Business Context and Reporting Period
This Form 6-K, dated October 28, 2021, reports the completion of a business combination between Cellect Biotechnology Ltd. (the "Company") and Quoin Pharmaceuticals, Inc. ("Quoin"). Upon closing, the Company changed its name to Quoin Pharmaceuticals, Ltd. The transaction involved Merger Sub, a wholly-owned subsidiary of the Company, merging with and into Quoin. The Company's American Depositary Shares (ADS) began trading on the Nasdaq Capital Market under the ticker symbol "QRNX" on October 29, 2021, replacing the previous ticker "APOP."
Key Financial Metrics and Capital Structure
The filing details the post-merger capital structure and financing activities but does not provide consolidated revenue, profit, or cash flow statements for the combined entity in this document.
- Share Capital: Approximately 3,338,430,800 ordinary shares were outstanding immediately after the merger. This includes 1,505,151,200 shares (represented by 3,762,878 ADS) held in escrow for Altium Growth Fund LP.
- Ownership Distribution: Former Quoin stockholders own approximately 88% of the ordinary shares; former Cellect stockholders own approximately 12%.
- Exchange Ratio: Approximately 12.0146 ordinary shares were issued for each share of Quoin common stock.
- Private Placement: The Company completed a private placement with Altium Growth Fund LP for an aggregate purchase price of approximately $17.0 million. This consisted of $5 million in senior secured notes (bridge loan) and $12 million in cash for pre-merger common stock.
- Warrants: The Company agreed to issue Series A, B, and C warrants to the Investor on the 136th trading day post-merger. Additionally, Exchange Warrants to purchase 1,238,429 ADS at $3.98 per ADS were issued to the Investor.
- Related Party Borrowings: In 2019 and 2020, the Company borrowed funds from executives Dr. Myers and Ms. Carter to cover operating expenses (Total 2019: $204,668; Total 2020: $20,317).
Material Changes Versus Prior Period
The primary material change is the fundamental restructuring of the Company through the merger with Quoin Pharmaceuticals, Inc.
- Corporate Identity: The Company's name changed from Cellect Biotechnology Ltd. to Quoin Pharmaceuticals, Ltd.
- Leadership Transition: The entire board of directors (except external directors) and all executive officers resigned. New leadership was appointed, including Dr. Michael Myers as CEO and Denise Carter as COO.
- Asset Divestiture: Concurrent with the merger, the Company sold its subsidiary, Cellect Biotherapeutics Ltd., to EnCellX, Inc.
- Contingent Value Rights (CVRs): Holders of Cellect ordinary shares prior to the merger received one CVR for each share, entitling them to potential future payments based on the performance of the divested subsidiary.
Guidance, Outlook, and Risks
The filing does not contain specific financial guidance, revenue projections, or management commentary regarding future operating results. However, it outlines several contingencies and risks:
- Financial Statement Filing: Audited financial statements for Quoin for the year ended December 31, 2020, and unaudited interim statements for the six months ended June 30, 2021, are not included in this filing. They are scheduled to be filed by amendment no later than January 11, 2022.
- Pro Forma Information: Unaudited pro forma condensed consolidated financial statements are also pending filing by January 11, 2022.
- Tax Implications: The receipt of CVRs may have income tax consequences for holders, who are advised to consult tax advisors.
- Related Party Transactions: The Company notes it does not have a formal policy for the review or approval of related party transactions, which were not reviewed under such a policy.
Investor Verification Checklist
- Verify the filing of Quoin's audited financial statements for 2020 and unaudited interim statements for 2021 by the January 11, 2022 deadline.
- Review the full text of the Merger Agreement (Exhibit 2.1) for detailed terms regarding the exchange ratio and escrow arrangements.
- Confirm the terms and exercise conditions of the Series A, B, and C warrants issued to Altium Growth Fund LP.
- Assess the potential value and payout triggers of the Contingent Value Rights (CVRs) associated with the sale of Cellect Biotherapeutics Ltd.
- Monitor the trading of the new ticker symbol "QRNX" and the settlement of the escrowed shares held for the Investor.