The following unaudited pro forma condensed combined financial information (hereinafter the “Combined Financial Information”) presents the combination of the balance sheet of Artemis Therapeutics, Inc. (“Artemis”) and Manuka Ltd. (the “Company” or “Manuka”) adjusted to give effect to the combination of their businesses (hereinafter the “Business Combination” or the “Merger”). The following Combined Financial Information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.”

 

Artemis is a public shell company.

 

Manuka Ltd (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, manufacturing, marketing and selling skin care products based on Mānuka honey and bee venom from New Zealand, among other natural ingredients, marketed and sold in Israel.

 

The unaudited pro forma condensed combined balance sheet as of March 31, 2022 combines the historical balance sheets of Artemis and the Company, on a pro forma basis as if the Business Combination, summarized below, had been consummated on March 31, 2022, giving effect to:

 

The unaudited pro forma condensed combined financial statements were derived as described below and should be read in conjunction with:

 

 

 

 

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. Basis of Presentation

The Combined Financial Information was prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” using the assumptions set forth in the notes to the unaudited pro forma condensed combined financial information. The Combined Financial Information has been adjusted to include transaction accounting adjustments, which reflect the application of the accounting required by U.S. GAAP, linking the effects of the Merger, described above, to the Artemis and Company historical financial statements (hereinafter the “Transaction Accounting Adjustments”).

The Merger will be accounted for as a reverse recapitalization, in accordance with U.S. GAAP. Under this method of accounting, Artemis will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Merger will be treated as the equivalent of the Company issuing stock for the net assets of Artemis, accompanied by a recapitalization. The net assets of Artemis will be stated at historical cost, with no goodwill or other intangible assets recorded.

 

The Company has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

 

 

 

The unaudited pro forma condensed combined balance sheet as of March 31, 2022 assumes that the Business Combination occurred on March 31, 2022.

 

The pro forma adjustments are based on the information currently available and reflect assumptions and estimates underlying the pro forma adjustments as described in the accompanying notes and it may not be indicative of the actual amounts and fair value of the Company. Additionally, the Combined Financial Information is based on preliminary accounting conclusions, which are subject to change. As the Combined Financial Information has been prepared based on these preliminary estimates and accounting, the final amounts recorded may differ materially from the information presented. The Combined Financial Information does not purport to represent the actual results of operations that the combined entity would have achieved had Artemis and the Company been combined during the periods presented. The Combined Financial Information does not reflect any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the combined entity.

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2. Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

 

The following is the CAP table reconciliation of Artemis.

 

Just prior to the consummation of the reverse recapitalization Artemis has reorganized its shareholdings. This reorganization did not impact the post-merger share of Artemis in the combined entity which remained 11%. Hence, even if the reorganization had earning consequences, such consequences were cancelled upon consummation of the reverse recapitalization as Artemis is the accounting Acquiree. The reorganization comprised of (1) settlement of liabilities with shares, the difference of which was recognized in earnings (2) conversion of employee’s warrants outstanding to shares, the difference of which was treated as share-based compensation and recognized in earnings and (3) conversion of warrants of other than employees, the difference of which was treated as dividend.

Name of Shareholder		Common Stock				Preferred Shares Series A				Preferred Shares Series C				Preferred Shares Series D				Settlement of debt (Note A)				Warrants converted to shares (Note B)				Share based compensation to executives (Note C)				Share-based to service provider (Note D)
		Number of shares																USD(*)
Outstanding shares as of June 5, 2022			5,153,461				453				250
Issuance of shares upon closing:
Tonak Ltd.			1,573,582																45,729
Israel Alfassi			25,000																								727
Cutter Mill Capital LLC			894,169																25,985
Globis Capital Partnership			976,167																				28,368
Globis International Investments			546,654																				15,886
Globis Overseas Fund			429,514																				12,482
Brian M. Culley			195,233																				5,674
Amiad Solomon			195,233																				5,674
Harmony (H.A.) Investments Ltd.			2,711,069																13,617												65,169
Chanan Morris			780,934																								22,694
Hadasit			95,256																2,768
Manuka Ltd			31,549,132												110,000
Total			45,125,405				453				250				110,000				88,099				68,084				23,421				65,169

The Transaction Accounting Adjustments included in the unaudited pro forma condensed combined balance sheet as of March 31, 2022 are as follows:

 

 

	D)	Includes the fair value of 2,242,509 shares granted to Harmony (H.A.) Investments Ltd as share-based payment to service provider. Amount of $65,169 was recognized as expenses.
	E)	As part of the merger agreement, it was agreed that shares of common stock of Artemis in the amount of 31,549,132 and Series D Preferred stock in the amount of 110,000 will be issued to Manuka’s shareholders in exchange for their shares of Manuka. Such preferred shares are convertible into 66,000,000 shares of common stock of Artemis. The total shares be given to Manuka is representing 87% of the issued and outstanding shares of Artemis post-merger.
	F)	Represents amount of $150,000 of liabilities that current shareholder of Artemis has committed to repay in lieu of Artemis.
	G)	Represents the cancellation of the shares and APIC of Artemis at the same amount.
	H)	As explained in E above, Manuka’s shareholder were issued ordinary and preferred shares. The amount of $339,764 represents the amount of attributed to the preferred shares issued to Manuka’s shareholder. As explained above the shareholders equity of Manuka, as the accounting acquirer, has been recapitalized to reflect the new structure that includes both preferred and shares of common stock. Allocation was done pro-ratably taking the into account that the preferred shares are convertible to 66,000,000 shares of common stock.
	I)	Represents the elimination of the shareholders deficiency of Artemis. As the amount is negative it has been shown as decrease in accumulated deficit.
	J)	Represents the elimination of shares issued, as explained in Notes A,B and C, prior to consummation to shareholders of Artemis as part of the elimination of the shareholders equity of Artemis due to it considered accounting acquiree.
	K)	Represents the elimination of all adjustments to accumulated deficit of Artemis, as part of the elimination of the shareholders equity of Artemis due to it considered accounting acquiree. This excludes the adjustment discussed in Note D above which is considered an expense of the accounting acquirer.
	L)	Represents the elimination of the accumulated deficit of Artemis.

(*) We have determined the fair value based recent transaction with 3rd party investor. In that transaction the Company raised $500K for 17.24% of the Company. That transaction derives fair value to the Company, pre-merger of $2,900K. Since, post transaction current shareholder of the Company will hold 87%, it is implying fair value of the post-merger Company of $3,3M and a per share price of $0.0291.