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 JUNE 30, 2021 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2020 (dollars in thousands)
REVENUES. We did not have any revenue-producing operations for the three months
ended June 30, 2021 or for the three months ended June 30, 2020.
PROFIT FROM SALE OF OPERATIONS, NET. We did not incur a profit from the sale of
operations in the three months ended June 30, 2021 or the three months ended
June 30, 2020.
COST OF REVENUES. We had no cost of revenues for the three months ended June 30,
2021 or for the three months ended June 30, 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 June 30, 2021 or for the three months ended
June 30, 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 June 30, 2021 or for the three months ended
June 30, 2020 due to us no longer having business operations.
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GENERAL AND ADMINISTRATIVE EXPENSES. We incurred $46 in general and
administrative expenses for the three months ended June 30, 2021 compared to $57
for the three months ended June 30, 2020, which consisted primarily of
compensation costs for administrative, finance and general management personnel,
legal, accounting and administrative costs and option expenses. The decrease in
general and administrative expenses is primarily due to us no longer having
business operations.
FINANCIAL (EXPENSE) INCOME, NET. We incurred $2 in financial expense for the
three months ended June 30, 2021 and June 30, 2020. The interest expense is in
respect of a related party loan.
OTHER EXPENSES. We incurred no other expenses in the three months ended June 30,
2021 or June 30, 2020.
NET LOSS. We incurred a net loss of $48 for the three months ended June 30, 2021
and $6 for the three months ended June 30, 2020. The decrease in net loss is
primarily due to a decrease in operating expenses and an income tax benefit with
respect to previous tax years in the amount of $53.
SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2020
(dollars in thousands)
REVENUES. We did not have any revenue-producing operations for the six months
ended June 30, 2021 or for the six months ended June 30, 2020.
PROFIT FROM SALE OF OPERATIONS, NET. We did not incur a profit from the sale of
operations in the six months ended June 30, 2021 or for the six months ended
June 30, 2020.
COST OF REVENUES. We had no cost of revenues for the six months ended June 30,
2021 or for the six months ended June 30, 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 six months ended June 30, 2021 or for the six months ended June
30, 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 six months ended June 30, 2021 or for the six months ended June
30, 2020 due to us no longer having business operations.
GENERAL AND ADMINISTRATIVE EXPENSES. We incurred $81 in general and
administrative expenses for the six months ended June 30, 2021 compared to $76
for the six months ended June 30, 2020, which consisted primarily of
compensation costs for administrative, finance and general management personnel,
insurance, legal, accounting and administrative costs and option expenses.
FINANCIAL EXPENSE (INCOME), NET. We incurred $3 in financial expense for the six
months ended June 30, 2021 as compared to financial expense of $4 for the six
months ended June 30, 2020.
OTHER EXPENSES. We incurred no other expenses in the six months ended June 30,
2021 or for the six months ended June 30, 2020.
NET LOSS. We incurred a net loss of $84 for the six months ended June 30, 2021
compared to incurring a net loss of $27 for the six months ended June 30, 2020.
The increase in net loss is primarily due to an income tax benefit received in
2020 with respect to previous tax years in the amount of $53.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2021, we had an accumulated deficit of $2,402 and a negative
working capital (current assets less current liabilities) of $421. Losses will
probably continue for the foreseeable future.
We do not have any material capital commitments for capital expenditures as of
June 30, 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 was 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. The Company is currently in default on the Notes and intends
to negotiate an extension for their repayment, however there is no guarantee
that we will be successful in doing so.
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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 June 30, 2021, we had accumulated liabilities of $425.
As of June 30, 2021, we had cash and cash equivalents of $4 and negative cash
flows from operating activities of $1 for the period then ended. The negative
cash flow from operating activities in the period ended June 30, 2021 is
attributable mainly to the net loss of $84, share-based compensation expenses of
$8, a decrease in other accounts receivable and prepaid expenses of $6 , an
increase in accrued expenses and other payables of $52 and an increase of
related liabilities of $17.
OFF BALANCE SHEET ARRANGEMENTS
None.
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