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.
This Quarterly Report on Form 10-Q contains statements that may constitute
"forward-looking statements." Generally, forward-looking statements include
words or phrases such as "anticipates," "believes," "estimates," "expects,"
"intends," "plans," "projects," "could," "may," "might," "should," "will," the
negative of such terms, and words and phrases of similar import. For example,
when we discuss possible strategic alternatives, we are using forward-looking
statements. Such statements are based on management's current expectations and
are subject to a number of risks and uncertainties, including, but not limited
to, the risks detailed from time to time in our filings with the Securities and
Exchange Commission, or the SEC. These risks and uncertainties could cause our
actual results to differ materially from those described in our forward-looking
statements. Any forward-looking statement represents our expectations or
forecasts only as of the date it was made and should not be relied upon as
representing its expectations or forecasts as of any subsequent date. Except as
required by law, we undertake no obligation to correct or update any
forward-looking statement, whether as a result of new information, future events
or otherwise, even if our expectations or forecasts change.
The following discussion and analysis should be read in conjunction with the
financial statements, related notes and other information included in this
Quarterly Report on Form 10-Q and with the Risk Factors included in Part I, Item
1A of our Annual Report on Form 10-K.
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. Since the termination of the License Agreement, the Company no longer
has any operating business.
We believe that we will continue to experience losses and increased negative
working capital and negative cash flows in the near future and will not be able
to return to positive cash flow without either obtaining additional financing in
the near term or completing a business transaction. We have experienced
difficulties accessing the equity and debt markets and raising capital and there
can be no assurance that we will be able to raise such additional capital on
favorable terms, or at all, or be able to complete a business transaction. If
additional funds are raised through the issuance of equity securities or
completing a business transaction, our existing stockholders will experience
significant dilution. In order to conserve our cash and manage its liquidity, we
have implemented cost-cutting initiatives including the reduction of employee
headcount and overhead costs.
Our Board of Directors is exploring strategic alternatives, which may include
future acquisitions, a merger with another company or the sale of the public
shell company.
THREE MONTHS ENDED MARCH 31, 2021 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2020 (dollars in thousands)
REVENUES. We did not have any revenue-producing operations for the three months
ended March 31, 2021 or for the three months ended March 31, 2020.
PROFIT FROM SALE OF OPERATIONS, NET. We did not incur a profit from the sale of
operations in the three months ended March 31, 2021 or the three months ended
March 31, 2020.
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COST OF REVENUES. We had no cost of revenues for the three months ended March
31, 2021 or for the three months ended March 31, 2020 due to the fact that we
had no revenue-producing operations.
RESEARCH AND DEVELOPMENT EXPENSES. We incurred no research and development
expenses for the three months ended March 31, 2021 or for the three months ended
March 31, 2020 due to the termination of the License Agreement resulting in the
Company no longer having business operations.
SELLING AND MARKETING EXPENSES. We did not incur any selling and marketing
expenses for the three months ended March 31, 2021 or for the three months ended
March 30, 2020 due to us no longer having business operations.
GENERAL AND ADMINISTRATIVE EXPENSES. We incurred $35 in general and
administrative expenses for the three months ended March 31, 2021 compared to
$19 for the three months ended March 31, 2020, which consisted primarily of
compensation costs for administrative, finance and general management personnel,
insurance, legal, accounting and administrative costs and option expenses. The
increase is primarily due to an increase in legal expenses in the amount of $18.
FINANCIAL (EXPENSE) INCOME, NET. We incurred $1 in financial expense for the
three months ended March 31, 2021 as compared to $2 for the three months ended
March 31, 2020. The interest expense is in respect of a related party loan.
OTHER EXPENSES. We incurred no other expenses in the three months ended March
31, 2021 or March 31, 2020.
NET LOSS. We incurred a net loss of $36 for the three months ended March 31,
2021 and $21 for the three months ended March 31, 2020. The increase in net loss
is primarily due to a $16 increase in general and administrative expenses and a
$1 decrease in finance expenses.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2021, we had an accumulated deficit of $2,354 and a negative
working capital (current assets less current liabilities) of $377. Losses will
probably continue for the foreseeable future.
We do not have any material capital commitments for capital expenditures as of
March 31, 2021.
Since the closing of our merger with Artemis Therapeutics Inc., a Delaware
corporation and Artemis Acquisition Corp., a Delaware corporation and our
wholly-owned subsidiary on August 23, 2016, we have financed our operations
primarily through private placements of our securities. On October 23, 2017, we
executed securities purchase agreements relating to a private placement offering
of an aggregate of 300,000 shares of our common stock at a purchase price of
$1.00 per share, and of 250 shares of our Series C Convertible Preferred Stock,
at a purchase price of $1,000.00 per share, with such shares of Series C
Preferred Stock initially convertible into an aggregate of 250,000 shares of
common stock. In addition, each investor received a warrant to purchase fifty
percent of the number of shares of common stock effectively purchased in the
offering. The closing of the offering took place on October 23, 2017. On May 15,
2019, we issued two unsecured promissory notes (each, a "Note" and collectively
the "Notes") in the aggregate principal amount of $100 to two related parties.
$20 and $30 of the funds were received by us on March 22, 2019, and April 4,
2019, respectively. The balance of the funds were received in May 2019. Each
Note accrues interest at a rate of 6% per annum until the Note is repaid in
full. All payments of principal, interest and other amounts under each Note are
payable by June 30, 2021. The proceeds of the Note were used by us for general
working capital purposes.
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We have sustained significant operating losses in recent periods, which have
resulted in a significant reduction in our cash reserves. Due to the termination
of the License Agreement, we no longer have any business operations. We believe
that we will continue to experience losses and negative cash flows in the near
future and will not be able to return to positive cash flow without obtaining
additional financing in the near term or entering into a business transaction.
We have experienced difficulties accessing the equity and debt markets and
raising capital or entering into a business transaction, and there can be no
assurance that we will be able to raise such additional capital on favorable
terms or at all or entering into a business transaction. If additional funds are
raised through the issuance of equity securities or entering into a business
transaction, our existing stockholders will experience significant further
dilution. In order to conserve our cash and manage its liquidity, we have
implemented cost-cutting initiatives including the reduction of employee
headcount and overhead costs.
As of March 31, 2021, we had accumulated liabilities of $382.
As of March 31, 2021, we had cash and cash equivalents of $2 and a positive cash
flow from operating activities of $1 for the period then ended. The positive
cash flow from operating activities in the period ended March 31, 2021 is
attributable mainly to an Israeli value added tax (VAT) refund less payment to
vendors.
We had no cash flow from financing activities in the three-month period ended
March 31, 2021.
OFF BALANCE SHEET ARRANGEMENTS
None.
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