In this section, "Management's Discussion and Analysis of Financial Condition
and Results of Operation," references to "the Company" "we," "us," or "our,"
refer to Artemis Therapeutics, Inc. and its consolidated subsidiaries and dollar
amounts are in thousands, except as otherwise stated.
The following management's discussion and analysis should be read in conjunction
with our financial statements, related notes and other information included in
this Quarterly Report on Form 10-Q, the audited financial statements and related
notes for the year ended December 31, 2021 and the Risk Factors included in our
Current Report on Form 8-K filed with the SEC on July 5, 2022, and with the Risk
Factors included in Part I, Item 1A of our Annual Report on Form 10-K. Some of
the information contained in this discussion and analysis or set forth elsewhere
in this Quarterly Report, including information with respect to our plans and
strategy for our business, includes forward-looking statements that involve
risks and uncertainties. See "Cautionary Note Regarding Forward-Looking
Statements". You should review the "Risk Factors" section of our Current Report
on Form 8-K filed with the SEC on July 5, 2022 for a discussion of important
factors that could cause actual results to differ materially from the results
described in or implied by the forward-looking statements contained in the
following discussion and analysis.
OVERVIEW
Until January 10, 2019, we were engaged in the development of agents for the
prevention and treatment of severe and potentially life-threatening infectious
diseases. On January 10, 2019, we received a notice regarding the immediate
termination of a certain license agreement, dated May 31, 2016 (the "License
Agreement"), executed by and between the Company, Hadasit Medical Research
Services and Development Ltd. and the Hong Kong University of Science and
Technology R and D Corporation Limited. We relied primarily on the License
Agreement with respect to the development of Artemisone, our former lead product
candidate. Upon the termination of the License Agreement, the Company ceased
having an operating business.
From January 10, 2019 through June 30, 2022, we had no business operations and
have classified as a "shell" company, as such term is defined in Rule 405 of the
Securities Act and Rule 12b-2 of the Exchange Act.
On March 6, 2022, we signed a Share Exchange Agreement, as amended (the "Share
Exchange Agreement"), with Manuka Ltd., a limited liability company organized
under the laws of the State of Israel, having an office for the transaction of
business at 3 Eliezer Vardinon St., Petach Tikva, 4959507, Israel ("Manuka"),
pursuant to which Manuka became our wholly owned subsidiary. Since its
inception, Manuka's business activities primarily consisted of distributing
M?nuka honey imported from New Zealand, developing and distributing supplements
aimed at the beauty and skincare markets and, developing and manufacturing
skincare products based on New Zealand's M?nuka honey and bee venom, among other
natural ingredients. All three segments of Manuka's products are to be marketed
and sold solely on its websites. Manuka's skincare products are manufactured in
Israel. The transactions contemplated by the Share Exchange Agreement closed on
June 30, 2022 (the "Closing") and following the Closing, we adopted the business
of Manuka.
Pursuant to the terms of the Share Exchange Agreement, we acquired all of the
outstanding shares of Manuka (the "Manuka Shares") from Manuka's shareholders in
exchange for an aggregate amount of 33,791,641 common stock (including 2,242,509
shares issued to services provider) of our common stock of and 110,000 shares of
our Series D Preferred stock (convertible into 66,000,000 shares of our common
stock) (collectively, the "Consideration Shares"), such that Manuka's
shareholders held, immediately following the closing, eighty-nine percent (89%)
of our issued and outstanding share capital (including and assuming the full
conversion of the Series D Preferred stock).
In addition, on June 30, 2022, we entered into various debt forgiveness
agreements with various existing stockholders, including Tonak Ltd., for the
forgiveness of an aggregate of $306,117 in outstanding debt in exchange for the
issuance of 3,031,567 shares of Artemis' common stock. On June 30, 2022, we
entered into various warrant exchange agreements for the exchange of certain
warrants to purchase shares of our common stock, originally issued in October
2017, in exchange for an aggregate of 2,342,802 shares of our common stock.
Finally, on June 30, 2022, we entered into a debt forgiveness agreement and
warrant exchange agreement with Cutter Mill Capital, pursuant to which we agreed
to issue 894,169 shares of our common stock. We also agreed to register all such
shares issued to Cutter Mill Capital, including any and all shares issued or
issuable to such holder upon conversion of any of its outstanding preferred
stock, within the earlier of 60 days following the closing date (which was
subsequently extended to September 20, 2022) (provided, however that in the
event the company has not cleared comments with the SEC with respect to the
filing of the Current Report on Form 8-K filed on July 5, 2022 relating to the
transactions contemplated by the Share Exchange Agreement, such date shall be 90
days following the date of the agreement) and the date that we file our next
registration statement, and agreed to obtain effectiveness within 90 days (or
120 days in the event of a full review by the SEC).
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We are a beauty company that develops and distributes premium-quality skincare
products, that are based on M?nuka honey and bee venom. Since our inception,
Manuka's business activities primarily consisted of developing and manufacturing
skincare products based on M?nuka honey and bee venom from New Zealand, among
other natural ingredients, marketed and sold solely on our website in Israel,
www.bmanuka.co.il, and to be marketed and sold globally at www.bmanuka.com.
Our Common Stock is quoted on the OTC Pink Open Market under the symbol "ATMS".
THREE MONTHS ENDED SEPTEMBER 30, 2022 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2021
Revenues. During the three months ended September 30, 2022, we generated
revenues of $118 thousand, compared to $3 thousand for the three months ended
September 30, 2021. The reason for the increase in revenues for the three months
ended September 30, 2022, was mainly due to the deployment of 5 new products and
our marketing and sales efforts, as well as an increase in sales and repeat
customers.
Sales and Marketing Expenses. During the three months ended September 30, 2022,
we had sales and marketing expenses of $269 thousand compared to $19 thousand
for the three months ended September 30, 2021. The increase in our sales and
marketing expenses for the three months ended September 30, 2022 is mainly due
to the Company's efforts to increase its sales and generate new customers.
General and Administrative. Our general and administrative expenses for the
three months ended September 30, 2022, which consisted primarily of professional
services and salaries, and share based compensation amounted to $290 thousand,
compared to $44 thousand for the three months ended September 30, 2021. The
increase in the general and administrative expenses for the three months ended
September 30, 2022, was mainly due to an increase in consultants and
professional services expenses paid in connection with the Reverse
Recapitalization Transaction and share based compensation.
Financial Expense. For the three months ended September 30, 2022, we had
financial income, net of $1 thousand compared to financial expense of $8
thousand for the three months ended September 30, 2021. The reason for the
decrease in financial expenses for the three months ended September 30, 2022,
was due to changes in exchange rates and translation differences.
Net Loss. We incurred a net loss of $444 thousand for the three months ended
September 30, 2022 as compared to a net loss of $69 thousand for the three
months ended September 30, 2021. The reason for the increase in net loss is
mainly due to the increase in the Company's marketing and sales efforts to
increase the number of customers as well as an increase in consultants and
professional services expenses paid in connection with the Share Exchange
Agreement and Share based compensation.
NINE MONTHS ENDED SEPTEMBER 30, 2022 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 2021
Revenues. During the nine months ended September 30, 2022, we generated revenues
of $195 thousand, compared to $7 thousand for the nine months ended September
30, 2021. The reason for the increase in revenues for the nine months ended
September 30, 2022, was mainly due to deployment of 5 new products and our
marketing and sales efforts, as well as an increase in sales and repeat
customers.
Sales and Marketing Expenses. During the nine months ended September 30, 2022,
we had sales and marketing expenses of $465 thousand, compared to $37 thousand
for the nine months ended September 30, 2021. The increase in our sales and
marketing expenses for the nine months ended September 30, 2022 is mainly due to
the Company's efforts to increase its sales and generate new customers.
General and Administrative. Our general and administrative expenses for the nine
months ended September 30, 2022, which consisted primarily of professional
services and stockholder's salaries, amounted to $570 thousand, compared to $99
thousand for the nine months ended September 30, 2021. The increase in the
general and administrative expenses for the nine months ended September 30,
2022, was mainly due to increase in consultants and professional services
expenses paid in connection with the Share Exchange Agreement and share based
compensation.
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Financial Expense. For the nine months ended September 30, 2022, we had
financial income, net of $16 thousand compared to financial expense of $16
thousand for the nine months ended September 30, 2021. The reason for the
decrease in financial expenses for the nine months ended September 30, 2022, was
due to changes in exchange rates and translation differences.
Net Loss. We incurred a net loss of $849 thousand for the nine months ended
September 30, 2022 as compared to a net loss of $147 thousand for the nine
months ended September 30, 2021. The reason for the increase in net loss is
mainly due to the increase in the Company's marketing and sales efforts to
increase the number of customers as well as an increase in consultants and
professional services expenses paid in connection with the Share Exchange
Agreement and share based compensation.
LIQUIDITY AND CAPITAL RESOURCES
We had $85 thousand in cash at September 30, 2022 versus $0 in cash at September
30, 2021. Cash used by operations for the nine months ended September 30, 2022
was $343 thousand as compared to $163 for nine months ended September 30, 2021.
The reason for the increase in cash used by operations is primarily due to a
capital raise in December 2021 in the amount of $500 thousand and the
utilization of funds for our current activities in 2022 in the amount of $415
thousand.
Net cash provided by financing activities was $17 thousand for the nine months
ended September 30, 2022, as compared to net cash provided by financing
activities of $188 thousand for the nine months ended June 30, 2021. The
decrease is mainly due to decrease in receipt of credit and owner loans and the
use of working capital.
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