, helping patients adjust to their impaired cognitive state by creating workarounds, such as taking notes to compensate for lost short-term memory.
Our Mission and Principal Product

Our mission is to develop and license novel stem cell solutions and systems to repair and regenerate neuronal damage. We are focused on finding a treatment for TBI. The Company through its license and research funding agreement ("License Agreement") with Ariel University R&D Co., Ltd., ("Ariel"), a wholly owned subsidiary of Ariel University based in Ariel, Israel ("AU") is working on identifying product candidate solutions. The Company has also been conducting a research study with Professor Chenfeng Ke of the Chemistry Department at Dartmouth College to develop innovative 3D printable, biocompatible advanced materials and stem cell delivery techniques to treat TBI. The Company is working to produce and deliver a proprietary modified stem cell system that would be implanted at the target site and will induce neuronal recovery and/or slowdown of degenerative damage.  Research under the License Agreement commenced upon its execution and is currently on course with internally established timelines.
To date, we have established our Implant Team which has performed several in-vitro and in-vivo animal studies of some basic material modifications to our proprietary TBI treating implant.
4

We have also developed what we believe to be is a new and innovative TBI efficacy measurement model by which we evaluate the effect of our implant on a broad spectra of cellular and molecular expressions, typical to TBI injuries.
We are using the model to optimize our implant and evaluate the TBI treating efficacy of modifications. Current study results enable us to design and execute further chemical and genetic modifications to the implant and MSC lines. Our joint study with Dartmouth College is progressing and we have developed new lab techniques to modify, measure and integrate our basic material and MSCs. In addition to developing and commercializing a product for the treatment of TBI, as our research progresses our goal is to ensure that our product development has intellectual property protection and we develop a solid patent portfolio.
We believe that to repair TBIs each injured site must receive a continuous flow of neuro-protective and neuro-regenerative agents in order to prevent further neuronal damage and have the potential to stimulate neurons to migrate to the injury site, regrow axonal processes and regenerate brain tissue.

There can be no assurance however that the research in which we are engaged will progress or be successful in achieving its goals.

Our Market

Our market is the treatment of TBI. According to the Center for Disease Control and Prevention (the "CDC"), TBI is a major cause of death and disability in the United States and TBI contributes to about 30% of all injury deaths According to the CDC, every day, 153 people in the United States die from injuries that include TBI. In 2013, about 2.8 million TBI-related emergency department ("ED") visits, hospitalizations, and deaths occurred in the United States. TBI contributed to the deaths of nearly 50,000 people. TBI was a diagnosis in more than 282,000 hospitalizations and 2.5 million ED visits.  These consisted of TBI alone or TBI in combination with other injuries.   CDC data indicates that the economic cost of TBI in 2010, including direct and indirect medical costs, is estimated to be approximately  $76.5 billion.

Market Competition

The biotechnology and pharmaceutical industries are characterized by intense and rapidly changing competition to develop new technologies and proprietary products, and any product candidates that we successfully develop and commercialize will have to compete with existing therapies and new therapies that may become available in the future. We believe that our novel approaches and scientific expertise will enable us  to produce and deliver a treatment by integrating proprietary, engineered mesenchymal stem cells ("MSC"s), 3D printable scaffolding, smart materials and a novel delivery system to reduce neuronal loss and functional   impairment and possibly regenerate brain tissue and function for TBI patients which will provide us with competitive advantages. We face potential competition from many different sources, including larger and better-funded pharmaceutical, specialty pharmaceutical and biotechnology companies, as well as from academic institutions and governmental agencies and public and private research institutions that may develop potentially competitive products or technologies. To the extent that we develop product candidates for indications with larger patient populations, we expect to experience particularly intense competition from larger and better funded pharmaceutical and biotechnology companies. Any product candidate that we may develop will compete with such larger and better funded pharmaceutical and biotechnology companies, established drugs or solutions and new drug candidates being developed by others, that may currently be in clinical trials.

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

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

Licensed Intellectual Property

Pursuant to the License Agreement, the Company has an exclusive, worldwide, royalty bearing license for the sole purpose of developing, manufacturing, using, offering for sale and selling the Products. Ariel has filed the following provisional patent application:

U.S. Patent
Application No.
Application
Filing Date
 
Status
U.S.
Patent No.
 
Issue Date
 
Subject Matter
62/617,310
(Provisional)
1/15/2018
Pending
N/A
N/A
Methods, compositions and devices related to neural cell development
 
A U.S. provisional patent application provides the means to establish an early effective filing date for a later filed nonprovisional patent application.

As our research progresses we or Ariel intend to file for additional patents. Additionally, we expect to file for trademarks.

Pursuant to the Option Agreement with Dartmouth entered into on October 17, 2017, the Company has a one-year exclusive option to negotiate a worldwide, royalty bearing, exclusive license with Dartmouth for 3D printable materials in the field of human and animal health. During the option period, the Company agreed to use all commercially reasonable resources to evaluate the intellectual property and provide quarterly milestone reports and a commercialization plan upon exercise of the option. Pursuant to the Option Agreement, the Company agreed to finance the prosecution of patents by Dartmouth to protect its intellectual property.  Further, the Agreement provides for the payment by the Company of an option fee and certain license fees and royalty payments based upon the Company's product sales, as part of a final negotiated license agreement.

Dartmouth filed a utility patent application with the U.S. Patent Office on November 15, 2017 for Mechanically Interlocked Molecules-Based Materials for 3-D printing, which the Company financed by reimbursing Dartmouth for the patent filing costs.
5


Government Regulation

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

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

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

FDA Review, Clearance and Approval Process

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

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

Clinical Trials

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

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

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

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

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

If a drug survives the clinical trials, an NDA is submitted to the FDA. An NDA contains all the preclinical and clinical information obtained during the testing phase. The application contains information on the chemical makeup and manufacturing process, pharmacology and toxicity of the compound, human pharmacokinetics, results of the clinical trials, and proposed labeling. An NDA can include experience with the medication from outside the United States as well as external studies related to the drug.
6


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

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

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

Employees
 
As of February 26, 2018, we had one full-time employee. Our two executive officers, Jonah Meer and Ido Merfeld, who are our sole officers and directors, are responsible for the day-to-day operations of our company. We currently outsource all professional services to third parties in an effort to maintain lower operational costs.

Research and Development
 
During the years ended December 31, 2017 and 2016, we incurred research and development costs of $1,179,777 and $156,000, respectively.
 
Item 1A: Risk Factors
 
As a smaller reporting company, we are not required to provide the information required by this Item.
 
Item 1B. Unresolved Staff Comments
 
Not applicable.
 
Item 2. Properties
The Company entered into a month to month lease agreement for office space at 777 Brickell Avenue, Suite 500, Miami, Florida 33131 for $70 per month. The Company believes that this space is adequate for its current needs and the lease provides it with the flexibility and ability to expand when necessary.
Item 3. Legal Proceedings
 
There are no pending legal proceedings to which we are a party or in which any director, officer or affiliate of ours, any owner of record or beneficially of more than 5% of any class of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us.
 
Item 4. Mine Safety Disclosures
 
Not applicable.
7

 
 
PART II
 
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
Market Information  
Our common stock has been quoted on the OTC pink sheets under the symbol "BLMB" since July 3, 2017 and since August 10, 2017 under the symbol "QRON". Prior to July 3, 2017, there was no trading market for our common stock.
The following table sets forth the high and low sales prices as reported on the OTC pink sheets. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.
2017
 
High
 
 
Low
 
Third Quarter
 
$
3.00
 
 
$
1.00
 
Fourth Quarter
 
$
3.00
 
 
$
2.80
 

The last reported sales price of our common stock on the OTC pink sheets on February 15, 2018, the most recent trading date, was $2.70.
As of February 26, 2018, there were 41 stockholders of record of our common stock.

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

Securities Authorized for Issuance under Equity Compensation Plans
 
The following table provides information regarding our equity compensation plans as of December 31, 2017:
 
Equity Compensation Plan Information
 
Plan category
 
Number of securities to be issued upon exercise of outstanding options, warrants and rights
 
 
Weighted-average exercise price of outstanding options, warrants and rights
 
 
Number of securities remaining available for future issuance under equity compensation plans
 
Equity compensation plans approved by security holders
 
 
-
 
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity compensation plans not approved by security holders (1)
 
 
960,00
(2)
 
$
1.93
 
 
 
-
 
______________ 
(1) On December 14, 2016, the Board adopted the Plan as described in Item 10 of this Annual Report on Form 10-K. 10 million shares are reserved for issuance under the Plan.
(2) Represents (i) five-year options granted to each of Jonah Meer and Ido Meerfeld to purchase 300,000 shares of common stock at $2.00 per share which are exercisable commencing December 4, 2018, (ii) three-year options to purchase an aggregate of 20,000 shares of common stock at $2.00 per share granted to each of Motti Ratmansky and Albert Pinhasov, each a Science Advisor, (iii) three-year options to purchase an aggregate of 30,000 shares of common stock at $0.40 per share to Yitshak Francis, a Science Advisor, and (iv) awards of 145,000 shares of common stock to each of Danny Baranes and Liat Hammer, each a Science Advisor, which vest on December 18, 2018, as set forth in Note 7 to the financial statements under Item 8 of this Annual Report on Form 10-K.
 
8


Recent Sales of Unregistered Securities
 
On January 27, 2017, the Company sold an aggregate of 1,124,000 shares of its common stock at a purchase price of $0.25 per share to 37 accredited investors for aggregate gross proceeds of $281,000 in a private offering under Regulation D of the Securities Act of 1933, as amended. For every two shares of common stock purchased, an investor received a warrant to purchase one share of common stock at an exercise price of $0.40 per share. The warrant was immediately exercisable and expires on December 31, 2019.

On July 11, 2017, the Company issued 8,000 shares of common stock and a warrant to purchase 4,000 shares of common stock to an accredited investor for gross proceeds of $2,000. On November 1, 2017, such accredited investor exercised the warrant on a cashless basis and was issued 3,429 shares of common stock by the Company. .

The Company and Ariel Scientific Innovations Ltd., formerly known as Ariel University R&D Co., Ltd. entered into Addendum #1, effective December 13, 2017 (the "Addendum") to the License Agreement pursuant to which Ariel was permitted to exercise a portion of the warrant granted pursuant to the License Agreement. On December 13, 2017, the Company issued 119,950 shares of common stock to Ariel, representing 1% of the issued and outstanding shares of the Company on such date.

On December 14, 2017, the Company issued 145,000 shares of its common stock to each of Professor Danny Baranes and Dr. Liat Hammer, the Company's Scientific Advisors, for advisory services provided to the Company.

None of the above issuances involved any underwriters, underwriting discounts or commissions, or any public offering and we believe are exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof and/or Regulation D promulgated thereunder.
 
Item 6. Selected Financial Data
 
As a smaller reporting company, we are not required to provide the information required by this Item. 
 
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
 
Our Management's Discussion and Analysis contains 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. These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, we do not intend to update any of the forward-looking statements to conform these statements to actual results, later events or circumstances or to reflect the occurrence of unanticipated events.

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

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

Plan of Operation

To date, we have not yet developed any candidate for product development nor generated any revenue from the sales of products or services.

In the next 12 months, we plan on establishing additional research teams with each team focusing on a specific area of research in conformance with our multidisciplinary approach in  integrating the biological, chemical and mechanical challenges of treating traumatic brain injury to enable the development of what we believe to be our novel stem cell delivery system, via an implantable product.

We also plan to further develop our proprietary, neuro-regenerative mesenchymal stem cell lines as it relates to our product candidate and to continue working with Dartmouth College in our development of innovative 3D printable biocompatible advanced materials and stem cell delivery techniques.

On January 9, 2017, Ariel filed a US provisional patent application related to our neural cell development research. A U.S. provisional patent application provides the means to establish an early effective filing date for a later filed non-provisional patent application. It does not mature into an issued patent unless the applicant files a regular non-provisional patent application within one year. On January 22, 2018, Ariel refiled the provisional patent application. Subject to positive efficacy findings, we currently intend to file for a non-provisional application within one year of the filing of the refiled provisional application.

As our research progresses if and when we achieve functional supporting results, we or Ariel intend to file for additional patents. Under the License Agreement, Ariel will be responsible for the preparation, filing, prosecution and protection of the patents. Such preparation shall be done in consultation with the Company, provided expenses in excess of $1,000 will require Company pre-approval. The Company shall reimburse Ariel for all documented patent-related expenses. We currently estimate the cost of such patent preparation and filing to be approximately $7,000 which we intend to fund with the Company's operating capital.

We will continue exploring sources of additional debt and equity financings as well as available grants.

There is substantial doubt that we can continue as an on-going business after the next twelve months unless we obtain additional capital to pay our expenditures. We do not currently have sufficient resources to accomplish all of the conditions necessary for us to generate revenue.
9


Results of Operations

Revenue

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

Operating Expenses

For the years ended December 31, 2017 and December 31, 2016 (from inception on August 22, 2016):

 
 
For the Year ended December 31,
 
   
2017
   
2016
 
Operating expenses:
           
Research and development expenses
   
1,179,777
     
156,000
 
Professional fees
   
22,429
     
2,792
 
General and administrative expenses
   
200,939
     
6,578
 
Total operating expenses
   
1,403,145
     
165,370
 
 
Total operating expenses for the year ended December 31, 2017 were $1,403,145 compared to $169,240 for the year ended December 31, 2016. Operating expenses for the year ended December 31, 2017 consisted of research and development expenses of $1,179,777, which included  $1,147,860  in stock based compensation for stock awards issued to certain of our Scientific Advisors and the value of milestone stock awards issued to Ariel in 2017, as compared to operating expenses for the year ended December 31, 2016 which consisted of  research and development expenses of $56,000 for stock based compensation for stock awards issued to certain of our Scientific Advisors. Professional fees totaled $22,429 for the year ended December 31, 2017, as compared to professional fees of $2,792 for the year ended December 31, 2016, which consisted primarily of legal and accounting fees. General and administrative expenses totaled $200,939 for the year ended December 31, 2017 as compared to $6,578 for the year ended December 31, 2016. General and administrative expenses for the year ended December 31, 2017 consisted of $135,529 in stock based compensation associated with the issuance of stock options to certain members of our Scientific Advisory board as well as two officers, and advertising and marketing fees of $28,481, as well as other general office expenses.   General and administrative costs for the year ended December 31, 2016 consisted primarily of general office expenses and a one-time cost related to the issuance of preferred stock to our two directors of $2,598.

Other expenses

Other expenses for the year ended December 31, 2017 were $20,295 compared to $3,870 for the year ended December 31, 2016. Included in other expenses for the year ended December 31, 2017 are accrued interest expense on the Company's convertible notes of $1,124 and accretion of the debt discount related thereto totaling $13,082, as well as the loss on the associated derivative liability over the period of $6,090. For the year ended December 31, 2016 the Company recorded accrued interest on its convertible notes of $287 and accretion of the debt discount related thereto of $3,583 with no such loss on the change in the derivative liability.
 
Statement of Cash Flows

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

 
 
For the Year ended December 31,
 
 
 
2017
   
2016
 
Net cash provided (used by) operating activities
   
(121,927
)
   
(106,772
)
Net cash provided from (used by) investing activities
   
-
     
-
 
Net cash provided from financing activities
   
24,452
     
262,014
 
Increase (decrease) in cash and cash equivalents
   
(97,475
)
   
155,242
 

During the year ended December 31, 2017, our net cash decreased by $97,475 as compared to an increase to net cash in fiscal 2016 of $155,242.
10


Cash Used in Operating Activities

Cash used in operating activities for the year ended December 31, 2017 totaled $121,927as compared to $106,772 for the year ended December 31, as a result of an increase in prepaid expenses and accounts payable, as compared to only a small increase to accounts payable for the year ended December 31, 2017.

Fiscal 2017 includes adjustments for various for non-cash items including stock awards issued to Scientific Advisory Board members of $812,000,  shares issued in respect of certain milestone events to our technology licensing partner valued at $335,860, stock options granted to officers and consultants totaling $135,029, accretion of the debt discount of $13,082 and a change in derivative liabilities of $6,090 compared to non cash reconciling adjustments in fiscal 2016 including the issuance of preferred stock to directors of $2,598, stock awards to Science Advisors of $56,000 and accretion of debt discount of $3,583.

Cash Provided by Investing Activities

There was no cash provided by investing activities for the years ended December 31, 2017 and December 31, 2016.

Cash Provided by Financing Activities

During the year ended December 31, 2017 financing activities provided cash of $24,452 which consisted of $32,000 in proceeds from private placements, $15,000 in proceeds from convertible notes, offset by financing costs of $22,548 associated with the filing of our registration statement on Form S-1.  During the year ended December 31, 2016, financing activities provided cash of $262,014 which consisted of proceeds of $251,000 from our private placement offering, proceeds of $10,000 received from the issuance of a convertible note, and proceeds of $1,014 from shares issued to our co-founders.

Liquidity and Capital Resources
As of December 31, 2017, we had cash of $57,767. 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 our potential product and generate revenue, including successful development of a product candidate, 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 currently expect to incur increasing operating expenses. We will require substantial additional funds for operations, the service of debt and toto fund our business objectives. We will have to continue to rely on equity and debt financing. There can be no assurance that financing, whether debt or equity, will always be available to us in the amount required at any particular time or for any particular period or, if available, that it can be obtained on terms favorable to us. While we secured financing in the amount of $500,000 in January 2018, without additional financing, we do not believe our resources will be sufficient to meet our operating and capital needs beyond the fourth quarter of 2018.
Off Balance Sheet Arrangements
 
We currently have no off-balance sheet arrangements. 

Critical Accounting Policies

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements.  Refer to Note 2 of the Audited Condensed Financial Statements included herein.
 
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 $1,179,777 for the year ended December 31, 2017, inclusive of stock-based compensation costs (2016 – $156,000).
 
Advertising and Marketing Costs:  Advertising and marketing costs are expensed as incurred. The Company incurred $28,481 in advertising and marketing costs during the year ended December 31, 2017.
Stock-Based Compensation and Other Share-Based Payments :   The expense attributable to the Company's directors is recognized over the period in which the amounts are earned and vested, and the expense attributable to the Company's non-employees is recognized when vested, as described in Note 7,  Stock Plan .
Warrants:  The Company accounts for common stock warrants in accordance with applicable accounting guidance provided in ASC Topic 815  "Derivatives and Hedging – Contracts in Entity's Own Equity"  (ASC Topic 815), as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement.  For warrants classified as equity instruments we apply the Black Scholes model.   Presently all warrants issued and outstanding are accounted for using the equity method.
11

Recent Accounting Pronouncements
Recent accounting pronouncements, other than below, issued by the FASB (including its EITF), the AICPA and the SEC did not or are not believed by management to have a material effect on the Company's present or future financial statements.

In August 2017, the FASB issued ASU 2017-12,  Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities  ("ASU 2017-12"). The objective of the ASU is to improve the financial reporting of hedging relationships in order to better portray the economic results of an entity's risk management activities in its financial statements and to make certain targeted improvements to simplify the application of hedge accounting guidance. ASU 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2017-12 on the Company's financial statements.

In May 2017, the FASB issued ASU 2017-09,  Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting.  The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The Company is currently evaluating the impact of ASU 2017-09 on the Company's financial statements.   

Item 7A. Quantitative and Qualitative Disclosures about Market Risk
 
As a smaller reporting company, we are not required to provide the information required by this Item.


12

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

 

 


Qrons Inc.
 
Index to Financial Statements
 
 
 
Page
Report of Independent Registered Public Accounting Firm
 
 F-1
Balance Sheets as of December 31, 2017 and 2016
 
 F-2
Condensed Statements of Operations for the years ended December 31, 2017 and 2016
 
 F-3
Condensed Statement of Changes in Stockholders' Equity (Deficit)
 
 F-4
Condensed Statements of Cash Flows for the years ended December 31, 2017 and 2016
 
 F-5
Notes to Financial Statements
 
 F-6 to F-17

 
13

 
To The Board of Directors and Stockholders of
Qrons Inc.

Opinion on the Financial Statements
We have audited the accompanying balance sheets of Qrons Inc. (the Company) as of December 31, 2017 and 2016, and the related statements of operations, stockholders' equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2017 and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2017 and 2016, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 3 to the financial statements, the Company has not generated revenues sufficient to cover operating expenses and will need additional capital to service its debt obligations.  These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/Pinnacle Accountancy Group of Utah
We have served as the Company's auditor since 2016
Farmington, Utah
February 28, 2018
 

F-1

QRONS INC.
BALANCE SHEETS

 
 
December 31,
2017
   
December 31,
2016
 
 
           
 
           
ASSETS
           
Current assets
           
Cash and cash equivalents
 
$
57,767
   
$
155,242
 
Prepaid expenses
   
15,812
     
-
 
Total current assets
   
73,579
     
155,242
 
 
               
TOTAL ASSETS
 
$
73,579
   
$
155,242
 
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
 
               
Current liabilities
               
Accounts payable and accrued liabilities
 
$
14,141
   
$
287
 
Accounts payable and accrued liabilities – related party
   
1,410
     
-
 
Convertible note – related party, net of debt discount
   
6,665
     
3,583
 
Derivative liabilities
   
31,090
     
-
 
Total current liabilities
   
53,306
     
3,870
 
 
               
Total liabilities
    53,306      
3,870
 
 
               
Stockholders' equity
               
Series A Preferred Shares: $0.001 par value, authorized 10,000; 2,000 shares issued and outstanding
   
2
     
2
 
Common stock, $0.0001 par value: shares authorized 100,000,000;  12,404,910 and 11,424,000 shares issued and outstanding at December 31, 2017 and 2016, respectively
   
1,240
     
1,142
 
Additional Paid-in Capital
   
1,611,711
     
319,468
 
Accumulated deficit
   
(1,592,680
)
   
(169,240
)
Total stockholder's equity
   
20,273
     
151,372
 
TOTAL LIABILITIES & EQUITY
 
$
73,579
   
$
155,242
 


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

 
F-2



QRONS INC.
CONDENSED STATEMENTS OF OPERATIONS

 

 
 
For the Year ended December 31,
 
 
 
2017
   
2016
 
Net sales
 
$
-
   
$
-
 
 
               
Operating expenses:
               
Research and development expenses
   
1,179,777
     
156,000
 
Professional fees
   
22,429
     
2,792
 
General and administrative expenses
   
200,939
     
6,578
 
Total operating expenses
   
1,403,145
     
165,370
 
 
               
Income (loss) from operations
   
(1,403,145
)
   
(165,370
)
 
               
Other Income (expense)
               
Interest expense
   
(14,205
)
   
(3,870
)
Change in derivative liabilities
   
(6,090
)
   
-
 
Other (expense)
   
(20,295
)
   
(3,870
)
 
               
Net (loss)
 
$
(1,423,440
)
 
$
(169,240
)
 
               
Net (loss) per common shares (basic and diluted)
 
$
(0.12
)
 
$
(0.02
)
 
               
Weighted average shares outstanding
               
Basic and diluted
   
11,657,791
     
10,406,779
 



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

F-3



QRONS INC.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

 
 
Series A Preferred Shares
   
Common Stock
   
Additional
Paid-in
   
Accumulated
   
Total
 
 
 
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
   
Equity
 
Balance, August 22, 2016
   
-
   
$
-
     
-
   
$
-
   
$
-
   
$
-
   
$
-
 
Issuance of common stock and Series A preferred shares
   
2,000
     
2
     
10,120,000
     
1,012
     
2,598
       -      
3,612
 
Issuance of common stock for private placement
   
-
     
-
     
1,004,000
     
100
     
250,900
      -      
251,000
 
Shares issued for stock awards
   
-
     
-
     
300,000
     
30
     
55,970
       -      
56,000
 
Beneficial conversion feature associated with convertible note
     -        -        -        -      
10,000
       -      
10,000
 
Net loss for the period
    -                -        -      -      
(169,240
)
   
(169,240
)
Balance, December 31, 2016
   
2,000
     
2
     
11,424,000
     
1,142
     
319,468
     
(169,240
)
   
151,372
 
Issuance of common stock for private placement
   
-
     
-
     
128,000
     
13
     
31,987
     
-
     
32,000
 
Financing costs associated with S-1
     -        -        -        -      
(22,548
)
     -      
(22,548
)
Warrants exercised associated with private placement
    -        -      
442,960
     
44
     
(44
)
     -      
-
 
Warrants exercised associated with License and Research Funding Agreement
     -        -      
119,950
     
12
     
335,848
       -      
335,860
 
Shares issued for stock awards
     -        -      
290,000
     
29
     
811,971
       -      
812,000
 
Stock option granted to officers
     -        -        -       -      
106,029
       -      
106,029
 
Stock option granted to non-employees
     -        -        -        -      
29,000
       -      
29,000
 
Net loss for the period
     -        -        -        -       -      
(1,423,440
)
   
( 1,423,44 0
)
Balance, December 31, 2017
   
2,000
   
$
2
     
12,404,910
   
$
1,240
   
$
1,611,711
   
$
(1,592,680
)
 
$
20,273
 




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

F-4



QRONS INC.
CONDENSED STATEMENTS  OF CASH FLOWS


 
 
For the Year ended December 31,
 
 
 
2017
   
2016
 
Cash Flows From Operating Activities
           
Net loss
 
$
(1,423,440
)
 
$
(169,240
)
Adjustments to reconcile net income to net cash provided from (used by) operating activities:
               
Preferred stock issued to Directors, valuation
   
-
     
2,598
 
Stock awards recorded as research and development expense
   
812,000
     
56,000
 
Shares issued as research and development expense
   
335,860
     
-
 
Stock option granted and recorded as advisory services
   
106,029
     
-
 
Stock option vested and recorded as consulting fees
   
29,000
     
-
 
Accretion of debt discount
   
13,082
     
3,583
 
Change in derivative liabilities
   
6,090
     
-
 
Changes in operating assets and liabilities:
           
-
 
Prepaid expenses
   
(15,812
)
     -  
Accounts payable and accrued liabilities
   
13,854
     
287
 
Accounts payable and accrued liabilities, related party
   
1,410
     
-
 
Net cash provided (used by) operating activities
   
(121,927
)
   
(106,772
)
 
           
-
 
Cash Flows From Investing Activities
               
Net cash provided from (used by) investing activities
   
-
     
-
 
 
               
Cash Flows From Financing Activities
               
Proceeds from issuance of common stock
   
-
     
1,012
 
Proceeds from sale of Series A preferred stock
   
-
     
2
 
Proceeds from private placement
   
32,000
     
251,000
 
Financing costs
   
(22,548
)
   
-
 
Proceeds from convertible note
   
15,000
     
10,000
 
Net cash provided from financing activities
   
24,452
     
262,014
 
 
               
Increase (decrease) in cash and cash equivalents
   
(97,475
)
   
155,242
 
 
               
Cash at beginning of period
   
155,242
     
-
 
Cash at end of period
   
57,767
     
155,242
 
 
               
SUPPLEMENTAL DISCLOSURES
               
Interest paid
 
$
-
   
$
-
 
Income taxes paid
 
$
-
   
$
-
 
                 
SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES
               
Derivative liability associated with debt discount
 
$
25,000
   
$
-
 

 

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

F-5



 
QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS

 
Note 1 – Description of Business and Basis of Presentation
Organization and nature of business:
Qrons Inc.  ("Qrons" and/or the "Company") was incorporated under the laws of the State of Wyoming on August 22, 2016 under the name BioLabMart Inc. Our headquarters are located at 777 Brickell Avenue, Suite 500, Miami, FL 33131.
The Company is a p reclinical stage biotechnology company developing advanced cell-based solutions to combat neuronal injuries with a laser focus on traumatic brain injuries. The technology could  potentially treat a wide range of neurodegenerative diseases.  The Company's  treatment integrates proprietary, engineered mesenchymal stem cells, 3D printable scaffolding, smart materials and a novel delivery system .
On December 14, 2016, the Company entered into a license and research funding agreement ("License Agreement") with Ariel Scientific Innovations Ltd., formerly known as Ariel University R&D Co., Ltd., ("Ariel"), a wholly owned subsidiary of Ariel University, based in Ariel, Israel. Under the terms of the License Agreement, Professor Danny Baranes, the principal investigator and his research team will carry out further research relating to cell treatment with conditioned medium for neuronal tissue regeneration and repair. In consideration for payments under the License Agreement, the Company received an exclusive worldwide royalty- bearing license in Ariel patents and know-how to develop and commercialize products based on or incorporating conditioned medium for neuronal tissue regeneration and/or repair, resulting from Ariel's research or technology or the Company's research funding (the "Products).
Under the License Agreement, the Company is required to use its best efforts to develop and commercialize the Products in accordance with development milestones set forth in the Agreement.
On July 6, 2017, the board of directors and a majority of the Company's shareholders approved an amendment to the Company's Articles of Incorporation to change the name of the Company from "BioLabMart Inc." to "Qrons Inc.". On August 8, 2017, the Company filed Amended Articles of Incorporation with the State of Wyoming to effectuate such name change.
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 its Daily List on August 9, 2017. The new name and symbol change to "QRON" for the OTC market was effective August 10, 2017.
On October 17, 2017, the Company entered into an option agreement with the Trustees of Dartmouth College which provides for, among other things, the grant to the Company of a one-year exclusive option to negotiate a worldwide, royalty bearing, exclusive license with Dartmouth for 3D printable materials in the field of human and animal health. During the option period, the Company agreed to use all commercially reasonable resources to evaluate the intellectual property and provide quarterly milestone reports and a commercialization plan upon exercise of the option. Pursuant to the agreement, the Company agreed to finance the prosecution of patents by Dartmouth to protect its intellectual property.  Further, the agreement provides for the payment by the Company of an option fee and certain license fees and royalty payments based upon the Company's product sales, as part of a final negotiated license agreement.
On December 14, 2017, the Company entered into a services agreement with Ariel pursuant to which a team under the direction of Prof. Baranes will conduct molecular biology research activities involving the testing of scaffold materials for the Company.
As at the report date, the Company is aggressively continuing with the development of its cell-based solutions relative to traumatic brain injuries.
F-6



QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS

 
Note 2 – Summary of Significant Accounting Policies
Financial Statement Presentation:  The audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
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 $1,179,777 for the year ended December 31, 2017, inclusive of stock based compensation costs (2016 – $156,000).
Advertising and Marketing Costs:  Advertising and marketing costs are expensed as incurred. The Company incurred $28,481 in advertising and marketing costs during the year ended December 31, 2017 (2016 - $0).
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 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 7,  Stock Plan .
Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurements and Disclosures, 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. FASB 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. FASB 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.

F-7



QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS

Note 2 – Summary of Significant Accounting Policies (continued)
Fair Value of Financial Instruments (continued)
The following table provides a summary of the fair value of our derivative liabilities as of December 31, 2017 and December 31, 2016:
 
Fair value measurements on a recurring basis
 
 
Level 1
 
Level 2
 
Level 3
 
As of December 31, 2017:
           
Liabilities
           
Derivative liabilities
$
-
 
$
-
 
$
31,090
 
 
                 
As of December 31, 2016:
                 
Liabilities
                 
Derivative liabilities
$
-
 
$
-
 
$
-
 

 
Warrants:  The Company accounts for common stock warrants in accordance with applicable accounting guidance provided in ASC Topic 815  "Derivatives and Hedging – Contracts in Entity's Own Equity"  (ASC Topic 815), as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement.  For warrants classified as equity instruments we apply the Black Scholes model.   Presently all warrants issued and outstanding are accounted for using the equity method.

Income taxes:  The Company has adopted ASC Topic 740 – "Income Taxes" ASC Topic 740 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC Topic 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 Topic 280 – "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 computation of basic loss per share for the periods ended December 31, 2017 and 2016 excludes potentially dilutive securities of  underlying share purchase warrants, convertible notes, stock options and preferred shares, because their inclusion would be antidilutive. As a result, the computations of net loss per share for each period presented is the same for both basic and fully diluted.

The table below reflects the potentially dilutive securities at each reporting period which have been excluded from the computation of diluted net loss per share:

   
December 31,
2017
   
December 31,
2016
 
Stock purchase warrants
   
54,000
     
502,000
 
Research Warrrants at 3% of issued and outstanding shares
   
372,147
     
-
 
Convertible Notes
   
18,864
     
-
 
Series A Preferred shares
   
700
     
-
 
Stock options, vested
   
13,334
     
-
 
Stock options, not yet vested
   
656,666
         
Stock awards, not yet vested
   
290,000
         
 
   
1,405,711
     
502,000
 
 

F-8



QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS

 
Note 2 – Summary of Significant Accounting Policies (continued)

New Accounting Pronouncements:  Recent accounting pronouncements, other than below, issued by the FASB (including its EITF), the AICPA and the SEC did not or are not believed by management to have a material effect on the Company's present or future financial statements.

In August 2017, the FASB issued ASU 2017-12,  Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities  ("ASU 2017-12"). The objective of the ASU is to improve the financial reporting of hedging relationships in order to better portray the economic results of an entity's risk management activities in its financial statements and to make certain targeted improvements to simplify the application of hedge accounting guidance. ASU 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2017-12 on the Company's financial statements.

In May 2017, the FASB issued ASU 2017-09,  Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting.  The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The Company is currently evaluating the impact of ASU 2017-09 on the Company's financial statements.   

Note 3 – Going Concern

The Company has experienced net losses to date, and it has not generated revenue from operations, and will need additional working capital to service debt and for ongoing 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. There can be no assurance that financing, whether debt or equity, will always 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.

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.
Note 4 – Convertible Note – Related Party and Derivative Liabilities
On September 1, 2016, the Company entered into a convertible debenture agreement with CubeSquare, LLC ("CubeSquare"), of which our Chief Executive Officer is the managing partner and our President is a 25% owner. The Company received proceeds of $10,000 during fiscal 2016 ("Note 1"). The note 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 are convertible at any time at the option of the lender 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.
On September 28, 2017 the Company and CubeSquare amended Note 1 to extend the maturity date of the note from September 1, 2017 to September 1, 2018 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 is due on September 27, 2018. Interest shall accrue from September 27, 2017 and shall be 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.

F-9



QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS

 
Note 4 – Convertible Note – Related Party and Derivative Liabilities (continued)
The Company analyzed the amendment to Note 1 and Note 2 under  ASC 815-10-15-83  and concluded that these two convertible debentures  meet the definition of a derivative.  We estimated the fair value of the derivative on the inception dates, and subsequently, using the Black-Scholes valuation technique, adjusted for the effect of dilution, because that technique embodies all of the assumptions (including, volatility, expected terms, and risk-free rates) that are necessary to fair value complex derivate instruments.
The carrying value of these convertible notes is as follows:
 
 
December 31, 2017
   
December 31, 2016
 
Face value of certain convertible notes
 
$
25,000
   
$
10,000
 
Less: unamortized discount
   
(18,335
)
   
(6,417
)
Carrying value
 
$
6,665
   
$
3,583
 

Amortization of the discount over the years ended December 31, 2017 and 2016 totaled $13,082 and $3,583, respectively, which amounts have been recorded as interest expense.  
As a result of the application of ASC No. 815 in period ended December 31, 2017 the fair value of the conversion feature is summarized as follows:
Balance at December 31, 2016
 
$
-
 
Derivative addition associated with convertible notes
   
25,000
 
Loss on change in fair value
   
6,090
 
Balance at December 31, 2017
 
$
31,090
 

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 September 30, 2017 and commitment date:
   
Commitment Date
   
December 31, 2017
 
Expected dividends
   
0
     
0
 
Expected volatility
 
101% ~103%
   
110% ~ 115%
 
Expected term
 
0.92 ~ 1 year
   
0.67 ~0.74 year
 
Risk free interest rate
   
1.33%
 
 
1.53 ~ 1.65%
 

Note 5 – License and Research Funding Agreement
On December 14, 2016 the Company entered into a License and Research Funding Agreement (the "License Agreement") with Ariel Scientific Innovations Ltd., formerly known as Ariel University R&D Co., Ltd. ("Ariel"), a wholly owned subsidiary of Ariel University ("AU") based in Israel, pursuant to which:

-
 In the course of research performed at AU, Prof. Danny Baranes has developed certain technology relating to coral based and non-coral based conditioned medium for tissue regeneration and repair;
-
 the Company wishes to receive a license from Ariel and in order to secure receipt of such license, agrees to fund further research at AU relating to such technology; and
-
 Ariel is willing to grant the Company a license, pursuant to the terms of the License Agreement to allow it to develop and commercialize products.



F-10



QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS
Note 5 – License and Research Funding Agreement (continued)

Pursuant to the above noted License Agreement, the Company shall fund the research completed during the research period in the total amount of $100,000.

In addition, upon the occurrence of an Exit Event (as defined in the License Agreement) of the Company or of any affiliate commercializing the products, the Company is obligated to issue to Ariel an immediately exercisable warrant for that number of shares equal to 4% of the issued and outstanding shares of the Company at the time of issuance.

The Company and Ariel Scientific Innovations Ltd., formerly known as Ariel University R&D Co., Ltd.entered into Addendum #1, effective December 13, 2017 (the "Addendum") to the License Agreement pursuant to which Ariel was permitted to exercise a portion of the warrant granted pursuant to the License Agreement. On December 13, 2017, the Company issued 119,950 shares of common stock to Ariel, representing 1% of the issued and outstanding shares of the Company on such date, and valued at $335,860. The right to the balance of the shares subject to the warrant remains subject to the terms of the License Agreement and the occurrence of an Exit Event (as described in the License Agreement). In addition, the Addendum provides that Ariel may not request a demand registration until the balance of the shares subject to the warrant is exercised.

In addition to the other payments, the Company will pay Ariel upon the occurrence of the following milestone events, additional payments which be due within 6 months of completion of the milestone:

-
 Upon successful clinical FDA Phase II completion - $130,000; and
-
 Upon successful clinical FDA Phase III completion - $390,000

Upon successful development and commercialization and in recognition of the rights and licenses granted to the Company pursuant to the License Agreement, the Company will be subject to certain royalty payments as specified in the License Agreement.

During the year ended December 31, 2016, the Company incurred research and development costs of $156,000, which amount includes the aforementioned funding of $100,000 pursuant to the License Agreement as well as $56,000 recorded as stock-based compensation in respect to certain stock awards discussed in Note 6 below.

During the year ended December 31, 2017, the Company incurred total research and development costs of $1,179,777, which amount includes the aforementioned value of 119,950 shares of common stock at $335,860 pursuant to the License Agreement, as well as $812,000 recorded as stock-based compensation in respect to certain stock awards discussed in Note 6 below granted to various members of the Company's scientific advisory board.

On December 14, 2017, the Company entered into a 12-month services agreement with Ariel (the "Services Agreement") pursuant to which a team at Ariel University under the direction of Prof. Danny Baranes (the "Scientist") will conduct molecular biology research activities involving the testing of scaffold materials for the Company. If the Scientist ceases to provide services, the Company must be notified and a replacement acceptable to the Company must be found within 30 days or the Company may terminate the Services Agreement.


F-11



QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS
Note 6 – Commitments

(1)  
Service Agreement with Ariel

As compensation for the services provided, the Company will pay Ariel (i) $17,250 within five business days of the execution of the Services Agreement, and (ii) $17,250 by May 1, 2018.

The Services Agreement may be terminated by the non-breaching party upon a material breach that is not cured within 30 days by the other party. The Services Agreement may also be terminated by the Company upon thirty days' written notice to Ariel. Ariel must keep confidential information of the Company confidential for five years after the term of the Services Agreement.

During the year ended December 31, 2017, $17,250 was paid of which $1,438 was expensed in fiscal year 2017 and the remaining $15,812 will be expensed in a subsequent period.

(2)  
Science Advisory Board Member Consulting Agreements (the "Agreements")

As part of its ongoing program of research and development, the Company has retained distinguished scientists and other qualified individuals to advise the Company with respect to its technology and business strategy and to assist it in the research, development and analysis of the Company's technology and products. In furtherance thereof, the Company has retained certain Advisors as members of its Scientific Advisory Board as described below, and the Company and Advisors have entered into agreements with the following terms and conditions:

-
Scientific Advisory Board and Consulting Services -   Advisor shall provide general consulting services to Company (the "Services") as a member of its Scientific Advisory Board ("SAB"). As a member of the SAB, Advisor agrees to provide the Services as follows: (a) attending meetings of the Company's SAB; (b) performing the duties of a SAB member at such meetings, as established from time to time by the mutual agreement of the Company and the SAB members, including without limitation meeting with Company employees, consultants and other SAB members, reviewing goals of the Company and assisting in developing strategies for achieving such goals, and providing advice, support, theories, techniques and improvements in the Company's scientific research and product development activities; and (c) providing consulting services to Company at its request, including a reasonable amount of informal consultation over the telephone or otherwise as requested by Company. Advisor's consultation with Company will involve services as scientific, technical and business advisor to the Company and its senior team as needed with respect to the field of neuronal injuries and neuro degenerative diseases ("the "Field") and requires the application of unique, special and extraordinary skills and knowledge that Advisor possesses in the Field.
 
-
SAB Consulting Compensation -  the Company shall grant to Advisor the option to purchase certain number of shares of the common stock of the Company as per the stock option award grant. The options are subject to terms and provisions of the Company's 2016 Stock Option and Stock Award Plan.

On November 15, 2017, the Company entered into Agreements with three Advisors under the terms of which two Advisors are granted the option under the 2016 Stock Option and Award Plan to purchase Twenty Thousand (20,000) shares of common stock under certain vesting terms and one Advisor under the 2016 Stock Option and Award Plan is granted an option to purchase Thirty Thousand (30,000) shares of common stock under certain vesting terms.
 
The Company recorded stock-based compensation in the amount of $29,000 in respect to these options grants during fiscal 2017 which amount has been allocated as advisory services as part of general and administrative expenses. (ref Note 7 – Stock Plan)


 
F-12



QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS

 
Note 7 – Stock Plan
2016 Stock Option and Stock Award  
On December 14, 2016, the Board adopted the Company 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 Administrator of the Plan appointed by the Company's Board of Directors (the "Board"), or in the absence of an Administrator, by the Board. The Company has reserved 10 million shares for issuance under the Plan.
Stock Award:
On December 14, 2016, the Board awarded to each of its Science Advisors, Prof. Danny Baranes and Dr. Liat Hammer, a total of 440,000 sha res of common stock of which 150,000 shares vested on December 14, 2016, 145,000 shares vested on December 14, 2017, and 145,000 shares will vest on December 14, 2018, provided such advisors are still providing services to the Company.
   
For Year ended
December 31,
 
   
2017
   
2016
 
Number of shares issued
   
290,000
     
300,000
 
Fair market value per share
 
$
2.80
   
$
0.1867
 
Stock based compensation recognized
 
$
812,000
   
$
56,000
 

The value of the vested awards have been recorded as research and development expenses in the respective periods.  A total of 290,000 stock awards are expected to vest during fiscal 2018.
Stock Options:

(a)  
Stock Options granted to Science Advisors:

On November 15, 2017, under the 2016 Stock Option and Award Plan , the Board awarded two of its Science Advisors the following three-year stock options: (i) an immediately exercisable option to purchase 6,667 shares of common stock at an exercise price of $2.00 per share, (ii) an option to purchase 6,667 shares of common stock exercisable on November 15, 2018 at an exercise price of $2.00 per share and (iii) an option to purchase 6,666 shares of common stock exercisable on November 15, 2019 at an exercise price of $2.00 per share, provided the advisors are still providing services to the Company.

On November 15, 2017, under the 2016 Stock Option and Award Plan , the Board awarded a Science Advisor, the following three-year stock options: (i) an option to purchase 15,000 shares of common stock, exercisable on November 15, 2018 at an exercise price of $0.40 per share and (ii) an option to purchase 15,000 shares of common stock exercisable on on November 15, 2019 at an exercise price of $0.40 per share, provided the advisor is still providing services to the Company.

During the year ended December 31, 2017, total recognized compensation in respect of the above stock option compensation was $29,000, which amount has been allocated as advisory services as part of general and administrative expenses. As of December 31, 2017, total unrecognized compensation remaining to be recognized in future periods totaled $135,230.

(b)  
Stock Options granted to Officers:

On December 4, 2017, the Board granted five year option awards to each of its two officers for the purchase of 300,000 shares of the common stock of the Company . Option awards are granted with an exercise price of $2 at the date of grant; and vest on December 4, 2018, expiring on December 4, 2022.
 
During the year ended December 31, 2017, total recognized compensation of $106,029 was recorded as general and administrative expenses. As of December 31, 2017, total unrecognized compensation remaining to be recognized in future periods totaled $1,307,691.

 

F-13



QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS
Note 7 – Stock Plan (continued)
Stock Options: (continued)
The fair value of each option award 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 ~ 126.34%
 
Risk-free interest rate
 
 
1.79% ~ 2.15%
 
Expected life (years)
 
 
3 ~ 5
 
Stock Price
 
$
2.80
 
Exercise Price
 
$
0.40 ~ 2.00
 

A summary of the activity for the Company's stock options for the years ended December 31, 2017 and 2016, is as follows:
 
2017
 
 
   
Weighted Average
 
 
Shares
 
Exercise Price
 
Outstanding, beginning of period, December 31, 2016
   
-
   
$
-
 
Granted
   
670,000
   
$
1.93
 
Exercised
   
-
   
$
-
 
Canceled
   
-
   
$
-
 
Outstanding, end of period
   
670,000
   
$
1.93
 
Options exercisable, end of period
   
13,334
   
$
2.00
 
Options expected to vest, end of period
   
656,666
   
$
1.89
 
Weighted average fair value of options granted
 
 
 
    $
2.36
 
Note 8 – Capital Stock
Authorized:
The Company has authorized 100,000,000 shares of common stock, $0.0001 par value and 10,000 shares of a class of preferred stock called the "Series A Preferred Stock", par value $0.001.
Series A Preferred Stock:
Each share of Series A Preferred Stock has a stated value of $1 per share and accrues 4% per annum for determination of liquidation, conversion or redemption. The shares convert at the option of the holder into shares of common stock at the market value of the common stock. The Series A Preferred Stock vote as a single class and maintain 66 2/3% of the total votes as long as any shares of Series A Preferred Stock remain outstanding. The Series A Preferred Stock contains liquidation preference (senior rank to all common) and are not to be amended without the holders' approval.
At inception on August 22, 2016, the Company approved the issuance of 1,000 shares of Series A Preferred Stock at par value to Jonah Meer, the Company's Chief Executive Officer, Chief Financial Officer and Secretary, for cash $1 was paid for the Series A Preferred Stock.

F-14



QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS

 
Note 8 – Capital Stock (continued)
Series A Preferred Stock : (continued)

As a result of the super voting rights allocated to the Series A Preferred Stock, management conducted a valuation of the fair value of the issued shares.  Shares of the Series A Preferred Stock issued were valued based upon industry specific control premiums and the fair value of the Company's common stock at the time of the transaction applying Statement of Financial Accounting Standard ASC 820-10-35-37  Fair Value in Financial Instruments  as of the issuance date of August 22, 2016. As a result of the third-party valuation of the fair value of the Series A Preferred Stock issued to our officers and directors, the Company recorded additional stock-based compensation as general and administrative expenses of $2,598 during the year ended December 31, 2016 with respect to the shares issued.

The third party valuation report was based on the following inputs as at August 22, 2016: (1) price per share of common stock of $0.0001; (2) 10,120,000 common stock outstanding; (3) A 19.3% premium over the common stock for the voting preferences, representing $600 in control value at issuance; (4)  The Series A Preferred Stock voting rights represented 66.7% of the total voting rights; (5) The conversion value is $2,000 (no discount for lack marketability since the common shares are also restricted).

Common Stock issuances as of December 31, 2017 and 2016:

At inception on August 22, 2016, the Company issued 5,060,000 shares of common stock at par value Mr. Jonah Meer, the Company's CEO, CFO and Secretary for cash totaling $506.

At inception on August 22, 2016, the Company issued 5,060,000 shares of common stock at par value to Mr. Ido Merfeld, the Company's President for cash totaling $506.

On September 4, 2016, the Company's Board of Directors approved the sale and issuance of up to 1,200,000 shares of the Company's common stock, par value $.0001, at a subscription price of $0.25 per share  For  each two shares of common stock purchased, the holder received an immediately exercisable warrant expiring December 31, 2019 to purchase one share of the Company's common stock at a price of $0.40 per share.

On December 14, 2016, the Company issued 300,000 shares to two Scientific Advisors as a stock award valued at $56,000, or $0.18667 per share, based on price allocation with respect to the aforementioned private placement as to each share of common stock, and recorded the associated cost as research and development expenses. (ref Note 7 – Stock Plan)

During the year ended December 31, 2016, the Company received total proceeds of $251,000 by way of private placement subscriptions for a total of 1,004,000 shares.

All costs incurred with respect to the Form S-1 Registration Statement prior to its effective date on May 10, 2017 totaling $22,548 have been allocated to additional paid in capital.

On December 13, 2017, 119,950 shares were issued to Ariel as an exercise of warrants pursuant to a License Agreement (ref Note 5 – License and Research Funding Agreement). These shares were valued at $335,860 or $2.8 per share, based on fair market value, and the associated cost was recorded as research and development expenses.
 
On December 14, 2017, the Company issued 290,000 shares to two Scientific Advisors as a stock award, valued at $812,000, or $2.8 per share, based on fair market value, and recorded the associated cost as research and development expenses. (ref Note 7 – Stock Plan).

During the year ended December 31, 2017, the Company received aggregate proceeds of $32,000 in private placement subscriptions for a total of 128,000 shares.

During the year ended December 31, 2017 the Company  received warrant exercise notices in respect of 512,000 warrants from various subscribers and issued a total of 442,960  shares of common stock  on a cashless exercise basis as per the cashless exercise formula in the warrant.

F-15



QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS
Note 8 – Capital Stock (continued)
Share Purchase Warrants
In accordance with authoritative accounting guidance,  the fair value of the aforementioned warrants was calculated using the Black-Scholes option-pricing model with the following assumptions at the measurement date(s):
 
 
Measurement date
 
Dividend yield
 
 
0%
 
Expected volatility
 
 
97.90~119.33%
 
Risk-free interest rate
 
 
1.47~1.60%
 
Expected life (years)
 
 
2.71~2.92
 
Stock Price
 
$
0.25
 
Exercise Price
 
$
0.40
 

As of December 31, 2017, the following common stock purchase warrants were outstanding:
 
 
Warrants (1)
   
Weighted Average Exercise Price
 
Outstanding – August 22, 2016
   
-
     
-
 
Granted
   
502,000
   
$
0.40
 
Forfeited/Canceled
   
-
     
-
 
Exercised
   
-
     
-
 
Outstanding – December 31, 2016
   
502,000
   
$
0.40
 
Granted
   
64,000
     
0.40
 
Forfeited/Canceled
   
-
         
Exercised
   
512,000
 (2)        
Outstanding – December 31, 2017
   
54,000
   
$
0.40
 
 
(1) Each two shares of common stock purchased under the private placement provides for one warrant to acquire an additional share of common stock together with the payment of $0.40.
(2)During the year ended December 31, 2017, investors exercised 512,000 share purchase warrants and received 442,960 underlying shares for exercise on a cashless basis.
 
Note 9 – Income Taxes
The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.   For the fiscal year ended December 31, 2016 the Company measured our U.S. deferred tax assets at a statutory income tax rate of 34%.    
On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act) was enacted into law including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. The Company does not have any foreign earnings and therefore, we do not anticipate the impact of a transition tax. We have remeasured our U.S. deferred tax assets at a statutory income tax rate of 21%. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of any transition tax, deferred tax re-measurements, and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118, and no later than fiscal year end December 31, 2018.
 
During 2017, the Company incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward was approximately $1,589,930 at December 31, 2017 and $169,240 at December 31, 2016 and will begin to expire in the year 2036.

F-16

QRONS INC.
NOTES TO AUDITED FINANCIAL STATEMENTS
 
Note 9 – Income Taxes
 
The Company had deferred income tax assets as of December 31, 2017 and 2016 as follows:

 
 
December 31, 2017
   
December 31, 2016
 
Loss carryforwards
 
$
333,880
   
$
57,540
 
Less – stock based compensation
   
(210,600
)
   
(11,760
)
Less – derivative liabilities
   
(1,280
)
   
-
 
Change in tax effected rates
   
(22,000
   
-
 
Less - valuation allowance
   
(100,000
)
   
(45,780
)
Total net deferred tax assets
 
$
-
   
$
-
 

Tax years from inception to fiscal year ended December 31, 2017 have been filed and are open for examination by the taxing authorities.  The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the period presented. The Company had no accruals for interest and penalties at September 30, 2017. The Company's utilization of any net operating loss carry forward may be unlikely as a result of its intended activities. 

Note 10 – Subsequent Events

Subsequent to the fiscal year ended December 31, 2017 the Company sold 312,500 shares of its common stock to Conventus Holdings SA, a BVI corporation ("Conventus") and raised $500,000 pursuant to a subscription agreement, dated January 23, 2018 (the "Subscription Agreement"), in a private placement offering pursuant to an exemption from registration under Regulation S of the Securities Act of 1933, as amended ("Reg S"). The proceeds of the offering will be used for research and general corporate purposes. In connection with the investment, Pavel Hilman, the controlling shareholder of Conventus, entered into a one-year advisory board member consulting agreement, dated January 23, 2018 ("Advisory Board Agreement"), under which Mr. Hilman will serve on the Company's Advisory Board as a business advisor. The Advisory Board Agreement will automatically renew for up to two additional one-year periods, unless earlier terminated by either party upon 30 days' prior written notice to the other party. In consideration for serving on the Advisory Board, the Company awarded 10,000 shares of its common stock to Mr. Hilman under its 2016 Stock Option and Stock Award Plan.
 
F-17


Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosures
 
None.
 
Item 9A. 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 December 31, 2017, 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.

Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management's Annual Report on Internal Control over Financial Reporting
 
Management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rules 13a-15(f) under the Securities Exchange Act of 1934, internal control over financial reporting is a process designed by, or under the supervision of, the Company's principal executive, principal operating and principal financial officers, or persons performing similar functions, and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

The Company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company's management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting at December 31, 2017. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on that assessment under those criteria, management has determined that, as of December 31, 2017, our internal control over financial reporting was not effective.

Our internal controls 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 an 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.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to the exemption provided to issuers that are not "large accelerated filers" nor "accelerated filers" under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Item 9B. Other Information.
 
None.  
14

 
PART III
 
Item 10. Directors, Executive Officers and Corporate Governance.
 
The following table sets forth the names, ages and positions of our current board members and executive officers:
 
Name
 
Age
 
Position(s)
 
 
 
 
 
Jonah Meer
 
62
 
Chief Executive Officer, Chief Financial Officer, Secretary and Director
Ido Merfeld
 
53
 
President and Director
         
 
Our directors are elected for a term of one year and serve such director's successor is duly elected and qualified. Each executive officer serves at the pleasure of the Board.

The Company has no nominating, audit or compensation committees at this time. The entire Board participates in the nomination and audit oversight processes and considers executive and director compensation. Given the size of the Company and its stage of development, the entire Board is involved in such decision making processes. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors.

Jonah Meer, Chief Executive Officer, Chief Financial Officer, Secretary and a Director

Mr. Meer has served as our Chief Executive Officer, Chief Financial Officer, Secretary and a Director since the formation of the Company on September 22, 2016. Mr. Meer is an attorney, accountant and entrepreneur. His career started in 1979 and has been spent both in the financial services industry and in the investment world. He has held many executive and fiduciary roles with numerous private and public companies and entities, including a dozen years as Chief Operating Officer of a U.S. broker dealer. Separately he has served on numerous public and private company boards of directors. Since 1998 he has been CEO of jBroker Global Inc., and since 2013 its successor entity, jTrade Global LLC, a software marketing company. In 2005 he was appointed by the Equity Committee to serve as a Bankruptcy Trustee in the Southern District of New York to wind down a complex Liquidating Trust, which was finally terminated in 2015. In 2004 Mr. Meer established ANS Investments, a private company investing in special situations and alternative investments.  In 2016, he founded CubeSquare, a private investment company, to invest in special situations and alternative investments involving public and pre-public companies. Neither ANS Investments nor CubeSquare have a controlling interest in any public company and neither are registered investment advisors. He received his Master of Law degree from New York University, in addition to holding juris doctor and accounting degrees. As a co-founder and Chief Executive Officer, Mr.Meer is involved with the Company's day to day operations which led to his appointment to the Board.

Ido Merfeld, President and a Director

Mr. Merfeld has served as our President and a Director since the formation of the Company on September 22, 2016. In October 1991, Mr. Merfeld co-founded Ivory Software Systems based in Tel Aviv Israel, a start-up company specializing in servicing the financial services industry both in Israel and abroad ("Ivory"). Ivory developed and maintains software, infrastructure and products that allow large financial institutions to trade in the global securities markets on a real time basis. In 1998 he co-founded jBroker Global Inc., a U.S. company covering the distributing and selling of the group's products and services in both the US and Europe. In the last 10 years, he has also been involved in the establishment of several other startup companies including the establishment of a new Art Exchange in Luxemburg and a financial education internet company in the UK. In 2014 Mr. Merfeld, resigned as CEO of Ivory to become its Chairman. He now spends time enrolled in the molecular biology department at Ariel University. He previously received his B.A. in Computer Science, Statistics & Economics from Bar-Ilan University in Israel. As a co-founder and President, Mr.Merfeld is involved with the Company's day to day operations which led to his appointment to the Board.

Board of Advisors

The Company has a Board of Advisors which currently consists of the following six members.

Scientific Advisors

Professor Danny Baranes is Head of the Department of Molecular Biology at Ariel University, and the Principal Investigator for research in connection with the License Agreement. Professor Baranes did his post-doctoral fellowship in neuroscience in the lab of the Nobel laureate Dr. Eric Kandel at Columbia University. Professor Baranes continued on to McGill University, and returned to Israel in 2000 where he has held several positions at Ben Gurion University before joining Ariel University in 2009. He has received numerous international awards, published dozens of articles in leading international scientific journals as well having given numerous lectures and presentations. Professor Baranes received his PhD. in Biochemistry from Hebrew University.

Dr. Liat Hammer is Head of Research and Development at the Company. Prior to assuming this position she was Lab Manager at Ariel University involved in the management of various projects in the field of tissue engineering in vitro and in vivo (brain, cardiomyocyte, liver) and supervising the work of PhDs and M.Sc. students. Previously, after receiving her PhD. in 2007, Dr. Hammer spent 6 years as a senior researcher for a biopharmaceutical company developing an innovative strategy to heal diabetic wounds and ulcers. In that capacity she also exercised supervisory positions and was responsible for coordination and strategic planning, arranging all relevant data, writing patent drafts and patents maintenance. She received her PhD. in Molecular & Cell Biology from Bar-Ilan University in Israel.

Dr. Albert Pinhasov is Vice-President and Dean for Research and Development at Ariel University. He is a molecular biologist specializing in the neurobiology of social behavior. In addition, Dr. Pinhasov was a Postdoctoral Fellow, Drug Discovery CNS Research Team, Johnson and Johnson Pharmaceutical. He received his PhD in Molecular Biology and Clinical Biochemistry from Tel Aviv University in Israel.

Dr. Motti Ratmansky is the head of the Pain Rehabilitation Clinic at the Lowenstein Rehabilitation Hospital in Israel. He was the former head of the Israeli National Instruction Unit for combat medics and medical field units, supervising and training combat medics. Dr. Ratmansky received his Medical Degree from the Technion Medical School in Israel.

15

Dr. Yitshak Francis received his Biology undergraduate degree from the Technion and his PhD in Medical Molecular Biology from University College London. After his PhD, he joined Columbia University as a post doctorate and after two years became an Associate Research Scientist. During his role as an Associate Research Scientist, he worked on a variety of drug development projects. Additionally, he was a co-founder and CEO of Citta Pharmaceuticals, a Columbia University spin-off biotechnology company that develops drugs for treating Alzheimer's disease. During his role as a CEO, he was responsible for business development, management and fundraising. Currently Dr. Francis serves as Director of Business Development at Ariel Scientific Innovations (Ariel University's tech transfer company), where he facilitates the translation of academic life science projects to the industry. Pursuant to the License Agreement, Dr. Francis was appointed as a non-voting observer on our Board of Directors.
 
Business Advisor
Pavel Hilman is Chairman of HIG Capital AG, a Swiss holding company, Mr. Hilman has extensive experience in the financial industry and private venture investments in the areas of bio-tech, agri-tech, med-tech, nano-tech and IT. Mr. Hilman currently serves on various executive and advisory Boards and supervisory committees of private and public corporations in the United Kingdom, USA, Switzerland, Israel, Luxemburg, Poland, Russian Federation and the Ukraine.
Involvement in legal proceedings

There are no legal proceedings that have occurred within the past ten years concerning our directors, or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.

Family relationships
 
There are no family relationships among any of our officers or directors.
 
Committees of the Board of Directors
 
The Company does not have an audit committee. We are not a "listed company" under SEC rules and are therefore not required to have an audit committee comprised of independent directors.
 
We do not currently have a "financial expert" within the meaning of the rules and regulations of the SEC.
 
The Company has no nominating or compensation committees at this time. The entire Board participates in the nomination and audit oversight processes and considers executive and director compensation. Given the size of the Company and its stage of development, the entire Board is involved in such decision-making processes. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors.
 
Code of Ethics
 
The Company has not as yet adopted a code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions as required by the Sarbanes-Oxley Act of 2002 due to our small size and limited resources and because management's attention has been focused on matters pertaining to raising capital and the operation of the business.

Section 16(a) Beneficial Ownership Reporting Compliance
 
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% percent of our equity securities ("Reporting Persons") to file reports of ownership and changes in ownership with the SEC. Based solely on our review of copies of such reports and representations from the Reporting Persons, we believe that during the fiscal year ended December 31, 2017, the Reporting Persons timely filed all such reports.
 
Changes in Nominating Process
 
There are no material changes to the procedures by which security holders may recommend nominees to our Board.
16

 
Item 11. Executive Compensation.
 
Summary Compensation Table
 
The following table provides certain information regarding compensation awarded to, earned by or paid to persons serving as our Chief Executive Officer during fiscal 2017 and 2016. No other officer had compensation exceeding $100,000. ("named executive officer").
 
Name and
Principal Position
Fiscal Year
Ended 12/31
Salary
($)
Bonus
($)
Stock Awards
($)
Option Awards
($)
All Other
($)
Total
($)
Jonah Meer,
Chief Executive Officer, Chief Financial Officer, Secretary and Director
2017
-
-
-
53,015 (2)
 -
53,015(2)
 
2016
 
-
 
-
 
-
 
-
 
1,299(1)
 
1,299(1)
                  
 
(1)  Represents fair value of voting control of preferred stock purchased by directors, upon formation of Company, in excess of cost.
  (2)  Represents a five-year option to purchase 300,000 shares of common stock at an exercise price of $2.00 per share, exercisable on December 4, 2018. During the year ended December 31, 2017, total recognized compensation of $53,015 was recorded as general and administrative expenses. As of December 31, 2017, total unrecognized compensation remaining to be recognized in future periods totals $653,845.

2016 Stock Option and Stock Award Plan

On December 14, 2016, the Board adopted the BioLabMart Inc.  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 Administrator of the Plan appointed by the Company's Board of Directors, or in the absence of an Administrator, by the Board. The Company has reserved 10 million shares for issuance under the Plan.

Outstanding Equity Awards
 
The table below reflects all outstanding equity awards made to any named executive officer that were outstanding at December 31, 2017. 
 
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2017

Name
Grant Date
Number of Securities Underlying Unexercised Options (#) Exercisable
Number of Securities Underlying Unexercised Options (#) Unexercisable
Option ExercisePrice
($)
Option Expiration
Date
           
Jonah Meer
12/4/17
0
300,000(1)
2.00
12/4/22
 
   (1)  Such options are exercisable on December 4, 2018.
17

Compensation of Directors

During the year ended December 31, 2017, no compensation has been paid to our directors in consideration for their services rendered in their capacities as directors.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
The following table lists, as of February 26, 2018, the number of shares of common stock beneficially owned by (i) each person, entity or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known to the Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each of our named executive officers and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by each person using "beneficial ownership" concepts under the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person directly or indirectly has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to dispose or direct the disposition of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest. Except as noted below, each person has sole voting and investment power with respect to the shares beneficially owned and each stockholder's address is c/o c/o Qrons Inc., Suite 500, 777 Brickell Avenue, Miami, Florida 33131.
 
The percentages below are calculated based on 12,729,125 issued and outstanding shares of common stock outstanding as of February 26, 2018.
 
 
 
 
Amount and Percentage of Beneficial
Name and Address of Beneficial Owner
Ownership
 
Shares
 
 
%
Directors and Executive Officers:
 
 
 
 
 
Jonah Meer
 
 
 
 
 
       Chief Executive Officer, Chief Financial Officer, Secretary and Director
5,060,000
 
 
39.75
%(1)
     
 
 
 
 
 
Ido Merfeld
 
 
 
 
 
       President and Director
5,060,000
 
 
39.75
%(1)
       
 
 
 
 
 
All officers and directors as a group (2 persons):
10,120,000 
 
 
79.50
%
 
 
 
 
 
 
   (1) Messrs. Meer and Merfeld are the holders of the Company's issued and outstanding Series A preferred stock. For so long as the Class A Preferred Stock is issued and outstanding, 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.
 
Change-in-Control Agreements
 
The Company does not have any change-in-control agreements with any of its executive officers.

Item 13. Certain Relationships and Related Transactions and Director Independence.
 
Certain Relationships and Related Transactions

At inception on August 22, 2016, the Company issued 5,060,000 shares of common stock at par value and 1,000 shares of Series A Preferred Stock at par value to Mr. Meer, the Company's CEO, CFO and Secretary for cash totaling $507 of which $506 was paid in respect to the issuance of the common stock and $1 was paid for the Series A Preferred stock.

At inception on August 22, 2016, the Company issued 5,060,000 shares of common stock at par value and 1,000 shares of Series A Preferred Stock at par value to Mr. Ido Merfeld, President of the Company, for cash totaling $507, of which $506 was paid in respect to the issuance of the common stock and $1 was paid for the Series A Preferred stock.

18

Each share of Series A preferred stock has a stated value of $0.001 per share and accrues 4% per annum for determination of liquidation, conversion or redemption. The shares convert at the option of the holder into shares of common stock at the market value of the common. The Series A Preferred vote as a single class and maintain 66 2/3% of the total votes as long as any shares of Series A remain outstanding. The Preferred Series A contain liquidation preference (senior rank to all common); are not to be amended without the holder's approval.

As a result of the super voting rights allocated to the Series A preferred stock, management conducted a valuation of the fair value of the issued shares.

The Series A preferred shares issued were valued based upon industry specific control premiums and the fair value of the Company's common stock at the time of the transaction applying Statement of Financial Accounting Standard ASC 820-10-35-37 Fair Value in Financial Instruments as of the issuance date of August 22, 2016.  As a result of the third party valuation of the fair value of the Series A Preferred Stock issued to our officers and directors, the Company recorded additional stock-based compensation as general and administrative expenses of $2,598 during the year ended December 31, 2016 with respect to the shares issued.

On September 1, 2016, the Company entered into a convertible debenture agreement with CubeSquare. Jonah Meer, our Chief Executive Officer is the managing member of CubeSquare. Ido Merfeld, our President, is a 25% owner of CubeSquare. Under the debenture agreement, CubeSquare loaned $10,000. Cube Square had agreed to loan the Company an additional $15,000 on the same terms and conditions if requested by the Company. The loan bears interest at 8% per annum (which will increase to 12% if an event of default as described in the debenture agreement occurs) and was due on September 1, 2017, or immediately upon an event of default. Interest is payable, at CubeSquare's option, in cash or common stock. Any portion of the loan and unpaid interest are convertible at any time at the option of CubeSquare into shares of common stock of the Company at a conversion price per share of the greater of (i) $0.0625, if the Company's shares are not trading on a public market, and (ii) if the Company's shares are listed for trading on a public market, an amount equal to a 50% discount to the average of the five lowest trading prices during the previous twenty trading days. So long as the loan is outstanding, the Company may not merge, reorganize, restructure, reverse split its stock, consolidate or sell all or substantially all of its assets without giving seven days prior written notice to CubeSquare, in which case, CubeSquare can put the note to the Company at 125% of the then outstanding principal and interest. The debenture agreement also provides for anti-dilution protection (with certain exceptions) if the Company engages in other transactions at a lower price per share. The Company has the right to redeem the loan for 6 months, in whole or in part, at 125% of the principal amount being redeemed and accrued interest thereon. The Company must reserve 150% of the number of shares issuable upon conversion of the loan. The Company may not engage in short sales. Except upon 61 days prior written notice to the Company, CubeSquare may not convert the loan if as a result of such conversion, CubeSquare and its affiliates would own in excess of 9.9% of the total issued and outstanding shares of the Company.

On September 27, 2017, the Company entered into an 8% convertible debenture in the amount of $15,000 with CubeSquare, with the same terms as the $10,000 loan described above, due September 27, 2018.

On September 28, 2017, the maturity date of the $10,000 loan was extended for an additional year to September 1, 2018 pursuant to a First Amendment to 8% Convertible Debenture, dated September 28, 2017.

Under the Plan, on December 14, 2016, the Board awarded each of its Science Advisors, Prof. Danny Baranes and Dr. Liat Hammer, 440,000 shares of common stock, 150,000 shares of which vested upon issuance, 145,000 shares vested on December 14, 2017 and 145,000 shares vest on December 14, 2108, provided the advisors are still providing services to the Company.

Under the Plan, on November 15, 2017, the Board awarded each of its Science Advisors, Motti Ramansky and Albert Pinhasov, the following three-year stock options: (i)an immediately exercisable option to purchase 6,667shares of common stock at an exercise price of $2.00 per share, (ii) an option to purchase 6,667 shares of common stock exercisable on November 15, 2018 at an exercise price of $2.00 per share and (iii) an option to purchase 6,666 shares of common stock exercisable on November 15, 2019 at an exercise price of $2.00 per share, provided the advisors are still providing services to the Company.

Under the Plan, on November 15, 2017, the Board awarded Science Advisor, Yitzhak Francis, the following three-year stock options: (i) an option to purchase 15,000 shares of common stock, exercisable on November 15, 2018 at an exercise price of $0.40 per share and (ii) an option to purchase 15,000 shares of common stock exercisable on on November 15, 2019 at an exercise price of $0.40 per share, provided Mr. Francis is still providing services to the Company.

We entered into a one-year advisory board member consulting agreement, dated January 23, 2018 ("Advisory Board Agreement"), under which Pavel Hilman will serve on the Company's Advisory Board as a business advisor. The Advisory Board Agreement will automatically renew for up to two additional one-year periods, unless earlier terminated by either party upon 30 days' prior written notice to the other party. In consideration for serving on the Advisory Board, the Company awarded 10,000 shares of its common stock to Mr. Hilman under its 2016 Stock Option and Stock Award Plan.

We sold 312,500 shares of common stock to Conventus Holdings SA, a BVI corporation ("Conventus") and raised $500,000 pursuant to a subscription agreement, dated January 23, 2018 (the "Subscription Agreement"), in a private placement offering pursuant to an exemption from registration under Regulation S of the Securities Act of 1933, as amended ("Reg S"). Pavel Hilman, a member of our Advisory Board, is the controlling shareholder of Conventus.

Insider Transactions Policies and Procedures
 
The Company does not currently have an insider transaction policy.
 
Director Independence

Our Board of Directors does not include any independent directors.
 
Item 14. Principal Accounting Fees and Services.
 
Audit Fees
 
Audit fees consist of fees for professional services rendered for the audit of the Company's consolidated financial statements included in the Company's Annual Report on Form 10-K and the review of financial statements included in the Company's Quarterly Reports on Form 10-Q. The aggregate fees billed for professional services rendered by our principal accountant, Heaton & Company, PLLC (doing business as Pinnacle Accountancy Group of Utah), for audit and review services for the years ended December 31, 2017 and December 31, 2016 were $9,000 and $4,500 respectively.
 
We incurred no non-audit related fees, tax fees or other fees for professional services rendered by our principal accountant for the years ended December 31, 2017 and 2016.
 
Administration of the Engagement; Pre-Approval of Audit and Permissible Non-Audit Services
 
We have not yet established an audit committee. Until then, there are no formal pre-approval policies and procedures. Nonetheless, the auditors engaged for these services are required to provide and uphold estimates for the cost of services to be rendered. The percentage of hours expended on Heaton & Company, PLLC's respective engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.
19

 
PART IV
 
Item 15. Exhibits, Financial Statement Schedules.
 
Exhibit Number
Exhibit
 
 
101* Interactive Data Files
 
 
_____________ 
* Filed herewith  
**Portions of Exhibit 10.5 have been omitted pursuant to a confidential treatment request granted by the SEC.
(1) Incorporated by reference to the corresponding exhibit to the Company's Registration Statement on Form S-1 filed with the SEC on March 13, 2017
(2) Incorporated by reference to the corresponding exhibit to the Company's Current Report on Form 8-K filed with the SEC on August 11, 2017
(3) Incorporated by reference to the corresponding exhibit to the Company's Current Report on Form 8-K filed with the SEC on October 20, 2017
(4) Incorporated by reference to the corresponding exhibit to the Company's Current Report on Form 8-K filed with the SEC on December 15, 2017
(5) Incorporated by reference to the corresponding exhibit to the Company's Current Report on Form 8-K filed with the SEC on February 12, 2017

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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: March 2, 2018
By:
/s/ Jonah Meer
 
   
Jonah Meer
Chief Executive Officer, Chief Financial Officer and Secretary
(Principal Executive Officer and Principal Financial and Accounting Officer)
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
 
Signature
 
 
 
 
Title
 
 
Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
/s/ Jonah Meer
 
 
 
Chief Executive Officer, Chief Financial Officer, Secretary
 
March 2, 2018
Jonah Meer
 
 
 
and a Director (Principal Executive Officer and Principal Financial and Accounting Officer)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
/s/ Ido Merfeld
 
 
 
President and a Director
 
March 2, 2018
Ido Merfeld
 
 
 
 
 
 
 
 
 
 
 
 
 
     
 
21


Exhibit 10.10
FIRST AMENDMENT TO 8% CONVERTIBLE DEBENTURE:
This First Amendment to the 8% Convertible Debenture dated September 1, 2016 made by BioLabMart Inc., now known as Qrons Inc. (the "Company") for the benefit of CubeSquare LLC in the amount of $10,000 (the "Debenture") hereby amends the Debenture as follows:
1) All references in the Debenture to ""BioLabMart Inc. shall be deleted and replaced with "Qrons Inc."
2)The maturity date of the Debenture is hereby amended to September 1, 2018.
3) Section 2.1 (c) of the Debenture is hereby deleted in its entirety.
Except as amended hereby all of the terms and conditions of the Debenture shall remain in full force and effect.

Dated this 28 th day of September 2017
Qrons Inc.
By: /s/Jonah Meer
Chief Executive Officer
ACKNOWLEDGED AND AGREED:
CubeSquare LLC
By: /s/Jonah Meer
Managing Member



Exhibit 10.11

NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

September 27 , 2017
                                                                    $15,000


QRONS INC.

8% Convertible Debenture

Due September 27, 2018
 
FOR VALUE RECEIVED, QRONS INC ., a Wyoming corporation (hereinafter called the " Borrower " or the " Company "), hereby promises to pay to CubeSquare LLC, a Florida limited liability company   (the " Holder ") the sum of FIFTEEN   THOUSAND Dollars ( $15,000 ), with simple interest accruing at the rate described below, on September 1 , 2018 (the " Maturity Date ").

 
 NOW THEREFORE, the following terms shall apply to this Note:

ARTICLE I
GENERAL PROVISIONS

1.1   Payments . The entire unpaid principal amount due under this Note (the " Principal ") shall be due and payable on the Maturity Date. Interest on this Note (the " Interest ") will be payable on the Maturity Date. Interest shall be payable in cash or, at the Holder's option, in shares of the Company's common stock, par value $0.0001 per share (the " Common Stock ").

  Upon any full conversion by the Holder in accordance with Article II of all of the Interest and the Principal due hereunder, all of the Borrower's payment obligations shall terminate. All payments in respect of the indebtedness evidenced hereby shall be applied in the following order: to accrued Interest, Principal, and charges and expenses owing under or in connection with this Note.

  If any payment of interest is paid in Common Stock, the number of shares issuable will be determined utilizing the conversion ratio as set forth in Article II.

1.2   Interest .  Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to eight percent (8%) from the date Principal was advanced in connection with this Note and shall be payable on the Maturity Date unless otherwise converted earlier at the election of the Holder as further described below.  Interest shall be calculated on the basis of a 360-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder will be paid to the Holder or its assignee in whose name this Note is registered on the records of the Borrower regarding registration and transfers of Notes (the " Note Register ").

1.3   Payment Grace Period . From and after the 10 th day after an Event of Default under Article III, the interest rate applicable to any unpaid amounts owed hereunder shall be increased to 12 percent (12%) per annum.
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1.4   Conversion Privileges . The conversion privileges set forth in Article II shall remain in full force and effect immediately from the date hereof and until the Note is paid in full regardless of the occurrence of an Event of Default. This Note shall be payable in full on the Maturity Date, unless previously converted into Common Stock in accordance with Article II hereof; provided , that if an Event of Default has occurred, the Holder may elect to extend the Maturity Date by the amount of days of the pendency of the Event of Default.

1.5   Corporate Existence .  So long as this Note remains outstanding, the Company shall not directly or indirectly consummate any merger, reorganization, restructuring, reverse stock split, consolidation, sale of all or substantially all of the Company's assets or any similar transaction or related transactions (each such transaction, a " Fundamental Change ") unless, prior to the consummation a Fundamental Change, the Company shall have given the Holder not less than seven (7) days prior written notice to the Holder .  In any such case, the Company grants the Holder the right to put this Note to the Company up to the time of the effectiveness of the Fundamental Change at 125 % of the then outstanding Principal plus any unpaid and accrued Interest .


ARTICLE II
CONVERSION RIGHTS AND REDEMPTION RIGHTS

The Holder shall have the right to convert the Principal and accrued and unpaid Interest due under this Note into Shares of the Borrower's Common Stock as set forth below.

2.1   Conversion into the Borrower's Common Stock .

(a)   The Holder shall have the right from and after the date of the issuance of this Note and then at any time until this Note is fully paid, to convert any outstanding and unpaid principal portion of this Note, and accrued Interest, at the election of the Holder (the date of giving of such notice of conversion being a " Conversion Date ") into fully paid and non-assessable shares of Common Stock as such stock exists on the date of issuance of this Note (such shares, the " Conversion Shares "), or any shares of capital stock of Borrower into which such Common Stock shall hereafter be changed or reclassified (the " Other Securities "), at the conversion price as defined in Section 2.1(b) hereof (the " Conversion Price "), determined as provided herein. Upon delivery to the Borrower of a completed Notice of Conversion, a form of which is attached hereto as Exhibit A , Borrower shall issue and deliver to the Holder within three (3) business days from the Conversion Date (such third day being the " Delivery Date ") that number of Conversion Shares for the portion of the Note converted in accordance with the foregoing. At the election of the Holder, the Borrower will deliver in cash accrued but unpaid interest on the principal amount of the Note being converted in the manner provided in Section 1.1 through the Conversion Date directly to the Holder on or before the Delivery Date. The number of Conversion Shares to be issued upon each conversion of this Note shall be determined by dividing that portion of the Principal of this Note and accrued Interest to be converted, by the Conversion Price.

(b)   Subject to adjustment as provided hereof, the Conversion Price per share shall be determined between the Holder and the Company at such time that Holder desires to convert any portion of the note within two (2) business days from the Conversion Date.
 
(c)   The Conversion Price shall be equal to 50% of the average of the five (5) lowest trading prices during the previous twenty (20) trading days prior to the date of the Conversion Date.
 
 Notwishstanding the provisions of Section 2.1 (b) above,  the number and kind of shares or other securities to be issued upon conversion determined pursuant to Section 2.1(a), shall also be subject to adjustment from time to time upon the happening of the following certain events while this conversion right remains outstanding:


2


  A.   Reorganization, Consolidation, Merger, etc.; Reclassification .  In case at any time or from time to time, the Company shall, subject to Section 1.5 hereof, effect a Fundamental Change, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder of this Note, on the conversion hereof as provided in Article II, at any time after the consummation of such Fundamental Change, shall receive, in lieu of the Conversion Shares (or Other Securities) issuable on such conversion prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such Holder would have been entitled upon such consummation of a Fundamental Change if such Holder had so converted this Note, immediately prior thereto, all subject to further adjustment thereafter as provided in Section 2.1(d)(E).

  If the Borrower at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes that may be issued or outstanding, this Note, as to the unpaid principal portion thereof and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior to such reclassification or other change.

  B.   Dissolution . In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the Holder of this Note after the effective date of such dissolution pursuant to this Article II to a bank or trust company (a " Trustee "), as trustee for the Holder of the Notes if the Holder did not elect the put right granted pursuant to Section 1.5 above.

  C.   Continuation of Terms . Upon any Fundamental Change or transfer (and any dissolution following any transfer) referred to in this Article II, this Note shall continue in full force and effect and the terms hereof shall be applicable to the Other Securities and property receivable on the conversion of this Note after the consummation of such Fundamental Change or transfer or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Note as provided in Section 2.1(d)(E). In the event this Note does not continue in full force and effect after the consummation of the transaction described in this Article II, then only in such event will the Company's securities and property (including cash, where applicable) receivable by the Holder of this Note be delivered to the Trustee as contemplated by Section 2.1(d)(B).

  D. Share Issuance .  If at any time this Note is outstanding the Company shall offer, issue or agree to issue any common stock or securities convertible into or exercisable for shares of common stock (or modify any of the foregoing which may be outstanding) to any person or entity at a price per share or conversion or exercise price per share which shall be less than the then applicable Conversion Price, without the consent of all the Holders of this Note, except with respect to Excepted Issuances , then the Company shall issue, for each such occasion, additional shares of Common Stock to each Holder so that the average per share purchase price of the shares of Common Stock issued to the Holder (of only the Conversion Shares still owned by the Holder) is equal to such other lower price per share and the Conversion Price shall automatically be reduced to such other lower price per share .  For the purposes hereof, "Excepted Issuances" means any offer, issuance or agreement to issue any common stock or securities convertible into or exercisable for shares of common stock (or modify any of the foregoing which may be outstanding) in connection with (i) full or partial consideration in connection with a strategic merger, consolidation or purchase of substantially all of the securities or assets of the corporation or other entity, (ii) the Company's issuance of
 
3

securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital, (iii) the Company's issuance of Common Stock or the issuance or grants of options to purchase Common Stock pursuant to the Company's stock option plans and employee stock purchase plans up to a maximum of 10% of the outstanding share capital on a fully diluted basis at the time of such issuance or grant, (iv) the conversion of any of the Notes, and (v) the payment of any interest on the Notes in Conversion Shares (any such instance, an "Excepted Issuances") .  The delivery to the Holder of the additional shares of Common Stock shall be not later than the effective date of the transaction giving rise to the requirement to issue additional shares of Common Stock.  For purposes of the issuance and adjustment described in this paragraph, the issuance of any security of the Company (including without limitation other convertible debentures) carrying the right to convert such security into shares of Common Stock or of any warrant, right or option to purchase Common Stock shall result in the issuance of the additional shares of Common Stock upon the issuance of such convertible security, warrant, right or option and again at any time upon any subsequent issuances of shares of Common Stock upon exercise of such conversion or purchase rights if such issuance is at a price lower than the Conversion Price in effect upon such issuance.  The rights of the Holder set forth in this Section 2.1 (d)(D) are   in addition to any other rights the Holder has pursuant to any other agreement referred to or entered into in connection herewith.

  E.   Extraordinary Events Regarding Common Stock . In the event that the Company shall (a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) subject to Section 1.5 hereof, combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Conversion Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Conversion Price then in effect. The Conversion Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 2.1(d)(E). The number of Conversion Shares that the Holder of this Note shall thereafter, on the conversion hereof as provided in Article II, be entitled to receive shall be adjusted to a number determined by multiplying the number of Conversion Shares that would otherwise (but for the provisions of this Section 2.1(d)(E)) be issuable on such conversion by a fraction of which (a) the numerator is the Conversion Price that would otherwise (but for the provisions of this Section 2.1(d)(E)) be in effect, and (b) the denominator is the Conversion Price in effect on the date of such conversion.

  F.   Certificate as to Adjustments . In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the conversion of the Notes, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Note and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Conversion Price and the number of Conversion Shares to be received upon conversion of this Note, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Note. The Company will forthwith mail a copy of each such certificate to the Holder of the Note and any transfer agent of the Company.
4


G.                Delay in Clearing. The Company shall issue shares to the Holder as set forth in 2.1(b) ("Initial Conversion Price"). However if the conversion price for the common stock on the Clearing Date (defined below) is lower than the Initial Conversion Price, then the Initial Conversion Price shall be adjusted such that the difference shall be taken based on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Conversion Price, with such additional issuance being subject to the limitation on conversion as set forth in 2.11, below.  For purposes of this Agreement, the Clearing Date shall be on the date in which the conversion shares are deposited into the Purchaser's brokerage account and Purchaser's broker has confirmed with Purchaser the Purchaser may execute trades of the conversion shares. The Holder shall represent and warrant that the shares were promptly tendered to the Holder's broker and that the delay is not the result of the Holder failing to provide the Broker or Clearing Firm with appropriate documentation to clear such shares including but not limited to this Note.

2.2   Method of Conversion . This Note may be converted by the Holder in whole or in part as described in Section 2.1(a) hereof. Upon partial conversion of this Note, a new Note containing the same date and provisions of this Note shall be issued by the Borrower to the Holder for the principal balance of this Note and interest which shall not have been converted or paid.

2.3   Intentionally Left Blank .


  2.4                   Intentionally Left Blank .

  2.5                      Conversion of Note .

(a)   Upon the conversion of this Note or part thereof, the Company shall, at its own cost and expense, take all necessary action, including obtaining and delivering, an opinion of counsel to assure that the Company's transfer agent shall issue stock certificates in the name of Holder (or its nominee) or such other persons as designated by Holder and in such denominations to be specified at conversion representing the number of Conversion Shares issuable upon such conversion. The Company warrants that no instructions other than these instructions have been or will be given to the transfer agent of the Company's Common Stock and that, unless waived by the Holder,should the Company's shares be publicly traded and quoted,  the Conversion Shares will be free-trading, and freely transferable, and will not contain a legend restricting the resale or transferability of the Conversion Shares provided the Conversion Shares are being sold pursuant to an effective registration statement covering the Conversion Shares or are otherwise exempt from registration.

(b)   Holder will give notice of its decision to exercise its right to convert this Note or part thereof by delivering an executed and completed Notice of Conversion (a form of which is attached as Exhibit A to the Note) to the Company via, email, or overnight courier or otherwise pursuant to Section 4.2 of this Note. The Holder will not be required to surrender this Note until this Note has been fully converted or satisfied, with each date on which a Notice of Conversion is delivered to the Company in accordance with the provisions hereof shall be deemed a Conversion Date (as defined above). The Company will itself or cause the Company's transfer agent to transmit the Company's Common Stock certificates representing the Conversion Shares issuable upon conversion of this Note to the Holder via express courier for receipt by such Subscriber on or before the Delivery Date (as defined above). In the event the Conversion Shares are electronically transferable, then delivery of the Conversion Shares must be made by electronic transfer provided request for such electronic transfer has been made by the Subscriber and the Holder has complied with all applicable securities laws in connection with the sale of the Common Stock, including, without limitation, the prospectus delivery requirements.

( c)   Nothing contained herein or in any document referred to herein or delivered in connection herewith shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest or dividends required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.

2.6   Intentionally Left Blank .
5


2.7   Optional Redemption .

(a)   For six months from the date hereof, the Borrower will have the option of prepaying the outstanding principal amount of this Note (" Optional Redemption "), in whole or in part, together with interest accrued thereon, by paying to the Holder a sum of money equal to one hundred twenty-five percent (125%) of the Principal amount to be redeemed, together with accrued but unpaid interest thereon and interest that will accrue until the actual repayment date and any and all other sums due, accrued or payable to the Holder arising under the Note(the " Redemption Amount ") on the day written notice of redemption (the " Notice of Redemption ") is given to the Holder. The Notice of Redemption shall specify the date for such Optional Redemption (the " Redemption Payment Date "), which date shall be not less than five (5) business days after the date of the Notice of Redemption (the " Redemption Period "). A Notice of Redemption shall not be effective with respect to any portion of this Note for which the Holder has a pending election to convert, or for Conversion Notices given by the Holder prior to the Redemption Payment Date. On the Redemption Payment Date, the Redemption Amount shall be paid in good funds to the Holder. In the event the Borrower fails to pay the Redemption Amount on the Redemption Payment Date as set forth herein, then (i) such Notice of Redemption will be null and void, (ii) Borrower will have no further right to deliver another Notice of Redemption, and (iii) Borrower's failure may be deemed by Holder to be a non-curable Event of Default.

2.8   Reservation. During the period the conversion right exists, Borrower will reserve and instruct its Transfer Agent to reserve from its authorized and unissued Common Stock a number of shares of Common Stock equal to 150% of the amount of Common Stock issuable upon the full conversion of this Note. Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. Borrower agrees that its issuance of this Note shall constitute full authority to its officers, agents, and transfer agents who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the conversion of this Note.

2.9   Maximum Conversion
(a) Notwithstanding anything to the contrary contained herein, if the Company is a reporting issuer or becomes a reporting issuer subject to the reporting requiremenst of the Securities Exchange Act of 1934, the number of Conversion Shares that may be acquired by the Holder upon conversion of this Note (or otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following such conversion (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the Holder's for purposes of Section 13(d) of the 1934 Act, does not exceed 9.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such conversion). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. By written notice to the Company, a Subscriber may waive the provisions of this Section 2.9(a) as to itself but any such waiver will not be effective until the 61 st day after delivery thereof and such waiver shall have no effect on any other Holder.

(b)   Notwithstanding anything to the contrary contained herein, if the Company at the time of conversion is not a reporting issuer subject to the reporting requirements of the Securies Exchange Act of 1934, the number of Conversion Shares that may be acquired by the Holder upon conversion of this Note (or otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following such conversion (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the Holder's for purposes of Section 13(d) of the 1934 Act, does not exceed 9.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such conversion). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. This provision may not be waived.

2.10   Short sales .  The Holder shall not sell short the common shares of the Company without first having sent a conversion request to the Company or having such shares available to cover such short sale prior to entering into such short sale.
6


ARTICLE III
EVENTS OF DEFAULT

An " Event of  Default ,"  wherever  used  herein, means any one of the following events  (whatever  the reason and  whether it shall be voluntary  or involuntary or effected by operation of law or pursuant to any judgment,  decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

3.1   Failure to Pay Principal or Interest . The Borrower fails to pay any Principal, Interest or other sum due under this Note when due.

3.2   Breach of Covenant . The Borrower breaches any other covenant or other term or condition of this Note in any material respect and such breach, if subject to cure, continues for a period of ten (10) business days after written notice to the Borrower from the Holder.

3.3   Breach of Representations and Warranties . Any representation or warranty of the Borrower made herein, or in any agreement, statement or certificate given in writing pursuant hereto or in connection therewith shall be false or misleading in any material respect as of the date made and the Closing Date.

3.4   Receiver or Trustee . The Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed.

3.5   Judgments . Any money judgment, writ or similar final process shall be entered or filed against Borrower or any of its property or other assets for more than $10,000, and shall remain unvacated, unbonded or unstayed for a period of thirty (30) days.

3.6   Bankruptcy . Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against the Borrower and if instituted against Borrower are not dismissed within thirty (30) days of initiation.

3.7   Non-Payment .  A default by the Borrower under any one or more obligations in an aggregate monetary amount in excess of $10,000 for more than forty-five (45) days after the due date.

3.8   Stop Trade . An SEC or judicial stop trade order or principal market trading suspension that lasts for five or more consecutive trading days.

3.9   Failure to Deliver Common Stock or Replacement Note . Borrower's failure to timely deliver Common Stock to the Holder pursuant to and in the time required by this Note.

  3.10   Failure to Maintain Current Public Information. Once the Company's stock has been publicly traded or publicly quoted, t he Company's failure to maintain current public information as defined in Rule 144 of the Securities Act of 1933,

3.11   Reverse Splits .  The Borrower effectuates a reverse split of its Common Stock without the prior written consent of the Holder.
7


3.12   Reservation Default .  Failure by the Borrower to have reserve for issuance upon conversion of the Note the amount of Common stock as set forth in this Note.

3.13   Cross Default . A default by the Borrower of a material term, covenant, warranty or undertaking of any other agreement to which the Borrower and Holder are parties .

3.14   Change in Control . A change in control of the Company without at least seven (7) days prior written notice to Holder. A change in control shall mean that more than 30% of the shares of common stock are consolidated in one person or entity so that the person or entity   (other than any one or more of the Holders) may control the election of the board of directors or the passage of a proposal that would normally require a shareholder vote without such shareholder vote and that such person or entity was not a holder of shares of the Company at the date of execution hereof.

  3.15   Asset Sales .  Any instance, undertaken without written consent  of the Holder, whereby the Company or any of its subsidiaries, sells, transfers, leases or otherwise disposes (including pursuant to a merger) of all or substantially all of the Company's assets, including any asset constituting an equity interest in any other person, except sales, transfers, leases and other dispositions of inventory, used, obsolete or surplus equipment or other property, in each case in the ordinary course of the Company's business and consistent with past practice.

  3.16   Delisting .  Delisting of the Common Stock from the market, including OTC Markets or the Over-the-Counter Bulletin Board, on which the Common Stock is then listed or quoted for trading.

  During the time that any portion of this Note is outstanding,  if any Event of Default has occurred,  the remaining principal amount of this Note, together with interest and other amounts owing in respect   hereof,  to the date of  acceleration  shall become, at the  Holder's  election,  immediately  due and payable in cash,  provided  however,  the Holder may request  (but shall have no obligation  to request)  payment of such amounts in Common Stock of the Borrower. In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion Price then in -   effect. The Holder need not provide and the Borrower hereby waives any  presentment,  demand,  protest or other notice of any kind, and the Holder may immediately and without  expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.  Upon an Event of Default, notwithstanding any other provision of this Note, the Holder shall have no obligation to comply with or adhere to any limitations, if any, on the conversion of this Note or the sale of the Conversion Shares, Shares or Other Securities.

ARTICLE IV
MISCELLANEOUS

4.1   Failure or Indulgence Not Waiver . No failure or delay on the part of Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
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  4.2 Notices . All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid that provides proof of delivery, or (iv) transmitted by hand delivery, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: (i) if to the Borrower to: Qrons Inc., 1900 Purdy Avenue ,#1907, Miami Beach Florida 33139, and (ii) if to the Holder, to CubeSquare LLC, 1900 Purdy Avenue ,#1907, Miami Beach Florida 33139.

4.3   Amendment Provision . The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

4.4   Assignability . This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns.

4.5   Cost of Collection . If default is made in the payment of this Note, Borrower shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys' fees and expenses.

4.6   Governing Law . This Note shall be governed by and construed in accordance with the laws of the State of  Wyoming. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of Florida or in the federal courts located in the state of Florida located in Dade County, Florida. Both parties and the individual signing this Agreement on behalf of the Borrower agree to submit to the jurisdiction of such courts. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.

4.7   Maximum Payments . Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

4.8   Waiver of Jury Trial .  THE PARTIES HEREBY  KNOWINGLY,  VOLUNTARILY AND  INTENTIONALLY WAIVE  THE  RIGHT  ANY OF THEM  MAY HAVE TO A TRIAL  BY JURY IN  RESPECT  OF ANY LITIGATION  BASED  HEREON OR ARISING OUT OF,  UNDER OR IN  CONNECTION  WITH THIS AGREEMENT  OR ANY  TRANSACTION  DOCUMENT  OR ANY  COURSE OF  CONDUCT,  COURSE OF DEALING,  STATEMENTS  (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION  IS  A  MATERIAL  INDUCEMENT  FOR  THE  PARTIES'  ACCEPTANCE  OF  THIS AGREEMENT.
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  4.9   Redemption . This Note may not be redeemed or paid without the consent of the Holder except as described in this Note.

  4.10              Shareholder Status . The Holder shall not have rights as a shareholder of the Borrower with respect to unconverted portions of this Note. However, the Holder will have all the rights of a shareholder of the Borrower with respect to the shares of Common Stock to be received by Holder after delivery by the Holder of a Conversion Notice to the Borrower.


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF , Borrower has caused this Note to be signed in its name by an authorized officer as of the 27 th   day of  September, 2017.

QRONS  INC.



By:/s/ Jonah Meer
Name: Jonah Meer
Title: CEO

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Exhibit A

NOTICE OF CONVERSION
(To be executed by the Holder in order to convert the Note originally issued September _, 2016)

TO:

The undersigned hereby irrevocably elects to convert $_________________ of the  principal  amount of the above  Note  into  Shares of Common  Stock of BioLabMart Inc.,  according to the conditions  stated therein,  as of the Conversion Date written below.

Conversion Date:                                                   ______________________________________

Applicable Conversion Price:                               ______________________________________

Signature:                                                                ______________________________________

Name:                                                                       ______________________________________

Address:                                                                  ______________________________________

Amount to be converted:                                    $_____________________________________

Amount of Note unconverted:                           $_____________________________________

Conversion Price per share:                               $_____________________________________

Number of  shares to be issued:                          ______________________________________

Amount of Interest Converted:                            $_____________________________________

Conversion Price per share:                                  $_____________________________________

Number of  shares of to be issued:                        ______________________________________
 
Please  issue  the  shares  of  to:                             ______________________________________

Issue to:                                                                      ______________________________________

Authorized Signature:                                             ______________________________________

Name:                                                                         ______________________________________

Title:                                                                          ______________________________________

Phone Number:                                                        ______________________________________

Broker DTC Participant Code:                               ______________________________________

Account Number:                                                    ______________________________________

12

Exhibit 10.12
ADVISORY BOARD MEMBER CONSULTING AGREEMENT
THIS ADVISORY BOARD MEMBER CONSULTING AGREEMENT ("Agreement") is made as of _____________, by and between Qrons Inc., a Wyoming corporation having an address at 777 Brickell Avenue, Suite 500, Miami, Florida, 33131 (the " Company "), and _________ an individual with an address at                                     (the " Advisor "). The Company and the Advisor may be referred to herein individually as " Party " or collectively, as " Parties ."
R E C I T A L :
        As part of its ongoing program of research and development, the Company desires to retain distinguished scientists and other qualified individuals to advise the Company with respect to its technology strategy and to assist it in the research, development and analysis of the Company's technology and products. In furtherance thereof, the Company desires to retain Advisor as a member of its Scientific Advisory Board as described below, and the Company and Advisor desire to enter into this Agreement to effect such retention.

NOW, THEREFORE, in consideration of the covenants hereinafter stated, the Parties agree as follows:
                                1. Scientific Advisory Board and Consulting Services .  Advisor shall provide general consulting services to Company (the "Services") as a member of its Scientific Advisory Board  ("SAB") As a member of the SAB, Advisor agrees to provide the Services as follows: (a) attending meetings of the Company's SAB; (b) performing the duties of a SAB member at such meetings, as established from time to time by the mutual agreement of the Company and the SAB members, including without limitation meeting with Company employees, consultants and other SAB members, reviewing goals of the Company and assisting in developing strategies for achieving such goals, and providing advice, support, theories, techniques and improvements in the Company's scientific research and product development activities; and (c) providing consulting services to Company at its request, including a reasonable amount of informal consultation over the telephone or otherwise as requested by Company. Advisor's consultation with Company will involve services as scientific, technical and business advisor to the Company and its senior team as needed with respect to the field of neuronal injuries and neuro degenerative diseases ("the "Field") and requires the application of unique, special and extraordinary skills and knowledge that Advisor possesses in the Field.

2 .   SAB Consulting Compensation;

                  a. In consideration for entering into this Agreement and the Services rendered to the Company, the Company shall grant to Advisor the option to purchase ____________________ Thousand (______) shares of the Common stock of the Company as per the stock option award grant attached hereto.  The options are subject to terms and provisions of the 2016 Stock Option and Stock Award Plan of the Company attached hereto.  
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b. If your service as an Advisor is terminated by you or the Company for any reason you may exercise the Option, to the extent that you would otherwise be entitled to do so at the date of termination of service, at any time within 30 days after the date of termination, but not after the Expiration Date.

3 .   Proprietary Rights .  

a. Proprietary Rights Created Outside of Performance of Services .  Any and all inventions, discoveries, processes, ideas, methods, designs and know-how, whether or not patentable, which Advisor may conceive or make either alone or in conjunction with others, prior to the term of this Agreement or during the term of this Agreement that were not developed in connection with the Services performed hereunder, shall remain the exclusive property throughout the world of Advisor.

b. Proprietary Rights Created in Performance of Services .  All work arising from the Services performed hereunder and all materials and products developed or prepared for Company by Advisor in connection with the Services performed hereunder are the exclusive property throughout the world of Company, and all right, title and interest therein shall vest in Company.  All documentation and other copyrightable materials developed or prepared by Advisor in connection with the Services performed hereunder shall be deemed to be "works made for hire" in the course of the Services rendered hereunder.  To the extent that title to any works arising from the performance of the Services hereunder may not, by operation of law, vest in Company, or such works may not be considered "works made for hire," all right, title and interest therein, including, without limitation, all copyrights, are hereby irrevocably assigned to Company.  Any and all inventions, discoveries, processes, ideas, methods, designs and know-how, whether or not patentable, which Advisor may conceive or make either alone or in conjunction with others, during the term of this Agreement, which in any way pertain to or are connected with the Services, shall be the sole and exclusive property throughout the world of Company; and Advisor, whenever requested to do so by Company or any subsidiary and/or affiliate thereof, at Company's expense, and without further compensation or consideration, shall promptly execute any and all applications, assignments and other instruments and perform such acts which Company shall deem necessary or advisable in order to apply for and obtain copyrights, letters, patent and other applicable statutory protection throughout the world for said inventions, ideas and discoveries, and in order to assign and convey to Company the sole and exclusive right, title and interest throughout the world in and to said inventions, discoveries, processes, ideas, methods, designs and know-how, or any applications, copyrights or patents thereof.

                         4 .   Confidentiality .  All inventions, ideas and discoveries which shall become Company's property pursuant to Paragraph 3 hereof shall be held secret and confidential by Advisor.  Further, during and after the performance by Advisor of the Services and the term of this Agreement, Advisor will not use or disclose or allow anyone else to use or disclose to any third party any "Confidential Information" (as defined below) relating to Company, its products, its research and development, its supplies or customers and the Services to be provided hereunder except as may be necessary in the performance of the Services or as may be authorized in writing in advance by an appropriate officer of Company.  Advisor acknowledges that the foregoing limitation expressly prohibits any use or disclosure of any Confidential Information by Advisor pursuant to lectures or scientific or technical papers or publications.  "Confidential Information" includes any trade secrets, confidential information, knowledge, data or other information of Company relating to products, processes, know-how, designs, formulas, test data, customer lists, business plans, marketing plans and strategies,
 
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 pricing strategies or other subject matter pertaining to any business of Company or any clients, customers, Advisors, licensees or affiliates.  "Confidential Information" shall not include any information which is publicly available at the time of disclosure or subsequently becomes publicly available through no fault of Advisor.  All written information, drawings, documents and other materials prepared by Advisor in the performance of the Services hereunder shall be Company's sole and exclusive property, and will be delivered to Company upon expiration or termination of this Agreement, together with all Confidential Information, if any, that may have been furnished to Advisor hereunder.

5 .   Other Agreements .  Advisor hereby represents that Advisor is not a party to any other agreements or commitments that would hinder Advisor's performance of the Services, other than those disclosed to Company in advance of the execution of this Agreement.

6 .   Term and Termination .  This Agreement shall commence on the date hereof and, unless earlier terminated as provided below, shall continue until one (1) year from the date hereof and shall automatically renew for additional one (1) year periods for up to two (2) subsequent years unless terminated earlier in accordance with the terms of this Agreement.  Either party shall have the right to terminate this Agreement without cause upon thirty (30) days' prior written notice to the other party.  The provisions of Paragraphs 3 and 4 shall survive and continue after expiration or termination of this Agreement.

7 .   Independent Contractor .  Advisor is an independent contractor.  Advisor shall not be deemed for any purpose to be an employee or agent of Company, and neither party shall have the power or authority to bind the other party to any contract or obligation.  Company shall not be responsible to Advisor or any governing body for any payroll-related taxes or insurance related to the performance of the terms of this Agreement.

8 . Disclosure .  Advisor acknowledges and agrees that Company may publicly disclose that Advisor is a member of Company's Advisory Board.

9 . Indemnification .   The Company shall indemnify and defend the Advisor from any and all third-party claims against Advisor and any costs, losses or expenses related thereto, including any reasonable legal fees and expenses, arising out of his Services or status as an Advisor hereunder, except to the extent such claims arise out of Advisor's deliberate and material misconduct. Provided the Advisor is still acting as an Advisor to the Company, three (3) months prior to the beginning of clinical trials and for a period of six years thereafter the Term, the Company, or any successor to the Company resulting from a change of control, shall use its best and reasonable efforts to keep in place a directors and officers liability insurance policy (or policies) providing comprehensive coverage to the Advisor.

10 .   Assignment .  Advisor may not assign any of his obligations hereunder without the prior written consent of Company, which may be withheld in its sole discretion.

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11 .   Notices .  Any notices required or permitted hereunder shall be given to the appropriate Party at the address listed on the first page of the Agreement, or such other address as the Party shall specify in writing pursuant to this notice provision.

12 .   Governing Law .  This Agreement shall be governed by and construed in accordance with the laws of the State of Florida.

13 .   Modifications .  No modification, amendment, supplement to or waiver of this Agreement shall be binding upon the parties hereto unless made in writing and duly signed by both Parties.

14 .   Severability .  In the event any one or more of the provisions of this Agreement is held to be invalid or otherwise unenforceable, the enforceability of the remaining provisions shall be unimpaired.
15 .   Entire Agreement .  This Agreement contains the entire agreement between the Parties, and supersedes any and all prior and contemporaneous oral and written agreements.

            16. Counterparts. This Agreement may be executed in one or more counterparts (including via facsimile or electronically via PDF) each of which will be deemed an original, but all of which together shall constitute one and the same instrument.


Qrons Inc.
Advisor
Signed by:
Signed by:
Signature:
Signature:



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EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
 
I, Jonah Meer, certify that:
 
1.
I have reviewed this Annual Report on Form 10-K of Qrons Inc. (the "registrant") for the year ended December 31, 2017;
   
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.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit 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 15d-15(f)) for the registrant and 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 our 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 registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
 
(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.
 
Dated: March 2, 2018
By:
/s/ Jonah Meer
 
 
 
Jonah Meer
 
   
Chief Executive Officer
(Principal Executive Officer and Principal Financial and Accounting Officer)
 
 
 

 




EXHIBIT 32.1
 
CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
 
The undersigned, Jonah Meer, Chief Executive Officer, Chief Financial Officer and Secretary 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 Annual Report on Form 10-K for the year ended December 31, 2017 (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.
 
 
Dated: March 2, 2018
By:
/s/ Jonah Meer
 
 
 
Jonah Meer
 
   
Chief Executive Officer, Chief Financial Officer and Secretary ( Principal Executive Officer and Principal Financial and Accounting Officer)