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 (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 JUNE 30, 2022 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2021
Revenues. During the three months ended June 30, 2022, we generated revenues of
$61,283, compared to $3,377 for the three months ended June 30, 2021. The reason
for the increase in revenues for the three months ended June 30, 2022, was
mainly due to our marketing and sales efforts, and an increase in sales and
repeat customers.
Sales and Marketing Expenses. During the three months ended June 30, 2022, we
had sales and marketing expenses of $86,832 compared to $8,023 for the three
months ended June 30, 2021. The increase in our Sales and Marketing Expenses for
the three months ended June 30, 2022 is mainly as a result of our efforts to
increase our sales and for generating new customers.
General and Administrative. Our general and administrative expenses for the
three months ended June 30, 2022, which consisted primarily of professional
services and salaries, amounted to $178,367, compared to $34,369 for the three
months ended June 30, 2021. The increase in the general and administrative
expenses for the three months ended June 30, 2022, was mainly due to an increase
in consultants and professional services expenses paid in connection with the
Reverse Recapitalization Transaction.
Financial Expense. For the three months ended June 30, 2022, we had financial
income, net of $19,239 compared to financial expense of $6,309 for the three
months ended June 30, 2021. The reason for the decrease in financial expenses
for the three months ended June 30, 2022, was due to changes in exchange rates
and translation differences.
Net Loss. We incurred a net loss of $201,396 for the three months ended June 30,
2022 as compared to a net loss of $45,874 for the three months ended June 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.
SIX MONTHS ENDED JUNE 30, 2022 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2021
Revenues. During the six months ended June 30, 2022, we generated revenues of
$77,660, compared to $3,377 for the six months ended June 30, 2021. The reason
for the increase in revenues for the six months ended June 30, 2022, was mainly
due an increase of our sales and repeated customers as a result of an increase
of marketing and sales efforts, including sales of 5 new products in addition to
our first product.
Sales and Marketing Expenses. During the six months ended June 30, 2022, we had
sales and marketing expenses of $196,034, compared to $18,073 for the six months
ended June 30, 2021. The increase in our sales and marketing expenses for the
six months ended June 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 six
months ended June 30, 2022, which consisted primarily of professional services
and stockholder's salaries, amounted to $280,180, compared to $55,170 for the
six months ended June 30, 2021. The increase in the general and administrative
expenses for the six months ended June 30, 2022, was mainly due to increase in
consultants and professional services expenses paid in connection with the Share
Exchange Agreement.
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Financial Expense. For the six months ended June 30, 2022, we had financial
income, net of $14,532 compared to financial expense of $8,251 for the six
months ended June 30, 2021. The reason for the decrease in financial expenses
for the six months ended June 30, 2022, was due to changes in exchange rates and
translation differences.
Net Loss. We incurred a net loss of $404,681 for the six months ended June 30,
2022 as compared to a net loss of $78,667 for the six months ended June 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.
LIQUIDITY AND CAPITAL RESOURCES
We had $149,396 in cash at June 30, 2022 versus $0 in cash at June 30, 2021.
Cash used by operations for the six months ended June 30, 2022 was $293,297 as
compared to $99,311 for six months ended June 30, 2021. The reason for the
increase in cash used by operations is primarily due to payments to consultants
and financial services as well as payments to marketing and public relations for
the exposure to the Company's products.
Net cash provided by financing activities was $10,744 for the six months ended
June 30, 2022, as compared to net cash provided by financing activities of
$113,089 for the six 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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