the sales milestones required for each licensed product marketed by Quoin Inc. are $10 million upon achieving $100 million in sales during the annual period; $25 million upon achieving $250 million in sales and $50 million upon achieving $400 million in sales during an annual period. On January 27, 2021, Quoin Inc. and Skinvisible entered into an amendment that changed clinical milestone payment requirements such that $750,000 would be payable to Skinvisible upon completion of specified clinical milestones, and $21.75 million dollars upon regulatory approval in the US and EU respectively. No development milestones, sales milestones or royalty payments were due in 2019, 2020 or 2021.

The agreement has a termination clause which is triggered if no product has started clinical trials 12 months after the date of the agreement or last subsequent amendment. On April 19, 2021, Quoin Inc. and Skinvisible entered into another addendum setting the development deadline of December 31, 2022. If the Company does not begin clinical trials as defined by the development deadline, the license agreement will take end immediately, except in certain circumstances. as specified in the agreement.

The license fees were originally due in two equal installments of $500,000 payable no later than December 31, 2019 and June 30, 2020, which have not been paid. The agreement was later amended for payment due July 31, 2020. On July 31, 2020, the agreement was amended to extend payment until September 30, 2020. On September 30, 2020, the agreement was again amended, requiring payment of the royalty only when external funding is received, as defined in the agreement. On June 21, 2021, the parties entered into a supplemental amendment which changed the payment terms and required a payment of $107,500 on June 26, 2021, a payment of $250,000 within 10 days of principal financing and the 250 $000 remaining on the earlier of the following dates: FDA approval of an Investigational New Drug Application or December 31, 2021. This amendment also eliminated the clinical milestone payments of $750,000 described above and reduces the milestone payment upon regulatory approval of the product containing Skinvisible technology in the US or EU, as applicable. first comes to a total of $5,000,000.

As of December 31, 2021 and December 31, 2020, the liability due for the acquisition of licenses was $250,000 and $875,000 respectively. The remaining license acquisition liability was not paid in accordance with the terms, but did not affect the Company’s rights to the technology, as the Company is in the process of renegotiating this payment with Skinvisible.

The main research and development suppliers used by the Company are as follows:

Quoin Inc. has entered into three consulting agreements with Axella Research LLC (“Axella”) to provide regulatory and preclinical/clinical services regarding QRX003 and QRX004. The combined costs of the three agreements are approximately $270,000, payable as the milestones of the three agreements are achieved. Quoin Inc. has also engaged Axella for additional services pursuant to separate work orders. Additionally, Quoin Inc. has two options to pay milestones due 1) half in equity (based on a pre-negotiated valuation) and half in cash or 2) entirely in cash, in which case a discount of approximately 20% would be applicable. We recorded research and development expenses for services provided and milestones achieved of approximately $247,000, $50,000 and $25,000 for the years ended December 31, 2021, 2020 and 2019, respectively, and recorded expenses of $193,537, $105,052 and $24,940 as of December 31, 2021, 2020 and 2019, respectively.

In November 2020, Quoin Inc. entered into a master services agreement with an initial term of three years with Therapeutics Inc. to manage the preclinical and clinical development of new products in the field of dermatology. The agreement required the execution of individual work orders. Quoin Inc. may terminate any work order for any reason upon 90 days written notice subject to the costs incurred by termination and the termination fee set forth, unless there is a material breach by Therapeutics Inc. The first work order was completed in late 2020 for a clinical study with an expected estimated cost of approximately $3.5 million and an expected timeline through the first quarter of 2023. For the fiscal year ended 31 December 2021, we incurred approximately $340,000 in research and development expenses related to this agreement.

In November 2021, we entered into an engagement with Queensland University of Technology for research-related services associated with Netherton Syndrome of approximately $250,000 for an expected period of eighteen months, including an initial expenditure of $25,000 has been committed in 2021.

We are a development stage company and it is impossible for us to accurately predict the outcome of our research, development or commercialization efforts. As such, it is impossible for us to accurately predict major trends, uncertainties, requirements, commitments or events that are reasonably likely to have a material effect on our liquidity or capital resources or that would prevent the financial reporting from necessarily indicative of future operating results or financial condition. However, to the extent possible, certain trends, uncertainties, requirements and commitments are described above in this section.

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