EX-99.2 11 exhibit_99-2.htm EXHIBIT 99.2
Exhibit 99.2

MANUKA LTD.

FINANCIAL STATEMENTS
March 31, 2022


MANUKA LTD.

FINANCIAL STATEMENTS AS OF
March 31, 2022

U.S. DOLLARS

INDEX

 
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MANUKA LTD.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. DOLLARS

         
March 31
    
December 31
  
   
Note
    
2 0 2 2
    
2 0 2 1
  
         
$
    
$
  
         
Unaudited
  
                       
ASSETS
                      
                       
CURRENT ASSETS
                      
Cash and cash equivalents
          
316,819
      
471,074
  
Trade receivables
          
9,755
      
171
  
Other receivables
          
33,038
      
19,477
  
Inventory
  
3
      
74,272
      
73,972
  
Total current assets
          
433,884
      
564,694
  
                       
NON-CURRENT ASSETS:
                      
Property and equipment, net
          
44,297
      
36,500
  
Operating lease right-of-use assets
  
4
      
50,976
      
55,402
  
Intangible assets, net
          
37,621
      
32,154
  
Total long-term assets
          
132,894
      
124,056
  
                       
TOTAL ASSETS
          
566,778
      
688,750
  
                       
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
                      
                       
CURRENT LIABILITIES:
                      
Short-term credit
          
93,925
      
96,608
  
Trade account payables
          
119,769
      
42,040
  
Short-term operating lease liabilities
  
4
      
19,281
      
19,118
  
Other account payables
          
87,546
      
101,875
  
Total current liabilities
          
320,521
      
259,641
  
                       
NON-CURRENT LIABILITIES:
                      
Long-term loan from a related party
  
6
      
254,716
      
238,957
  
Long-term operating lease liabilities
  
4
      
32,514
      
38,369
  
Other liabilities
          
38,339
      
32,268
  
Total long-term liabilities
          
325,569
      
309,594
  
                       
Total liabilities
          
646,090
      
569,235
  
                       
SHAREHOLDERS' EQUITY (DEFICIENCY):
                      
Ordinary shares (“Ordinary Shares”) of NIS 0.01 par value – Authorized: 1,000,000 shares at March 31, 2022 and December 31, 2021; Share capital - Ordinary Shares, NIS 0.01 par value, issued and paid-120,834 shares as of March 31, 2022 and December 31, 2021
  
5
      
345
      
345
  
Capital reserve from transaction with related parties
          
19,264
      
14,806
  
Additional paid in capital
          
501,831
      
501,831
  
Accumulated deficit
          
(600,752
)
    
(397,467
)
Total shareholders' deficiency
          
(79,312
)
    
119,515
  
                       
Total liabilities and shareholders' equity (deficiency)
          
566,778
      
688,750
  

The accompanying notes are an integral part of the financial statements.
1

MANUKA LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
U.S. DOLLARS

   
Three Months ended March 31
  
   
2 0 2 2
    
2 0 2 1
  
   
$
    
$
  
   
Unaudited
  
                 
Revenues
    
16,377
      
-
  
Costs of revenues
    
3,940
      
-
  
             
-
  
Gross profit
    
12,437
       -
 
                 
Operating expenses
                
Sales and marketing
    
109,202
      
10,050
  
General and administrative
    
101,814
      
20,801
  
                 
Total operating expenses
    
211,016
      
30,851
  
                 
Operating loss
    
(198,579
)
    
(30,851
)
                 
Financial expenses, net
    
(4,706
)
    
(1,942
)
                 
Net Loss and Total Comprehensive Loss
    
(203,285
)
    
(32,793
)
                 
Loss per share:
                
Basic and diluted net loss per share
    
(1.68
)
    
(0.33
)
Weighted average number of Ordinary Shares used in calculation of net loss per common share:
                
     
120,834
      
100,000
  

The accompanying notes are an integral part of the financial statements.
2

MANUKA LTD.
Interim Condensed Statements of Stockholders’ Equity (Unaudited)
U.S. dollars

   
Common Shares
    
Capital reserve from transaction with related parties
    
Additional Paid in Capital
    
Accumulated deficiency
    
Total
  
   
Number
     $        
$
    
$
    
$
  
Balance as of December 31, 2020
    
100,000
      
278
      
2,065
      
-
      
(67,680
)
    
(65,337
)
                                                 
Transactions with shareholders (Note 6)
                    
1,728
                      
1,728
  
                                                 
Net Loss
                                    
(32,793
)
    
(32,793
)
Balance as of March 31, 2021
                                                
     
100,000
      
278
      
3,793
      
-
      
(100,473
)
    
(96,402
)
Balance as of December 31, 2021
    
120,834
      
345
      
14,806
      
501,831
      
(397,467
)
    
119,515
  
                                                 
Transactions with shareholders (Note 6)
    
-
      
-
      
4,458
              
-
      
4,458
  
                                                 
Net Loss
    
-
      
-
              
-
      
(203,285
)
    
(203,285
)
                                                 
Balance as of March 31, 2022
    
120,834
      
345
      
19,264
      
501,831
      
(600,752
)
    
(79,312
)

The accompanying notes are an integral part of the financial statements.
3
MANUKA LTD.
Interim Condensed Consolidated Statement of Cash Flows (Unaudited)
U.S. dollars

   
Three Months ended March 31
  
   
2 0 2 2
    
2 0 2 1
  
   
$
    
$
  
Cash flows from operating activities:
                
Net loss
    
(203,285
)
    
(32,793
)
                 
Adjustments to reconcile net loss to net cash   provided by (used in) operating activities:
                
Depreciation
    
2,275
      
30
  
Increase (decrease) in operating lease liabilities
    
4,559
      
-
  
Decrease (increase) in Intangible assets
    
(5,466
)
    
-
  
Increase (decrease) in other liabilities
    
246
      
-
  
Accrued interest from shareholder loans
    
4,458
      
1,728
  
Increase in accounts receivable and other receivables
    
(23,143
)
    
(20,704
)
Increase in accounts payable and accrued expenses
    
63,399
      
2,297
  
Increase in inventory
    
(300
)
    
-
  
                 
Net cash used in operating activities
    
(157,257
)
    
(49,442
)
                 
Cash flows from investing activities:
                
Purchase of property and equipment
    
(10,072
)
    
-
  
                 
Net cash used in investing activities
    
(10,072
)
    
-
  
                 
Cash flows from financing activities:
                
Short-term credit
    
(2,683
)
    
18,220
  
Loan received from shareholders
    
15,757
      
28,168
  
                 
Net cash provided by financing activities
    
13,074
      
46,388
  
                 
Increase in cash and cash equivalents
    
(154,255
)
    
(3,054
)
                 
Cash and cash equivalents at beginning of period
    
471,074
      
3,054
  
                 
Cash and cash equivalents at end of period
  
$
316,819
      
-
  
                 
Non-cash activities:
                
                 
Intangible assets recognized with corresponding other liability
    
5,466
      
-
  

The accompanying notes are an integral part of the financial statements.
4

MANUKA LTD.
NOTES TO FINANCIAL STATEMENTS
U.S. dollars

NOTE 1 - DESCRIPTION OF BUSINESS AND GENERAL

Manuka Ltd. (“Manuka” or the “Company") was incorporated under the laws of the State of Israel on March 22, 2020, and started its business activities close to the date of incorporation. Since its inception, Manuka’s business activities primarily consisted of developing and manufacturing skincare products based on Mānuka honey and bee venom from New Zealand, among other natural ingredients, marketed and sold in Israel. Manuka’s website and mobile applications currently offer some cosmetic products.
 
The Company is in its early stages and there is great uncertainty regarding the future of its operations. Moreover, the Company is thinly capitalized and has not yet generated cash from operations. The Company raised funds from an outside investor, but it does not seem to be sufficient to fund its operation for the period of twelve months from the date of approval of the financial statements. In order to mitigate that risk, management has asked for the support of its major shareholder by way of a support letter securing the necessary funds to the Company in case of need.
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.         Accounting principles:

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of the SEC regulations. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed).
 
B.         Use of estimates in the preparation of financial statements:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates.

C.         Impact of recently issued and adopted accounting standards:

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed financial statements.

NOTE 3 - INVENTORIES

   
March 31,
    
December 31,
  
   
2022
    
2021
  
   
Unaudited
  
             
Raw materials
    
24,959
      
31,098
  
Finished goods
    
49,313
      
42,874
  
     
74,272
      
73,972
  

5

MANUKA LTD.
NOTES TO FINANCIAL STATEMENTS
U.S. dollars

NOTE 4 - LEASES
On August 10, 2021, the Company entered into an operating lease agreement for its office. The Company signed a new agreement for its current office and manufacturing facilities lease which originally was to end in 2022. The lease agreement is for one year starting in October 2021, with two options to extend the lease by another one year for each option until September 30, 2024. The Company is reasonably certain that it will exercise the additional two options starting in October 2022.


a.
The components of operating lease costs were as follows (unaudited):

   
Three Months ended March 31,
  
   
2022
    
2021
  
             
Operating lease cost
    
5,495
      
-
  
Total lease costs
    
5,495
      
-
  


b.
Supplemental balance sheet information related to operating leases is as follows (unaudited):

   
March 31,
    
December 31,
  
   
2022
    
2021
  
             
Operating lease right-of-use assets
    
50,976
      
55,402
  
Operating lease liabilities, current
    
19,281
      
19,118
  
Operating lease liabilities, long-term
    
32,514
      
38,369
  
Weighted average remaining lease term (in years)
    
2.50
      
2.75
  
Weighted average discount rate
    
7.85
%
    
7.85
%


c.
Future lease payments under operating leases as of December 31, 2021, are as follows (unaudited):

   
March 31,
  
   
2022
  
       
2022
    
16,908
  
2023
    
23,048
  
2024
    
17,286
  
Total undiscounted lease payments
    
57,242
  
Less: imputed interest
    
(5,447
)
Present value of lease liabilities
    
51,795
  

6

MANUKA LTD.
NOTES TO FINANCIAL STATEMENTS
U.S. dollars

NOTE 5 - SHAREHOLDERS' EQUITY

                  A. Stockholders Rights:

Shares of Ordinary Shares confer upon their holders the right to receive notice to participate and vote in general meetings of shareholders of the Company, the right to receive dividends, if declared, and the right to receive a distribution of any surplus of assets upon liquidation of the Company.

  B. Issuance of Shares:

On December 20, 2021, the Company entered into a securities purchase agreement, or the “SPA,” with certain investors. Pursuant to the SPA, the Company agreed to sell 20,864 Ordinary Shares to the investors for aggregate consideration of $500,016 following the consummation of the transactions contemplated by the investor’s holdings of the Company, representing 17.24% of the issued capital of the Company on a fully diluted basis.

NOTE 6 - RELATED PARTY BALANCES AND TRANSACTIONS

During 2020 and 2021 and the period ended in March 2022, the founder of the Company, Mr. Shimon Citron, a director and Chief Executive Officer of the Company, provided the Company with several loans at an aggregate amount of $255 thousand as of March 31, 2022. The loans bear no interest and are linked to the Israeli Consumer Prices Index (“CPI”). The repayment date has not been determined.

The Company considered whether the loans it received from its shareholder are beneficial and hence such benefit should be recorded in capital reserve from the transaction with a related party.

The Company estimated the value of the benefit as the difference between the interest rate stipulated in the contract and the interest rate commensurate with such loans expected in an arms-length transaction (inclusive adjustment to the size of the loan and the fact that it is unsecured, which the Company's management considers being the best estimate of the Company’s interest rate close to the date of receiving loans from the shareholders). Accordingly, as a result of the fact that shareholders’ loan bears no interest and with no maturity date, the benefit is determined each year at the beginning of the year, as the discount of the loans at the effective interest rate (determined above) determined to be approximately 8.85%. The benefit for the years ended December 31, 2021, and ended March 2022 were $12,741 and $4,458 respectively.


 a.
Balances with related parties:

   
March 31,
    
December 31,
  
   
2022
    
2021
  
   
Unaudited
  
             
Long-term Loan from a related party
    
254,716
      
238,957
  


b.
Transactions with related parties (unaudited):

   
Three Months ended March 31,
  
   
2022
    
2021
  
             
Trade account payables
    
75,444
      
-
  
Management fees to a shareholder
    
35,336
      
9,181
  
                 
Sales and marketing
    
56,524
      
-
  
Interest on loans from controlling shareholder
    
4,458
      
1,728
  

7

MANUKA LTD.
NOTES TO FINANCIAL STATEMENTS
U.S. dollars
NOTE 7 - SUBSEQUENT EVENTS

On March 6, 2022, shareholders of the Company (the “Shareholders”) entered into a share exchange agreement (the “Share Exchange Agreement”) with Artemis Therapeutics, Inc (“Artemis”), a shell company incorporated in the State of Delaware.

The Share Exchange Agreement provides that, upon the terms, and subject to the conditions set forth therein, on the closing date (the “Closing”), Artemis will acquire all of the outstanding shares of the Company (the “Manuka Shares”) from the Shareholders in exchange of the issuance of 31,549,132 shares of common stock and 110,000 Series D Preferred stock of Artemis  (the “Consideration Shares”). Such preferred shares are convertible into 66,000,000 ordinary shares of Artemis.  As a result, the Shareholders will hold, immediately following the Closing, eighty-seven percent (87%) of Artemis’s issued and outstanding share capital.

The Share Exchange Agreement is accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Artemis was treated as the “acquired” company for financial reporting purposes and the Company is considered the accounting acquirer.
 

8