Subject to completion, dated 21, 2022
The information in this preliminary prospectus is not complete
and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS
Artemis Therapeutics,
Inc.
Up to 15,232,243 SHARES OF COMMON STOCK
The selling stockholders named in this prospectus are offering
15,232,243 shares of common stock, par value $0.01 (the “Common Stock”) of Artemis Therapeutics, Inc. (the “Company”).
We are not selling any shares of common stock under this prospectus and will not receive any proceeds from the sale of Common Stock to
be offered by the selling stockholders. See “Use of Proceeds.” We are registering the sale of these shares of common stock
to satisfy registration rights we have granted to the selling stockholders.
This prospectus describes the general manner in which the shares may be offered and
sold by the selling stockholders named in this prospectus (the “Selling Stockholders”). If necessary, the specific manner
in which the shares may be offered and sold will be described in a supplement to this prospectus. The Selling Stockholders and intermediaries
through whom such securities are sold may be deemed “underwriters” within the meaning of the Securities Act of 1933, as amended
(the “Act”), with respect to the securities offered hereby, and any profits realized or commissions received may be deemed
underwriting compensation. There are no underwriting commissions involved in this offering. We have agreed to pay all the costs and expenses
of this offering and for registering these shares of Common Stock. The Selling Stockholders will pay no offering expenses, but all selling
and other expenses incurred by the Selling Stockholders will be paid by the Selling Stockholders.
Our Common Stock is quoted on the OTC Pink Open Market under the
symbol
“ATMS”. On
September 14, 2022, the last reported bid price of our Common Stock was $1.75 per share. There is a limited
public trading market for our Common Stock. You are urged to obtain current market quotations for the Common Stock.
As of the date of this prospectus, our Common Stock is subject to quotation on the OTC
Pink Open Market (
“OTC Pink”) operated by the OTC Markets Group, Inc. Until such time as our Common Stock is quoted on the OTCQB
Venture Market (
“OTCQB”) or listed on any national securities exchange or automated interdealer quotation system, the common
shares covered by this prospectus will be sold by the Selling Stockholders from time to time at a fixed price of $1.30 per share, representing
the average of the high and low prices as reported on the OTC Pink on
December 19, 2022. If and when our Common Stock is regularly quoted
on the OTCQB or is listed on any national securities exchange or automated interdealer quotation system, the Selling Stockholders may
sell their respective shares of Common Stock, from time to time, at prevailing market prices or in privately negotiated transactions.
Investing in our Common Stock involves risks. To read
about factors you should consider before buying shares of our Common Stock See “Risk
Factors” on page 7.
Neither the U.S. Securities and
Exchange Commission (the “SEC”) nor any state securities commission has approved
or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal
offense.
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
Common Stock, par value $0.01 |
|
ATMS |
|
OTC Pink Open Market |
The date of this prospectus is , 2022.
|
Page |
|
S-3 |
|
S-4 |
|
S-5 |
|
S-6 |
|
S-7 |
|
S-20 |
|
S-21 |
|
S-22 |
|
S-29 |
|
S-39 |
|
S-43 |
|
S-44 |
|
S-45 |
|
S-48 |
|
S-51 |
|
S-53 |
|
S-54 |
|
S-55 |
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S-56 |
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2 |
You should rely only
on the information contained in this prospectus. Neither we nor the Selling Stockholders have authorized any dealer, salesperson or other
person to give any information or to make any representations to you other than the information contained in this prospectus. You must
not rely on any information or representations not contained in this prospectus as if we had authorized it. The information contained
in this prospectus is current only as of the date on the cover page of this prospectus and may change after that date. We do not imply
that there has been no change in the information contained in this prospectus or in our affairs since that date by delivering this prospectus.
Neither we nor the Selling Stockholders are making an offer of these securities in any state where the offer is not permitted. You should
assume that the information appearing in this prospectus is accurate only as of its date, regardless of its time of delivery or the time
of any sale of shares of our Common Stock. Our business, financial condition, results of operations and prospects may have changed since
that date.
Unless the context indicates otherwise, as used in this prospectus,
the terms
“Manuka,” “the Company,” “we,” “our,” and
“us” refer to Artemis
Therapeutics, Inc., a Delaware corporation and its subsidiary Manuka Ltd., a limited liability company organized under the laws of the
State of Israel.
C:
Trademarks and Trade
Names
Solely for convenience,
any trademarks, trade names, service marks or copyrights referred to or used herein are listed without the applicable ©,
® or ™ symbol, but such references or uses are not intended to indicate, in any way, that we, or the applicable owner, will
not assert, to the fullest extent under applicable law, our or their, as applicable, rights to these trademarks, trade names, service
marks and copyrights. Other trademarks, trade names, service marks or copyrights of any other company appearing in this prospectus are,
to our knowledge, the property of their respective owners.
Market and Industry
Information
While we believe the
estimated market position, market opportunity and market size information included in this prospectus is generally reliable, such information,
which is derived in part from management’s estimates and beliefs, is inherently uncertain and imprecise. Other market data and industry
information is based on management’s knowledge of the industry and good faith estimates of management. All of the market data, panel
data and industry information used in this prospectus involves a number of assumptions and limitations, and you are cautioned not to give
undue weight to such estimates. Projections, assumptions and estimates of our future performance and the future performance of the industry
in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described
in “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this prospectus. These
and other factors could cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared
by independent parties.
This
summary highlights certain information contained in other parts of this prospectus. Because it is a summary, it does not contain all of
the information that you should consider in making your investment decision. Before investing in our Common Stock, you should read the
entire prospectus carefully, including our consolidated financial statements and the related notes included in this prospectus and the
information set forth under the headings
“Risk Factors”,
“Cautionary Note Regarding Forward-Looking Statements”
and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial data and
related notes. You should carefully read the
documents incorporated by reference herein, which are described under
“Where You Can
Find More Information”.
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 to
June
30, 2022, we had no business operations and have been 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. As the shareholders of
Manuka Ltd. received the largest ownership interest in
the Company, Manuka Ltd. was determined to be
the
“accounting acquirer” in the reverse recapitalization. As a result, the historical financial statements of
the Company were replaced with the financial statement of Manuka Ltd. for all periods presented, except for the adjustments
to reflect the legal capital of
the Company. 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 shares 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. (formerly our largest shareholder),
for the forgiveness of an aggregate of $306,117 in outstanding debt in exchange for the issuance of 3,031,567 shares of our 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. On
June 30, 2022, we entered
into several debt forgiveness agreement and warrant exchange agreements, including: (i) a debt forgiveness agreement with Cutter Mill
Capital LLC, pursuant to which we agreed to issue 894,169 shares of our Common Stock. We also agreed to register all such shares of Common
Stock issued to Cutter Mill Capital, within the earlier of 60 days following the closing date of the Share Exchange Agreement (provided,
however that in the event we have not cleared comments with the SEC with respect to this filing relating to the transactions contemplated
by the Share Exchange Agreement, such date shall be 90 days following the date if the agreement) and the date that we file its next registration
statement, and agreed to obtain effectiveness within 90 days (or 120 days in the event of a full review by the SEC); (ii) a debt forgiveness
agreement with Tonak Ltd., pursuant to which we agreed to issue 1,573,582 shares of our Common Stock; (iii) a debt forgiveness agreement
with Hadasit Medical Research Services and Development Ltd., pursuant to which we agreed to issue 95,256 shares of our Common Stock; (iv)
warrant exchange agreements with Globis Capital Partners, LP and Globis International Investments LLC, pursuant to which we agreed to
issue 1,585,682 and 616,654 shares of our Common Stock, respectively; (v) warrant exchange agreements with Brian M. Culley and Amiad Solomon,
pursuant to which we agreed to issue to each 220,233 shares of our Common Stock; and (vi) an option exchange agreement with Chanan Morris,
pursuant to which we agreed to issue to each 780,934 shares of our Common Stock.
Since
its inception, Manuka’s business activities primarily
consisted of distributing Mānuka 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 Mānuka 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.
Manuka
was organized under the laws of the State of Israel in March 2020. Manuka is a company with a limited operating history and may contend
with risks and uncertainties frequently encountered by early-stage companies in rapidly evolving markets, including capital and growth
expectations as well as fluctuations in operating results and revenues.
The Company is in its early stages and has
limited capital.
The Company’s net loss totaled $330 thousand for the year ended
December 31, 2021, compared to $68 for the period
from
March 22, 2020 (Inception) to
December 31, 2020.
The Company’s working capital totaled $305 thousand for the year ended
December
31, 2021, a negative $4 thousand (deficit) for the period from
March 22, 2020 (Inception) to December 31 December 2020 and its burn rate
is $61 thousand per month as of the date of this prospectus. Although
the Company raised funds from an outside investor, such amount
is not sufficient to fund its operations for the period of twelve months from the date of approval of the financial statements, which
raises substantial doubts as to
the Company’s ability to continue as a going concern. Management’s plans to alleviate such
doubts are mainly reliant on the following factors: (i) as detailed in our financial reports, one of our major stockholders is committed
and will continue to financially support
the Company through December 2023, (ii)
the Company plans to raise capital in the near term,
and (iii) based on
the Company’s current business activity, and according to prior experience,
the Company is expected to increase
its sales turnover and become cash positive during the second quarter of 2023. Furthermore,
the Company currently has no obligations for
additional support from any other sources such as shareholders, directors, or officers.
Our
mailing address is Manuka Ltd, 3 Eliezer Vardinon St., Petach Tikva, Israel 4959507, and our telephone number is +972-77-407-4700. Our
Israeli
web site address is
www.bmanuka.co.il, and our prospective global
web site address
is
www.bmanuka.com. The content of our
website shall not be deemed incorporated by
reference in this prospectus.
The Company’s Common Stock is not listed on any national
stock exchange but is quoted on the OTC Pink under the symbol
“ATMS.” Our management endeavors to establish a public
trading market for our Common Stock on the OTCQB or other trading systems. Currently our trading volume is limited and we are subject
to the Alternative Reporting Standard of the OTC Pink. Until such time as our Common Stock is quoted on the OTCQB or listed on any national
securities exchange or automated interdealer quotation system, the Common Shares covered by this prospectus will be sold by the Selling
Stockholders from time to time at a fixed price of $1.30 per share, representing the average of the high and low prices as reported on
the OTC Pink on
December 19, 2022.
This prospectus relates to the sale, from time to time, by the Selling Stockholders
identified in this prospectus of up to 15,232,243 shares of Company’s Common Stock, consisting of: (i) 2,936,311 shares of Common
Stock issued to certain stockholders in connection with several debt forgiveness agreements with
the Company in consideration of a debt
forgiveness; (ii) 780,934 shares of Common Stock issued to certain stockholders in connection with an option exchange agreement; (iii)
2,642,802 shares of Common Stock issued to certain stockholders in connection with several warrant exchange agreements; and (iv) 8,872,196
shares of Common Stock of certain stockholders.
We are registering the sale of these shares (the “Resale Shares”) to satisfy registration rights we have granted to the Selling
Stockholders. The Selling Stockholders may offer, sell or distribute all or a portion of the shares of Common Stock registered hereby
publicly or through private transactions at prevailing market prices or at negotiated prices. The Selling Stockholders may be deemed to
be “underwriters” within the meaning of the Securities Act. There are no underwriting commissions involved in this offering.
We have agreed to pay all the costs and expenses of this offering. The Selling Stockholders will pay no offering expenses, but all selling
and other expenses incurred by the Selling Stockholders will be paid by the Selling Stockholders. We will not receive any proceeds from
the sale of Common Stock to be offered by the Selling Stockholders.
Common Stock Offered by the Selling Stockholders: |
|
Up to 15,232,243 shares of Common Stock. |
|
|
|
Common Stock Currently Issued and Outstanding |
|
112,033,909 shares of Common Stock. |
|
|
|
Use of Proceeds:
|
|
The Selling Stockholders will receive all of the proceeds from the sale of our Common Stock in this offering.
We will not receive any proceeds from the sale of shares of Common Stock by the Selling Stockholders. See “Use of Proceeds.”
|
|
|
|
Risk Factors:
|
|
An investment in the Common Stock offered under this prospectus is highly speculative and involves substantial
risk. Please carefully consider the “Risk Factors” section and other information in
this prospectus for a discussion of risks. Additional risks and uncertainties not presently known to us or that we currently deem to be
immaterial may also impair our business and operations. |
|
|
|
Listing:
|
|
Our Common Stock is subject to quotation on OTC Pink under the symbol “ATMS”. There is a volatile
and limited trading market for our securities.
We intend to apply for quotation on the OTCQB. Until such time
as our Common Stock is quoted on the OTCQB or listed on any national securities exchange or automated interdealer quotation system, the
shares covered by this prospectus will be sold by the Selling Stockholders from time to time at a fixed price of $1.30 per share, representing
the average of the high and low prices as reported on the OTC Pink on December 19, 2022. If and when our Common Stock is regularly quoted
on the OTCQB or listed on any national securities exchange or automated interdealer quotation system, the Selling Stockholders may sell
their respective shares of Common Stock, from time to time, at prevailing market prices or in privately negotiated transactions.
|
Except as otherwise indicated, the number
of shares of our Common Stock outstanding after this offering is based on 112,033,909 shares of Common Stock currently issued and outstanding
as of
December 20, 2022 and assumes no exercise, settlement or termination of any outstanding stock options, stock appreciation rights,
restricted stock awards or other stock-based awards after
October 18, 2022.
SUMMARY
FINANCIAL INFORMATION
The following summary of our financial data
should be read in conjunction with, and is qualified in its entirety by reference to,
“Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and our interim unaudited consolidated financial statements for the nine months
ended
September 30, 2022 and our audited consolidated financial statements as of and for the year ended
December 31, 2021, appearing elsewhere
in this prospectus.
The following tables
set forth our summary financial information for the periods as of the dates indicated. All financial statements included in this prospectus
are prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP"). The financial statements
contained elsewhere fully represent our financial condition and operations; however, they are not indicative of our future performance.
|
|
Nine Months
ended September 30, |
|
|
For the Year
Ended December 31, |
|
|
Period from
March 22, (Inception) to December 31 |
|
|
|
2 0 2 2 |
|
|
2
0 2 1 |
|
|
2 0 2 1
|
|
|
2
0 2 0 |
|
|
|
(USD
in thousands) |
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
195 |
|
|
|
7 |
|
|
|
7 |
|
|
|
- |
|
Costs of revenues |
|
|
25 |
|
|
|
2 |
|
|
|
1 |
|
|
|
- |
|
Gross profit |
|
|
170 |
|
|
|
5 |
|
|
|
6 |
|
|
|
- |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
465 |
|
|
|
37 |
|
|
|
66 |
|
|
|
38 |
|
General and administrative |
|
|
570 |
|
|
|
99 |
|
|
|
230 |
|
|
|
23 |
|
Total operating expenses
|
|
|
1,035 |
|
|
|
136 |
|
|
|
296 |
|
|
|
61 |
|
Operating loss |
|
|
(865 |
) |
|
|
(131 |
) |
|
|
(290 |
) |
|
|
(61 |
) |
Financial expenses (expenses)/ Income, net |
|
|
16 |
|
|
|
(16 |
) |
|
|
(39 |
) |
|
|
(7 |
) |
Net Loss and Total Comprehensive
Loss |
|
|
(849 |
) |
|
|
(147 |
) |
|
|
(329 |
) |
|
|
(68 |
) |
Loss per common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common stock
|
|
|
(0.02 |
) |
|
|
(0.00 |
) |
|
|
(0.0041 |
) |
|
|
(0.0011 |
) |
Weighted average number of shares of Common Stock
used in calculation of net loss per common stock: |
|
|
38,567,577 |
|
|
|
26,109,483 |
|
|
|
26,139,289 |
|
|
|
20,315,323 |
|
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains “forward-looking statements,” which include information relating to management’s current view with
respect to future events, future financial performance, financial projections, strategies, expectations, competitive environment and regulation.
Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,”
“continue,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking
statements. Such forward-looking statements may include projections with respect to market size and acceptance, revenues and earnings,
marketing and sales strategies, and business operations. Although forward-looking statements in this report reflect the good faith judgment
of management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties
that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not
to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to
update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other
than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made
by us in our reports filed with the SEC which attempt to advise interested parties of the risks and factors that may affect our business,
financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying
assumptions prove incorrect, our actual results may vary materially from those expected or projected by the forward-looking statements.
Important factors that could cause such differences include, but are not limited to:
|
● |
the size and growth of our product market; |
|
● |
our limited operating history and inability to effectively grow our business; |
|
● |
our developing and manufacturing capabilities; |
|
● |
our entering into certain partnerships with third parties; |
|
● |
obtaining required regulatory approvals for sales or exports of our products; |
|
● |
our expectations regarding our short- and long-term capital requirements; |
|
● |
the effect of COVID-19 on our business; |
|
● |
our outlook for the coming months and future periods, including but not limited to our expectations regarding
future revenue and expenses; and |
|
● |
information with respect to any other plans and strategies for our business. |
The
foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk
factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. Please
see “Risk Factors” for additional risks that could adversely impact our business and
financial performance.
All
forward-looking statements included in this prospectus are based on information available to us on the date of this prospectus. Except
to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable
to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout
this prospectus.
Moreover,
new risks regularly emerge, and it is not possible for our management to predict or articulate all the risks we face, nor can we assess
the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from
those contained in any forward-looking statements. All forward-looking statements included in this prospectus are based on information
available to us on the date of this prospectus. Except to the extent required by applicable laws or rules, we undertake no obligation
to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent
written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety
by the cautionary statements contained above and throughout this prospectus.
An investment in our Common Stock is speculative and illiquid and involves a high degree of risk, including the risk of a loss of your
entire investment. You should carefully consider the risks and uncertainties described below and the other information contained in this
prospectus before purchasing shares of our Common Stock. If any of the following risks actually materialize, our business, financial condition,
prospects and/or operations could suffer. In such event, the value of our Common Stock could decline, and you could lose all or a substantial
portion of the money that you pay for our Common Stock. The risks and uncertainties described below are not the only ones we are facing.
Additional risks and uncertainties not presently known to us or that we deem immaterial may also impair our business operations or financial
condition. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our
business, financial condition and results of operations could be materially adversely affected by any of these risks. The trading price
of our securities could decline due to any of these risks, and you may lose all or part of your investment. The discussion of risks includes
or refers to forward-looking statements; you should read the explanation of the qualifications and limitations on such forward-looking
statements discussed elsewhere in this prospectus.
Risks Related to Our
Business
Manuka
has a limited operating history and is subject to the risks encountered by early-stage companies.
Manuka
was organized in Israel in March 2020. Because its operating company has a limited operating history, you should consider and evaluate
its operating prospects in light of the risks and uncertainties frequently encountered by early-stage companies in rapidly evolving markets.
For us, these risks include:
|
• |
risks that Manuka may not have sufficient capital to achieve its growth strategy;
|
|
|
|
|
• |
risks that Manuka may not develop its product and service offerings in a manner that
enables us to be profitable and meet its customers’ requirements; |
|
|
|
|
• |
risks related to the ability for us to attract, enter into or maintain contracts with
customers, partners and other third parties, including health food chains, retail outlets and other online distributers; |
|
|
|
|
• |
risks that our growth strategy may not be successful; and |
|
|
|
|
• |
risks that fluctuations in our operating results will be significant relative to our
revenues. |
These risks are described in more detail below. Its future growth will depend substantially
on Manuka’s ability to address these, and other risks, described in this section. If Manuka does not successfully address these
risks, its business would be significantly harmed.
Manuka’s future
success depends on its ability to develop, receive FDA and other similar regulatory approval for, and introduce new products or product
enhancements that will be accepted by the market in a timely manner, and if Manuka does not do so, its results of operations will suffer.
It is important
to Manuka’s business that it continues to build a pipeline of product offerings for the treatment skin conditions and cosmetic improvements
to remain competitive. Consequently, its success will depend in part on Manuka’s ability to develop or acquire and introduce new
products. However, Manuka may be unable to successfully maintain its regulatory clearance for existing products, or develop, obtain and
maintain regulatory clearance or approval for product enhancements, or new products, or these products may not be accepted by clinicians
who financially support many of the procedures performed with its products.
If Manuka does
not develop new products or product enhancements in time to meet market demand, if there is insufficient demand for these products or
enhancements, or if competitors introduce new products with enhanced functionalities that are superior to those of Manuka, then its results
of operations will suffer.
Failure to comply with the Israeli Ministry of Health (“MoH”) and any other applicable foreign governmental regulatory agency,
and failure of our suppliers and manufacturers to provide foreign laboratory tests for licensing requirements in Israel and to provide
any other applicable confirmations to the MoH or FDA or any other regulatory authority, could cause us to lose the ability to market and
sell our products which will disrupt our business and adversely affect our operations and revenues.
We rely, and expect to continue to rely, on third-party manufacturers to
produce our products that require an import license from the MoH (the “MoH License”), as well as other regulatory requirements
associated with sale and marketing of our products in Israel and in the United States, which requires our suppliers and manufacturers
to provide foreign laboratory tests and other confirmations. A failure of our third-party manufacturers to maintain their licenses and
of our ability to obtain satisfactory laboratory tests and other confirmations from our suppliers and manufacturers, may disrupt our business
which may result in an adverse effect on our operations and revenues.
The
success of Manuka’s business depends on its ability to maintain and enhance its reputation and brand.
Manuka believes
that its reputation in the skincare industry is of significant importance to the success of its business. A well-recognized brand is critical
to increasing its customer base and, in turn, increasing its revenue. Since the skincare industry is highly competitive, its ability to
remain competitive depends to a large extent on its ability to maintain and enhance its reputation and brand, which could be difficult
and expensive. To build, maintain and enhance its reputation and brand, Manuka needs to successfully manage many aspects of its business,
such as cost-effective marketing campaigns to increase brand recognition and awareness in a highly competitive market.
Manuka
will continue to conduct various marketing and brand promotion activities. Manuka cannot assure you, however, that these activities will
be successful and achieve the brand promotion goals we expect. If Manuka fail to maintain and enhance its reputation and brand, or if
we incur excessive expenses in its efforts to do so, Manuka’s business, financial conditions and results of operations could be
adversely affected.
Due to the competitive market in which we operate,
we may not be able to successfully find, enter into and maintain contracts with customers, partners and other third parties, including health
food and convenience stores’ chains, retail outlets and online distributers
(“Retail Customers”) to sell and market our products, which may negatively impact our revenues and business success.
Our revenues and business success may be limited to the strength
of our relationships and our ability to find, enter into and maintain
contracts with customers, partners and other third parties, including
health food and convenience stores’ chains, retail outlets and online distributers to continue to sell and market our products.
We do not have long term
contracts with any Retail Customers and sales to our Retail Customers are generally on an order-by-order basis
and are subject to rights of cancellation and rescheduling by the customer. If we cannot fill our Retail Customers' orders in a timely
manner, the sales of our products, and our relationships with those customers, may suffer, which could have a material adverse effect
on our product sales and ability to grow our product lines and our business. In addition, we compete directly with our Retail Customers
by selling our products to consumers via our
website on the internet. If our Retail Customers believe that our direct sales to consumers
divert sales from their stores, this may weaken our relationships with such customers and cause them to reduce purchases of our products.
If our Retail Customers
will be unable or unwilling to fulfil their obligations or decide to terminate their relations with us could have a material adverse effect
on our business, financial condition and results of operations. In addition, such problems may require us to find new Retail Customers
or other third-party service providers, and there can be no assurance that we would be successful in finding alternatives that third-party
Retail Customers or other distributers would meet our standards and business interests or goals which may negatively impact our revenues
and business success.
Our reliance on distributors, retailers and other third-parties
could affect our ability to efficiently and profitably distribute and market our products, maintain sales in our existing markets and
expand our business into other geographic markets.
Our ability to maintain
and expand our existing markets for our products, and to establish markets in new geographic distribution areas, is dependent on our ability
to establish and maintain successful relationships with reliable distributors, retailers and other third-parties strategically
positioned to serve those areas. Most of our distributors, retailers and other third-parties sell
and distribute competing products, and our products may represent a small portion of their businesses. The success of our distribution
network will depend on the performance of the distributors, retailers, and other third-parties in
our network. There is a risk they may not adequately perform their functions within the network by, without limitation, failing to distribute
to sufficient retailers or positioning our products in localities that may not be receptive to our product. Our ability to incentivize
and motivate distributors to manage and sell our products is affected by competition from other companies who have greater resources than
we do. To the extent that our distributors, retailers and other third-parties are distracted
from selling our products or do not employ sufficient efforts in managing and selling our products, including re-stocking the retail shelves
with our products, our sales and results of operations could be adversely affected. Furthermore, such third parties’ financial position
or market share may deteriorate, which could adversely affect our distribution, marketing and sales activities.
Our ability to maintain
and expand our distribution network and attract additional distributors, retailers and other third-parties will
depend on a number of factors, some of which are outside our control. Some of these factors include:
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the level of demand for our brands and products in a particular distribution area;
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our ability to price our products at levels competitive with those of competing products;
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our ability to deliver products in the quantity and at the time ordered by distributors,
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We may not be able
to successfully manage all or any of these factors in any of our current or prospective geographic areas of distribution. Our inability
to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on our relationships
in that particular geographic area, thus limiting our ability to maintain or expand our market, which will likely adversely affect our
revenues and financial results.
Manuka has
incurred losses since its inception.
To date Manuka
has generated minimal revenues. Manuka cannot give assurances that it will continue to generate revenues or income in the future.
To date,
Manuka has financed its operations primarily through marketing and sales, the sale of equity securities, shareholders loans and short-term
credit. The amount of its future net losses will depend, in part, on the rate of its future expenditures and its ability to obtain funding
through equity or debt financings, strategic collaborations, or grants. Skincare product development is a speculative undertaking and
involves a substantial degree of risk. With respect to its current products and future products (in the pure honey market), we are in
early developments of its penetration to the global market. Even if Manuka obtains regulatory approval to market its products, its future
revenue will depend upon the size of any markets in which its products may receive approval, and its ability to achieve sufficient market
acceptance, pricing, reimbursement from third-party payors, and adequate market share for its product candidates in those markets.
Manuka
expects to continue to incur expenses and increasing operating losses for the foreseeable future. Manuka anticipates that its expenses
will increase substantially if and as it:
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continue its research and preclinical and clinical development of its products;
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advance its programs into more expensive clinical studies;
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initiate additional preclinical, clinical, or other studies for its product candidates;
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change or add additional manufacturers or suppliers;
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seek regulatory and marketing approvals for our product that successfully complete
regulatory approvals;
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establish a sales, marketing, and distribution infrastructure to commercialize any
products for which Manuka may obtain marketing approval;
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make milestone or other payments under any license agreements;
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seek to maintain, protect, and expand its intellectual property portfolio;
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seek to attract and retain skilled personnel;
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create additional infrastructure to support its operations as a public company and
its product development and planned future commercialization efforts; and
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experience any delays or encounter issues with any of the above, including but not
limited to failed studies, complex results, safety issues, or other regulatory challenges that require longer follow-up of existing studies,
additional major studies, or additional supportive studies in order to pursue marketing approval.
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Further,
the net losses Manuka incurs may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison
of its results of operations may not be a good indication of its future performance.
Manuka
has had marginal revenues since inception. Our
costs may grow quicker than our revenues, which may negatively affect our potential profitability.
Manuka
has experienced net losses and has generated a marginal revenues since its inception. We expect our expenses to continue to increase
in the future as we expand our product offerings and hire additional personnel. Manuka does not anticipate generating significant
revenues until Manuka successfully develops, commercializes and sells its proposed products, of which Manuka can give no assurance. Our
expenses may be greater than we anticipate which would have a negative impact on our results of operations and our ability to invest in
expansion of our business such that may negatively affect our profitability. Manuka is unable to determine when it will generate significant
revenues, if any, from the sale of any of such products.
Manuka cannot predict when it will
achieve significant profitability, if ever. Manuka’s inability to become significantly profitable may force us to curtail or temporarily
discontinue its marketing and sales and its day-to-day operations. Furthermore, there can be no assurance that profitability, if achieved,
can be sustained on an ongoing basis. As of
September 30, 2022, Manuka had accumulated liabilities of $1,006.
If
Manuka is unable to protect the confidentiality of its trade secrets, its business and competitive position would be harmed.
Manuka
plans to rely on proprietary formulas, including unpatented know-how, to maintain its competitive position. Manuka will seek to protect
these proprietary secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them,
such as its employees, corporate collaborators, outside scientific collaborators,
contract manufacturers, consultants, advisors and other
third parties. Moreover, to the extent Manuka enters into such agreements, any of these parties may breach the agreements and disclose
its proprietary information, including its trade secrets, and Manuka may not be able to obtain adequate remedies for such breaches. Enforcing
a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome
is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets.
If any of its trade secrets were to be lawfully obtained or independently developed by a competitor, Manuka would have no right to prevent
them, or those to whom they communicate it, from using that technology or information to compete with us. If any of its trade secrets
were to be disclosed to or independently developed by a competitor, its competitive position would be harmed. In general, any loss of
trade secret protection or other unpatented proprietary rights could harm its business, results of operations and financial condition.
Manuka may need additional
financing to accomplish its business and strategic plans.
The funds Manuka has on hand may not be adequate to develop its current
business plan. Its ultimate success may depend on its ability to raise additional capital. In the absence of additional financing or significant
revenues and profits,
the Company will have to approach its business plan from a much different and much more restricted direction, attempting
to secure additional funding sources to fund its growth, borrowing money from lenders or elsewhere or to take other actions to attempt
to provide funding. Manuka cannot guarantee that it will be able to obtain sufficient additional funds when needed, or that such funds,
if available, will be obtainable on terms satisfactory to us. Manuka is at its early stages, has limited capital and has not yet generated
cash from operations. Manuka raised funds from an outside investor, which is not sufficient to fund its operation for the period of twelve
months from the date of approval of the financial statements, which raises substantial doubts as to
the Company’s ability to continue
as going concern. Management plans to alleviate such doubts are mainly reliant on the support of its major stockholder securing the necessary
funds for us in the foreseeable future.
Manuka will
need to raise additional financing to support the manufacturing of its products but it cannot be sure it will be able to obtain additional
financing on terms favorable to us when needed. If Manuka is unable to obtain additional financing to meet its needs, its operations may
be adversely affected or terminated.
It is highly likely that Manuka will need to raise significant additional capital in the future. Its current
financial resources are limited and may not be sufficient to finance its operations until Manuka becomes profitable. It is likely that
Manuka will need to raise additional funds in the near future in order to satisfy its working capital and capital expenditure requirements.
Therefore, Manuka is dependent on its ability to sell its securities for funds, receive grants or to otherwise raise capital. There can
be no assurance that Manuka will be able to obtain financing. Any sale of its Common Stock in the future will result in dilution to existing
stockholders and could adversely affect the market price of its Common Stock. Also, we may not be able to borrow or raise additional capital
in the future to meet its needs or to otherwise provide the capital necessary to conduct the development and commercialization of our
potential products, which could result in the loss of some or all of one's investment in our Common Stock.
Third
parties may initiate legal proceedings alleging that Manuka is
infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on its
business.
Manuka’s
commercial success depends upon its ability and the ability of its collaborators to develop, manufacture, market and sell its products
and use its proprietary formulas without infringing the proprietary rights of third parties. Manuka may become party to, or threatened
with, future adversarial proceedings or litigation regarding intellectual property rights with respect to its products and formulas. Third
parties may assert infringement claims against us based on existing proprietary rights that may be granted in the future. If Manuka is
found to infringe a third party's proprietary rights, Manuka could be required to obtain a license from such third party to continue developing
and marketing its formulas. However, Manuka may not be able to obtain any required license on commercially reasonable terms or at all.
Even if Manuka were able to obtain a license, it could be non-exclusive, thereby giving its competitors access to the same technologies
licensed to us. Manuka could be forced, including by court order, to cease commercializing the infringing product. In addition, Manuka
could be found liable for monetary damages. A finding of infringement could prevent us from commercializing its product formulas or force
us to cease some of its business operations, which could materially harm its business. Claims that we have misappropriated the confidential
information or trade secrets of third parties could have a similar negative impact on its business.
Even if
resolved in its favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant
expenses and could distract its technical and management personnel from their normal responsibilities. In addition, there could be public
announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors
perceive these results to be negative, it could have a substantial adverse effect on the price of our Common Stock. Such litigation or
proceedings could substantially increase its operating losses and reduce the resources available for development activities or any future
sales, marketing or distribution activities. Manuka may not have sufficient financial or other resources to adequately conduct such litigation
or proceedings. Some of its competitors are able to sustain the costs of such litigation or proceedings more effectively than Manuka can
because of their greater financial strength. Uncertainties resulting from the initiation and continuation of litigation or other proceedings
could have a material adverse effect on its ability to compete in the marketplace.
Product
liability claims could damage its reputation and adversely affect Manuka’s business.
The design,
manufacture and marketing of its products each carry an inherent risk of product liability claims and other damage claims. In addition
to the exposure, Manuka may have for defective products, clinicians may misuse its products or use improper techniques, regardless of
how well trained, potentially leading to injury and an increased risk of product liability. A product liability or other damages claim,
product recall or product misuse could require us to spend significant time and money in litigation, regardless of the ultimate outcome,
or to pay significant damages and could seriously harm its business.
If
Manuka fail to
manage growth or to prepare for product scalability effectively, it could have an adverse effect on its employee efficiency, product quality,
working capital levels and results of operations.
Any significant growth in
the market for its products or its entry into new markets may require an expansion of its employee base for managerial, operational, financial,
and other purposes. As of
December 20, 2022, Manuka had 3 employees and consultants who provide services on either a full-time or part-time
basis. During any period of growth, Manuka may face problems related to its operational and financial systems and controls, including
quality control and delivery and service capacities. Manuka would also need to continue to expand, train and manage its employee base.
Continued future growth will impose significant added responsibilities upon the members of management to identify, recruit, maintain,
integrate, and motivate new employees.
Aside
from increased difficulties in the management of human resources, Manuka may also encounter working capital issues, as Manuka will need
increased liquidity to finance the development of new products, and the hiring of additional employees. For effective growth management,
Manuka will be required to continue improving its operations, management, and financial systems and controls. Manuka’s failure to
manage growth effectively may lead to operational and financial inefficiencies that will have a negative effect on its profitability.
Manuka cannot assure investors that Manuka will be able to timely and effectively meet that demand and maintain the quality standards
required by its existing and potential customers.
Manuka’s management
team may not be able to successfully implement its business strategies.
If its management team is unable to execute on its business strategies, then its development, including the establishment of revenues
and its sales and marketing activities would be materially and adversely affected. In addition, Manuka may encounter difficulties in effectively
managing the budgeting, forecasting and other process control issues presented by any future growth. Manuka may seek to augment or replace
members of its management team or Manuka may lose key members of its management team, and Manuka may not be able to attract new management
talent with sufficient skill and experience.
If
Manuka is unable
to retain key executives and other key affiliates, its growth could be significantly inhibited, and its business harmed with a material
adverse effect on its business, financial condition and results of operations.
Manuka’s
success is, to a certain extent, attributable to the management, sales and marketing, of certain personnel. Its 1-management team personnel,
performs key functions in the operation of its business. The loss of him could have a material adverse effect upon its business, financial
condition, and results of operations. If Manuka loses the services of its senior management, Manuka may not be able to immediately locate
suitable or qualified replacements and may incur additional expenses to recruit and train new personnel, which could severely disrupt
its business and prospects.
If
Manuka fail to attract, hire and retain qualified personnel, Manuka may not be able to design, develop, market or sell our products or
successfully manage our business.
Manuka
has a small management team and are particularly dependent on our core management team. Accordingly, Manuka’s business prospects
are dependent on the principal member of our executive team, the loss of whose services could make it difficult for us to manage our business
successfully and achieve our business objectives. While Manuka has entered into employment agreements with its executive officer, he could
leave at any time, in addition to our other employees and consultants, who are all “at will” employees. Manuka’s ability
to identify, attract, retain and integrate additional qualified key personnel is also critical to its success. Competition for skilled
research, product development, regulatory and technical personnel is intense, and Manuka may not be able to recruit and retain the personnel
it needs. The loss of the services of any key personnel, or our inability to hire new personnel with the requisite skills, could restrict
our ability to develop our operations and business.
Investors
may have difficulties enforcing a U.S. judgment, including judgments based upon the civil liability provisions of the U.S. federal securities
laws, against us or its executive officers and directors, or asserting U.S. securities laws claims in Israel.
None of its
directors or executive officers are residents of the United States. Most of its directors’ and executive officers’ assets
and its assets are located outside the United States. Service of process upon us or its non-U.S. resident directors and executive officers
and enforcement of judgments obtained in the United States against us or its non-U.S. directors and executive officers may be difficult
to obtain within the United States. Manuka has been informed by its legal counsel that it may be difficult to assert claims under U.S.
securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal
securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against us or its executive officers
and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees
to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable,
the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure
will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described above. Israeli courts
might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against us or its executive
officers and directors.
Moreover, among
other reasons, including but not limited to fraud or absence of due process, or the existence of a judgment which is at variance with
another judgment that was given in the same matter if a suit in the same matter between the same parties was pending before a court or
tribunal in Israel, an Israeli court will not enforce a foreign judgment if it was given in a state whose laws do not provide for the
enforcement of judgments of Israeli courts (subject to exceptional cases) or if its enforcement is likely to prejudice the sovereignty
or security of the State of Israel.
We
rely on third party suppliers and manufacturers, which could be a barrier and cause supply shortage and interruption that could materially
impact our business, and we dependent on these third parties.
Manuka relies
upon third party suppliers and manufacturers, including Chic Cosmetics in Israel and Waitemata Honey Co located in New Zealand, to supply
raw materials and its products. A supplier’s failure to supply materials
in a timely manner, or to supply its finished products, may harm its ability to manufacture its products cost-effectively or at all, and
its revenues and gross margins might suffer.
In addition, any significant interruption, negative changes in the availability
or economics of the supply chain or increases in the prices for the ingredients in
the Company’s products provided by any such third-party
suppliers, manufacturers and contractors could materially impact
the Company’s business, financial condition, results of operations
and prospects. Any inability to secure required supplies or to do so on appropriate terms could have a materially adverse impact on the
Company’s business, financial condition, results of operations and prospects.
We do not control the
operational processes of our third party suppliers and manufacturers with whom we
contract and their quality control, quality assurance
and the maintenance of records and documentation, and we are dependent on these third parties for our business.
Further, our third-party
contract manufacturers may:
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have economic or business interests or goals that are inconsistent with ours;
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have economic or business hardship, including
COVID-19 pandemic or other global crisis; |
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take actions contrary to our instructions, requests, policies or objectives;
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be unable or unwilling to fulfill their obligations to comply with applicable regulations,
including those regarding the safety and quality of products and ingredients and good manufacturing practices; |
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have financial difficulties; |
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encounter raw material or labor shortages; and |
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encounter increases in raw material or labor costs that may affect our procurement
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The occurrence of any of these events, alone or together, could have a material adverse effect on our business, financial condition and
results of operations. In addition, such problems may require us to find new manufacturers or other third-party service providers, and
there can be no assurance that we would be successful in finding alternatives that third-party suppliers, manufacturers or distributors
meeting our standards of innovation and quality.
Underproduction
could lead to undercapitalization of market demand.
Manuka may not
meet its product development and commercialization milestones. Manuka has several development programs that are in the pre-commercial
stage. The success of each formulation development program is highly dependent on its correct interpretation of commercial market requirements,
and its translation of those requirements into applicable product specifications and appropriate development milestones. If Manuka has
misinterpreted market requirements, or if the requirements of the market change, Manuka may develop a product that does not meet the cost
and performance requirements for a successful commercial product. In addition, if Manuka does not meet the required development milestones,
its commercialization schedules could be delayed, which could result in potential adverse effects on its business.
Changes
in customer expectation in its industry and market may materially effect the results of Manuka’s operations.
The risk of
not meeting its customer expectations may result in shift in market shares. Manuka’s customers may not be satisfied with the products
Manuka delivered, therefore there is a chance that they will choose products offered by its competitors. This may result in low sales
revenue and lower in market share.
The
future worldwide demand for our current products and its future products is uncertain. Manuka’s current products and its future
products may not be accepted and may not become commercially successful.
Customers may
not perceive the benefits of its products and may be reluctant or unwilling to adopt Manuka’s products as a treatment option. While
Manuka believes that its products are a better alternative to other treatments of certain skin conditions, individuals who are accustomed
to using other modalities to treat customers may be reluctant to adopt broad use of its products.
Manuka must grow markets for its products through education and awareness programs. While studies have been done, there may be more to
perform, and certain there will be with new projects. The process of marketing the results of the studies is subject to a peer-review
process. Peer reviewers may not consider the results of studies of its products and any future products sufficiently novel or worthy of
publication. Failure to have studies of its product accepted may affect adoption of its products.
Increases
in the demand for, or the price of, raw materials could hurt our profitability, including with respect to supply chain disruptions.
The raw materials
used to manufacture its products are subject to availability constraints and price volatility caused by weather, supply conditions, government
regulations, general economic conditions, the COVID-19 pandemic and other global health crisis as well as other unpredictable factors.
Increases in the demand for, or the price of, raw materials could hurt its profitability.
Although the COVID-19 pandemic did not cause us to experience a significant impact on our business, the COVID-19 pandemic could adversely
affect our business, financial condition and results of operations, including with supply chain disruptions and our ability to sell our
products.
In December
2019, an outbreak of a novel coronavirus disease, or COVID-19, was first identified and began to spread across the globe and, in March
2020, the World Health Organization declared it a pandemic. This contagious disease has spread across the globe and is impacting economic
activity and financial markets worldwide, including countries in which our end users and customers are located, as well as the United
States and Israel where we have business operations. As a result of the COVID-19 pandemic, government authorities around the world have
ordered schools and businesses to close, imposed restrictions on non-essential activities and required people to remain at home while
imposing significant restrictions on traveling and social gatherings.
Manuka Ltd. was incorporated
under the laws of the State of Israel on
March 22, 2020. We experienced no significant impact on our business since inception and during
our operations, however, it is currently unclear the extent to which COVID-19 may impact our business and financial results going forward,
as the impact will depend on future developments with the pandemic which are highly uncertain and cannot be predicted, including new information
which may emerge concerning the severity of COVID-19 and the actions by governments around the world to contain COVID-19 or treat its
impact, among others.
COVID-19 may
negatively impact us due to supply chain disruptions and shortage in raw materials for our manufacturers, as well as causing us to incur
increased labor costs and difficulty in maintaining and attracting employees. We may also experience difficulties in selling our products
and generating revenue.
While COVID-19
has not had a material adverse impact on our operations through the date of this prospectus, the impact of COVID-19 (i) on our ability
to attract, serve, retain or upsell customers is inherently uncertain and depends on the duration, severity and potential resurgence of
the pandemic and its impact on end users, customers and the macroeconomic environment as a whole, and (ii) may reduce or limit our ability
obtain raw materials for our products. A supplier’s failure due to COVID-19
to supply materials in a timely manner, or to supply its finished products, may harm its ability to manufacture its products cost-effectively
or at all, and its revenues and gross margins might suffer.
Prior to the
COVID-19 pandemic, our employees traveled frequently to establish and maintain relationships with one another, as well as our customers,
suppliers, partners, and investors. Although we continue to monitor the situation and may adjust our current policies as more information
and public health guidance become available, limitations on travel and doing business in person may negatively affect our customer success
efforts, sales and marketing efforts, challenge our ability to enter into customer
contracts in a timely manner, slow down our recruiting
efforts, or create operational or other challenges, any of which could adversely affect our business, financial condition and results
of operations.
Furthermore,
COVID-19 has disrupted and may continue to disrupt the operations of our customers and for an indefinite period of time, including as
a result of travel restrictions and/or business shutdowns, all of which could negatively impact our business, financial condition and
results of operations. More generally, the COVID-19 pandemic has adversely affected economies and financial markets globally, leading
to an economic downturn, which could decrease technology spending and adversely affect demand for our offerings and harm our business,
financial condition and results of operations.
Risks Related to The
Securities Markets and Investments in Our Common Stock
Manuka’s
primary shareholder possesses the majority of its voting power, and through this ownership, control
the Company and its corporate actions.
The primary
shareholder and executive officer,
Shimon Citron holds, together with his spouse, a stake of 72% of the voting power in
the Company. This
executive officer, thus, has a controlling influence in determining the outcome of any corporate transaction or other matters submitted
to its stockholders for approval, including mergers, consolidations, and the sale of all or substantially all of its assets, election
of directors, and other significant corporate actions. As such, this executive officer has the power to prevent or cause a change in control;
therefore, without his consent Manuka could be prevented from entering into transactions that could be beneficial to us. The interests
of its executive officers may give rise to a conflict of interest with
the Company and
the Company’s shareholders. For additional
details concerning voting power please refer to the section below entitled
“Description of Securities.”
There
is a substantial lack of liquidity of our Common Stock and volatility risks, and because
there is no active public trading market for our Common Stock, you may not be able to resell your stock.
Our Common Stock
is traded on the over-the-counter market with quotations published on the OTC Pink, under the symbol
“ATMS”. The OTC Pink
is not otherwise regularly quoted on any other over-the-counter market or exchange. The trading volume of the Common Stock historically
has been limited and sporadic, and the stock prices have been volatile. As a result of the limited and sporadic trading activity, the
quoted price for the Common Stock on the over-the-counter market is not necessarily a reliable indicator of its fair market value. The
market price of our Common Stock could fluctuate substantially due to a variety of factors, including market perception of our ability
to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our Common Stock,
changes in general conditions in the economy and the financial markets or other developments affecting
the Company’s competitors
or
the Company itself. In addition, the OTC Pink is subject to extreme price and volume fluctuations in general. This volatility has had
a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and
could have the same effect on our Common Stock.
Sporadic and
limited trading volume is attributable to a number of factors, including the fact that we are a small company which is relatively unknown
to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume,
and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company
such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence,
there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned
issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect
on share price.
We intend to apply
for the listing of our shares to trade on the OTCQB, an inter-dealer, over-the-counter market that provides significantly less liquidity
than other national or regional exchanges. This process takes at least 60 days, and the application must be made on our behalf by a market
maker. Our Common Stock may be listed or traded only to the extent that there is interest by broker-dealers in acting as a market
maker. Despite our best efforts, we may not be able to convince any broker/dealers to act as market-makers and make quotations on OTCQB.
If our Common Stock becomes listed and a market for the stock develops, the actual price of our shares will be determined by prevailing
market prices at the time of the sale.
Furthermore, there
is no guarantee that our shares will be listed on the OTCQB or any other "over- the- counter" marketplace. We are currently traded on
the OTC Pink. If our securities are not eligible for continued quotation on the OTC Pink, or if a public trading market does grow and
develop, purchasers of the shares of Common Stock may have difficulty selling or be unable to sell their securities, rendering their shares
effectively worthless and resulting in a partial or complete loss of their investment.
We cannot give you any assurance that a broader or more active public trading
market for our Common Stock will develop or be sustained, or that current trading levels will be sustained. As a result of such trading
activity, the quoted price for our Common Stock on the OTC Pink may not necessarily be a reliable indicator of our fair market value.
In addition, if our shares of Common Stock cease to be quoted, holders would find it more difficult to dispose of or to obtain accurate
quotation as to the market value of, our Common Stock and as a result, the market value of our Common Stock likely would decline.
The market price
for our stock may be volatile and subject to fluctuations in response to factors, including the following:
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•
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The increased concentration of the ownership of our shares by a limited number of
affiliated stockholders following the Merger may limit interest in our securities;
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•
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variations in quarterly operating results from the expectations of securities analysts
or investors;
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•
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revisions in securities analysts’ estimates or reductions in security analysts’
coverage;
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•
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announcements of new products or services by us or our competitors;
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•
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reductions in the market share of our products;
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•
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announcements by us or our competitors of significant acquisitions, strategic partnerships,
joint ventures or capital commitments;
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•
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general technological, market or economic trends;
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•
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investor perception of our industry or prospects;
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•
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insider selling or buying;
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•
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investors entering into short sale contracts;
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•
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regulatory developments affecting our industry; and
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|
• |
additions or departures of key personnel. |
Many of these
factors are beyond our control and may decrease the market price of our Common Stock, regardless of our operating performance. Manuka
cannot make any predictions or projections as to what the prevailing market price for our Common Stock will be at any time, including
as to whether our Common Stock will sustain current market prices, or as to what effect that the sale of shares or the availability of
Common Stock for sale at any time will have on the prevailing market price.
Because
Manuka became public
by means of a “reverse merger”, Manuka may not be able to
attract the attention of major brokerage firms.
There may be
risks associated with us becoming public through a “reverse merger.” Securities analysts of major brokerage firms and securities
institutions may not provide coverage of us because there were no broker-dealers who sold our stock in a public offering that would be
incentivized to follow or recommend the purchase of our Common Stock. The absence of such research coverage could limit investor interest
in our Common Stock, resulting in decreased liquidity. No assurance can be given that established brokerage firms will, in the future,
want to cover our securities or conduct any secondary offerings or other financings on our behalf.
Our
Common Stock may not be eligible for listing or quotation on any national securities exchange.
We do not currently meet the initial quantitative listing standards of any national
securities exchange. We cannot assure you that we will be able to meet the initial listing standards of any national securities exchange
in the future, or, if we do meet such initial listing standards, that we will be able to maintain any such listing. Until our Common Stock
is listed on a national securities exchange, which event may never occur, we expect that it will continue to be eligible and quoted on
the OTC Pink. However, investors may find it difficult to obtain accurate quotations as to the market value of our Common Stock.
Further, the national securities exchanges are adopting so-called “seasoning” rules that will require that we meet certain
requirements, including prescribed periods of time trading over the counter and minimum filings of periodic reports with the SEC, before
we are eligible to apply for listing on such national securities exchanges. In addition, if we fail to meet the criteria set forth in
SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established
customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling our Common Stock,
which may further affect its liquidity. This would also make it more difficult for us to raise additional capital.
Our
stock price may be volatile.
The market price
of our Common Stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which
are beyond our control, including the following:
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•
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changes in our industry;
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•
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our ability to obtain working capital financing;
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•
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additions or departures of key personnel;
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•
|
limited “public float” in the hands of a small number of persons whose
sales or lack of sales could result in positive or negative pricing pressure on the market price for our Common Stock;
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•
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sales of our Common Stock;
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•
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our ability to execute our business plan;
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•
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operating results that fall below expectations;
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•
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loss of any strategic relationship;
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•
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regulatory developments;
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•
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economic and other external factors; and
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• |
period-to-period fluctuations in our financial results. |
In addition,
the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating
performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our Common
Stock.
Our
Common Stock is subject to price volatility unrelated to our operations.
The market price of our Common Stock could fluctuate substantially due to a variety
of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in
the same industry, trading volume in our Common Stock, changes in general conditions in the economy and the financial markets or other
developments affecting
the Company’s competitors or
the Company itself. In addition, the OTC Pink is subject to extreme price and
volume fluctuations in general. This volatility has had a significant effect on the market price of securities issued by many companies
for reasons unrelated to their operating performance and could have the same effect on our Common Stock.
The
securities issued in connection with the Share Exchange are restricted securities and may not be transferred in the absence of registration
or the availability of a resale exemption.
The shares of
Common Stock being issued in connection with the Share Exchange are being issued in reliance on an exemption from the registration requirements
under Section 4(a)(2) of the Securities Act. Consequently, these securities will be subject to restrictions on transfer under the Securities
Act and may not be transferred in the absence of registration or the availability of a resale exemption. In particular, in the absence
of registration, such securities cannot be resold to the public until certain requirements under Rule 144 promulgated under the Securities
Act have been satisfied, including certain holding period requirements. As a result, a purchaser who receives any such securities issued
in connection with the Share Exchange may be unable to sell such securities at the time or at the price or upon such other terms and conditions
as the purchaser desires, and the terms of such sale may be less favorable to the purchaser than might be obtainable in the absence of
such limitations and restrictions.
A decline in the price of our Common Stock
could affect our ability to raise working capital and adversely impact our ability to continue operations.
A prolonged decline in the price of our Common Stock could
result in a reduction in the liquidity of our Common Stock and a reduction in our ability to raise capital. A decline in the price of
our Common Stock could be especially detrimental to our liquidity and our operations. Such reductions may force us to reallocate funds
from other planned uses and may have a significant negative effect on our business plan and operations, including our ability to develop
new services and continue our current operations. If our Common Stock price declines, we can offer no assurance that we will be able to
raise additional capital or generate funds from operations sufficient to meet its obligations. If we are unable to raise sufficient capital
in the future, we may not be able to have the resources to continue our normal operations.
Sales of our currently issued and outstanding
stock may become freely tradable pursuant to Rule 144 and may dilute the market for your shares and have a depressive effect on the price
of the shares of our Common Stock.
A portion of the outstanding shares of Common Stock are “restricted securities”
within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”) (“Rule 144”).
As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule
144 or other applicable exemptions from registration under the Securities Act and as required under applicable state securities laws.
Rule 144 provides in essence that a non-affiliate who has held restricted securities for a period of at least six months may sell their
shares of Common Stock. Under Rule 144, affiliates who have held restricted securities for a period of at least six months may, under
certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1% of a
company’s outstanding shares of Common Stock or the average weekly trading volume during the four calendar weeks prior to the sale
(the four calendar week rule does not apply to companies quoted on the OTC Pink). A sale under Rule 144 or under any other exemption from
the Securities Act, if available, or pursuant to subsequent registrations of our shares of Common Stock, may have a depressive effect
upon the price of our shares of Common Stock in any active market that may develop.
Manuka does
not plan to declare or pay any dividends to its stockholders in the near future.
Manuka has not declared any dividends in the past, and it
does not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends will be made at
the discretion of the board of directors and will depend upon, among other things, the results of operations, cash flows and financial
condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that
future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend.
The requirements of being a public company
may strain resources and distract management.
As a public company, Manuka is subject to the reporting
requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). These requirements are extensive.
The Exchange Act requires that Manuka files annual, quarterly and current reports with respect to the business and financial condition.
The Sarbanes-Oxley Act requires that Manuka maintains effective disclosure controls and procedures and internal controls over financial
reporting.
Manuka may incur significant costs associated with its public
company reporting requirements and costs associated with applicable corporate governance requirements. Manuka expects all of these applicable
rules and regulations to significantly increase its legal and financial compliance costs and to make some activities more time consuming
and costly. This may divert management’s attention from other business concerns, which could have a material adverse effect on its
business, financial condition and results of operations. Manuka also expects that these applicable rules and regulations may make it more
difficult and more expensive for us to obtain director and officer liability insurance and Manuka may be required to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult
for us to attract and retain qualified individuals to serve on its board of directors or as executive officers. Manuka is currently evaluating
and monitoring developments with respect to these rules, and it cannot predict or estimate the amount of additional costs Manuka may incur
or the timing of such costs.
Future changes in financial accounting standards
or practices may cause adverse unexpected financial reporting fluctuations and affect reported results of operations.
A change in accounting standards or practices can have a
significant effect on reported results and may even affect reporting of transactions completed before the change is effective. New accounting
pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future. Changes to existing
rules or the questioning of current practices may adversely affect reported financial results or the way Manuka conducts business.
“Penny Stock” rules may make buying
or selling our Common Stock difficult.
Trading in our Common Stock is subject to the “penny
stock” rules. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price
of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer that recommends our Common Stock
to persons other than prior customers and accredited investors, must, prior to the sale, make a special written suitability determination
for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the
regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock
market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable
to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens
imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our Common Stock, which
could severely limit the market price and liquidity of our Common Stock.
Financial Industry Regulatory Authority,
Inc. (“FINRA”) sales practice requirements may limit a shareholder’s ability to buy and sell our Common Stock.
In addition to the “penny stock” rules described
above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds
for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status,
investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that
speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers
to recommend that their customers buy our Common Stock, which may limit your ability to buy and sell our stock and have an adverse effect
on the market for our shares.
All shares of our Common Stock offered by this prospectus
will be sold by the Selling Stockholders. We will not receive any proceeds from the sale of shares of Common Stock by the Selling Stockholders.
We will incur all costs associated with the preparation and filing of the registration statement of which this prospectus is a part. Brokerage
fees, commissions and similar expenses, if any, attributable to the sale of shares offered hereby will be borne by the applicable Selling
Stockholders.
MARKET
PRICE OF AND DIVIDENDS ON
THE COMPANY’S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Market Information
Our Common Stock is quoted on and
trades in the OTC Pink under the symbol of
“ATMS”. The OTC Pink operated by the OTC Markets Group, Inc. is a computer network
that provides information on current
“bids” and
“asks”, as well as volume information. The OTC Pink is not an
established public trading market into which the Selling Stockholders may offer and sell shares other than at a fixed price. Our Common
Stock last traded at $1.30 on
December 19, 2022. Trading in stocks quoted on the OTC Pink is often thin and is characterized by
wide fluctuations in trading prices due to many factors that may be unrelated to a company’s operations or business prospects. Furthermore,
quotations on the OTC Pink reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent
actual transactions.
Our management endeavors to establish a public trading market
for our Common Stock on the OTCQB or other trading systems. There is no assurance that our Common Stock will trade at any certain market
price, as prices for the Common Stock in any public market, which may develop, will be determined in the marketplace, and may be influence
by many factors, including the depth and liquidity of that market.
Holders
As of
December 14, 2022, there were
approximately 90 stockholders. This figure includes an indeterminate number of stockholders who hold their shares in
“street name.”
Dividends
We have not paid dividends on our Common Stock since inception
and
the Company does not intend to pay any dividends to its stockholders in the foreseeable future.
The Company currently intends on retaining
earnings, if any, to reinvest in its development and growth. The declaration of dividends in the future will be at the discretion of our
board of directors and will depend upon our earnings, capital requirements, financial position, general economic conditions, and other
factors the board of directors deems relevant.
Equity Compensation Plans
We do not have in effect any compensation plans under which
our equity securities are authorized for issuance, and we do not have any outstanding stock options.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and
Analysis of Financial Condition and Results of Operations (
“MD&A”) covers information pertaining to
the Company for the
nine months ended
September 30, 2022 and the year ended
December 31, 2021 and should be read in conjunction with the interim unaudited
consolidated financial statements for the nine months ended
September 30, 2022 and related notes and with the audited consolidated financial
statements and related notes of
the Company as of and for the year ended
December 31, 2021 and related notes thereto. Except as otherwise
noted, the financial information contained in this MD&A and in the financial statements has been prepared in accordance with accounting
principles generally accepted in the United States of America. All amounts are expressed in U.S. dollars unless otherwise noted. This
discussion contains forward-looking statements that involve risks and uncertainties including those discussed below and elsewhere in this
prospectus, particularly those under
"Risk Factors." Our actual results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors.
Overview
We are a beauty company that develops and distributes premium-quality
skincare products, that are based on Mānuka honey and bee venom. Since our 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 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 under the symbol “ATMS”.
Components of Operating Results
Revenue
Following
the Company's sales efforts in the nine
months ended
September 30, 2022,
the Company began to sell more products and have increased its repeated customers;
the Company currently
sells a variety of five new products in addition to our first product, entered into the sales cycle.
At the beginning of 2022,
the Company introduced five additional products, as follows:
(i) face serum enriched with Vitamin C; (ii) day cream; (iii) night nourishing cream; (iv) eye cream; and (v) a facial cleansing gel.
As a result of increasing the array of cosmetic products, from one sole product to a total of six,
the Company has seen a significant
increase in revenues and, consequently, an increase in its customer base.
Operating Expenses
Our current operating expenses consist of two components
- sales and marketing and general and administrative expenses.
Results of Operations
|
|
|
|
|
|
|
|
|
2021 |
|
(USD in thousands) |
|
(Unaudited) |
|
Revenues |
|
|
195 |
|
|
|
7 |
|
Cost of revenues |
|
|
25 |
|
|
|
2 |
|
Gross profit |
|
|
170 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
Sales and marketing expenses, net |
|
$ |
465 |
|
|
$ |
37 |
|
General and administrative expenses |
|
|
570 |
|
|
|
99 |
|
Operating loss |
|
|
(865 |
) |
|
|
(734 |
) |
Financial (expenses) income, net |
|
|
16 |
|
|
|
(16 |
) |
Net loss |
|
$ |
(849 |
) |
|
$ |
(147 |
) |
Loss attributable to holders of Common Stocks |
|
|
(0.02 |
) |
|
|
(0.00 |
) |
Revenues
During the nine months ended
September 30, 2022, we generated revenues of $195 thousand,
compared to $7 thousand for the nine months ended
September 30, 2021. The reason for the increase in revenues for the nine months ended
September 30, 2022, was mainly due to deployment of five new products and our marketing and sales efforts, as well as an increase in sales
and repeat customers. As a result of increasing the array of cosmetic products, from one sole product to a total of six,
the Company has
seen a significant increase in revenues and, consequently, an increase in its customer base.
Costs of revenues
During the nine months ended
September 30, 2022, we had cost of
revenue of $25 thousand compared to $2 thousand for the nine months ended
September 30, 2021. The reason for the increase in cost of revenue
for the nine months ended
September 30, 2022, was mainly due to an increase of purchases of raw materials for products following an increase
in sales.
Gross profit
During the nine months ended
September 30, 2022, we had cost of
gross profit of $170 thousand compared to $5 thousand for the nine months ended
September 30, 2021. The reason for the increase in gross
profit for the nine months ended
September 30, 2022, was mainly due an increase in sales and repeat customers.
Sales and Marketing Expenses, net
During the nine months
ended
September 30, 2022, we had sales and marketing expenses of $465 thousand, compared to $37 thousand for the nine months ended
September
30, 2021. The increase in our sales and marketing expenses for the nine months ended
September 30, 2022 is mainly due to
the Company's
efforts to increase its sales and generate new customers. As a result of increasing the array of cosmetic products, from a single product
to a total of six products, there has been a significant increase in sales and marketing expenses mainly due to
the Company's efforts
to increase exposure to its new products with the help of media advertising expenses and marketing on online public platforms.
General and Administrative Expenses
Our general and administrative expenses for the nine months ended
September 30, 2022, which consisted primarily of professional services and stockholder’s salaries, amounted to $570 thousand, compared
to $99 thousand for the nine months ended
September 30, 2021. The increase in the general and administrative expenses for the nine months
ended
September 30, 2022, was mainly due to increase in consultants and professional services expenses paid in connection with the Share
Exchange Agreement and share based compensation.
Operating Loss
As a result of the foregoing, our operating loss totaled
$865 thousand for the nine months ended
September 30, 2022, representing an increase of $734 thousand, compared to $131 thousand for the
nine months ended
September 30, 2021.
Financial Expenses
For the nine months ended
September 30, 2022, we had financial
income, net of $16 thousand compared to financial expense of $16 thousand for the nine months ended
September 30, 2021. The reason for
the decrease in financial expenses for the nine months ended
September 30, 2022, was due to changes in exchange rates and translation
differences.
Net Loss
We incurred a net loss of $849 thousand for the nine months ended
September 30, 2022 as compared to a net loss of $147 thousand for the nine months ended
September 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 and share based compensation.
Results of Operations
The following table presents our results of operations for
the year ended
December 31, 2021 and the period from March 22, (Inception) to 2020. We only began selling our products in 2021.
|
|
For the Year Ended December 31, |
|
|
Period from March 22, (Inception) to December 31 |
|
|
|
2021 |
|
|
2020 |
|
|
|
(USD in thousands) |
|
Revenue |
|
|
7
|
|
|
|
-
|
|
Cost of revenue |
|
|
1
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
6
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expenses, net |
|
$ |
67 |
|
|
$ |
38 |
|
General and administrative expenses |
|
|
230
|
|
|
|
23
|
|
Operating loss |
|
|
(290 |
) |
|
|
(61 |
) |
Financial expenses |
|
|
(39 |
) |
|
|
(7 |
) |
Net loss |
|
$ |
(330 |
) |
|
$ |
(68 |
) |
Loss attributable to holders of common stock |
|
|
(0.0041 |
) |
|
|
(0.008 |
) |
Sales and Marketing Expenses, net
Our sales and marketing expenses for the year ended
December
31, 2021, amounted to 67 thousand representing an increase of 29 thousand or 76%, compared to 38 thousand for the period from March 22,
(Inception) to
December 31, 2020. The increase was primarily attributable to an increase of $29 thousand in our efforts to reach the target
market and in order to increase the exposure to
the Company’s products among its customers.
General and Administrative Expenses
Our general and administrative expenses totaled $230 thousand
for the year ended
December 31, 2021, representing an increase of $207 thousand, compared to $23 thousand for the period from March 22,
(Inception) to
December 31, 2020. The increase was primarily attributable to an increase of $166 thousand in expenses due to management
fees to the founder and keeping office for our emerging operations.
Operating Loss
As a result of the foregoing, our operating loss totaled
$290 thousand for the year ended
December 31, 2021, representing an increase of $229 thousand, or 375% compared to $61 thousand for the
period from March 22, (Inception) to
December 31, 2020.
Financial Expenses
We recognized financial expense of $39 thousand for the
year ended
December 31, 2021, representing an increase of $32 thousand, or 457% compared to $7 thousand for the period from March 22,
(Inception) to
December 31, 2020. The increase was primarily attributable to interest from the shareholder’s loan and to the foreign
exchange rates losses from Israeli Shekels to the U.S. Dollar.
Net Loss
As a result of the foregoing, our net loss totaled
$330 thousand for the year ended
December 31, 2021, representing an increase of $262 thousand, or 385%, compared to $68 for the period
from March 22, (Inception) to
December 31, 2020.
Impact of COVID-19
The global spread of COVID-19 led many countries, including
Israel, to impose stringent limitations on movement, gatherings, transit of passengers and goods and to close the borders between countries.
The responses of governments have notably impacted many economies as well as capital markets worldwide.
Manuka was incorporated under the laws of the State of Israel
on
March 22, 2020.
The company experienced no significant impact on its business since its inceptions and during its operations.
It is currently unclear the extent to which COVID-19 may
impact our business and financial results going forward, as the impact will depend on future developments with the pandemic which are
highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions
by governments around the world to contain COVID-19 or treat its impact, among others.
Liquidity and Capital Resources
Overview
Since our inception, we did have significant revenues
and have incurred significant operating losses and negative cash flows from our operations. We have funded our operations principally
with approximately $501 thousand from the issuance of common stock and 177 thousand a loan from a major stockholder and with 96 thousand
short-term credit. As of
September 30, 2022, we had approximately $149 thousand in cash and cash equivalents.
Although
the Company raised funds from an
outside investor, such amount is not sufficient to fund its operations for the period of twelve months from the date of approval of the
financial statements, which raises substantial doubts as to
the Company’s ability to continue as a going concern. Management’s
plans to alleviate such doubts are mainly reliant on the following factors: (i) as detailed in our financial reports, one of our major
stockholders is committed and will continue to support
the Company through December 2023, (ii)
the Company plans to raise capital in the
near term, and (iii) based on
the Company’s current business activity, and according to prior experience,
the Company is expected
to increase its sales turnover and become cash positive during the second quarter of 2023. Furthermore,
the Company currently has
no obligations for additional support from any other sources such as shareholders, directors, or officers.
The table below presents our cash flows for the periods
indicated:
|
|
For the
Year Ended December 31, |
|
|
Period
from March 22, (Inception) to December 31 |
|
|
For the
Nine Months Ended September 30, |
|
(USD in thousands)
|
|
2021
|
|
|
2020
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$ |
(279 |
) |
|
$ |
(58 |
) |
|
$
|
(349
|
) |
|
$ |
(163 |
) |
Net cash provided by (used in) investing activities
|
|
$ |
(27 |
) |
|
$ |
(1 |
) |
|
$
|
(26
|
) |
|
$ |
(28 |
) |
Net cash provided by (used in) financing activities
|
|
|
774 |
|
|
|
62 |
|
|
|
(11 |
) |
|
|
188 |
|
Net increase (decrease) in cash and cash equivalents
|
|
|
468 |
|
|
|
3 |
|
|
|
(386 |
) |
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(3 |
) |
Operating Activities
Net cash used in operating activities was $349 thousand for the nine months ended
September 30,
2022 an increase of 114% compared to $163 thousand used in operations for the same period in 2021. Cash used in operations increased mainly
due to the increase in our operating activities.
Net cash used in operating activities of $280 thousand during
the year ended
December 31, 2021, compared to $58 thousand during the year ended
December 31, 2020, was primarily used for professional
services, travel, rent and other miscellaneous expenses.
Net Cash used in investing activities
Net cash used for investing activities was $26 thousand
for the nine months ended
September 30, 2022, a decreasing of $2 thousand compared to $28 thousand for the same period in 2021. Cash used
for investing activities decrease mainly due to a decreasing in fixed assets (purchase of property and equipment) during the nine months
ended
September 30, 2022.
Net cash provided by investing activities was $27 thousand
for the year ended
December 31, 2021, as compared $1 thousand for the period from March 22, (Inception) to
December 31, 2020. The increase
was mainly attributable to purchase of fixed assets.
Net Cash provided by financing activities
Net cash provided by financing activities was $(11)
thousand for the nine months ended
September 30, 2022 compared to $188 thousand net cash provided by financing activities during the same
period in 2021. The decrease in financing activities is mainly due to a decrease in short-term bank credit and other loans for working
capital.
Net cash provided by financing activities was $775 thousand for
the year ended
December 31, 2021, as compared to $62 thousand for the period from March 22, (Inception) to
December 31, 2020. The increase
was mainly attributable to equity raising.
Financing Arrangements
Since our inception we have funded our operations primarily through shareholders loans, by our Director and Chief Executive Officer, Mr.
Citron, in an aggregate amount of $757 thousand. As of
September 30, 2022 our financial arrangements with Mr. Citron includes several
loans at an aggregate amount of $233 thousand. The loans bear no interest and are linked to the Israeli Consumer Prices Index (
“CPI”).
The repayment date has not been determined.
We expect our expenses to increase significantly in connection
with our ongoing operations, particularly as we advance marketing activities to introduce our products to the market and find new markets.
We are still growing and do not know how to estimate our future
expenses at this time.
Until such time, if ever, that we can generate product revenue
sufficient to achieve profitability, we expect to finance our cash needs through the sales of our securities, milestone payments and other
outside funding sources. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting
or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
If we raise additional funds through government and other third-party funding, collaboration agreements, strategic alliances, licensing
arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue
streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise
additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development
or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer
to develop and market by ourselves. In addition, if we are unable to fund outside sources of funding, our majority stockholders intend
to provide us with the necessary financial support to continue our operations.
Seasonality
Manuka currently expects that its business will be subject to seasonal fluctuation. Such estimates of significant portions of net
sales and profits to be realized during the fall, winter and spring seasons as well as peaks during seasonal holidays such as Black Friday,
Christmas, New Year, and Easter.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements.
Quantitative and Qualitative Disclosure About Market Risk
We are exposed to market risks in the ordinary course of
our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market
prices and rates. Our current investment policy is to invest available cash in bank deposits with banks that have a credit rating of at
least A-. Accordingly, a substantial majority of our cash and cash equivalents is held in deposits that bear interest. Given the current
low rates of interest we receive, we will not be adversely affected if such rates are reduced. Our market risk exposure is primarily a
result of foreign currency exchange rates, which is discussed in detail in the following paragraph.
Critical Accounting Policies and Estimates
We describe our significant accounting policies more fully
in Note 2 to our financial statements for the year ended
December 31, 2021. We believe that the accounting policy below is critical in
order to fully understand and evaluate our financial condition and results of operations.
We prepare our financial statements in accordance with U.S.
GAAP. At the time of the preparation of the financial statements, our management is required to use estimates, evaluations and assumptions
which affect the application of the accounting policy and the amounts reported for assets, obligations, income and expenses. Our management
believes that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made.
These estimates, judgment and assumptions can affect reported amounts and disclosures made. Actual results could differ from those estimates.
Any estimates and assumptions are continually reviewed. The changes to the accounting estimates are credited during the period in which
the change to the estimate is made.
We believe the following critical accounting policies affect
our more significant judgments and estimates used in the preparation of the financial information included in this annual report:
Going Concern
The Company is in its early stages and has
limited capital.
The Company’s net loss totaled $330 thousand for the year ended
December 31, 2021, compared to $68 for the period
from
March 22, 2020 (Inception) to
December 31, 2020.
The Company’s working capital totaled $305 thousand for the year ended
December
31, 2021, and negative $4 thousand (deficit) for the period from
March 22, 2020 (Inception) to
December 31, 2020 and its burn rate is
$61 thousand per month as of the date of this prospectus. Although
the Company raised funds from an outside investor, such amount
is not sufficient to fund its operations for the period of twelve months from the date of approval of the financial statements, which
raises substantial doubts as to
the Company’s ability to continue as a going concern. Management’s plans to alleviate such
doubts are mainly reliant on following factors: (i) as detailed in our financial reports, one of our major stockholders is committed and
will continue to support
the Company through December 2023, (ii)
the Company plans to raise capital in the near term, and (iii) based
on
the Company’s current business activity, and according to prior experience,
the Company is expected to increase its sales turnover
and become cash positive during the second quarter of 2023. Furthermore,
the Company currently has no obligations for additional support
from any other sources such as shareholders, directors, or officers.
If we are unable to obtain sufficient amounts of additional capital, we may be required
to raise capital, which could harm our business, financial condition and operating results. If we obtain additional funds by selling any
of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders
will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior
to the common stock. If adequate funds are not available to us when needed on satisfactory terms, we may be required to cease operating
or otherwise modify our business strategy.
Financial statement in U.S. dollars
Our reporting currency is the U.S. dollar, and our functional
currency is the U.S. dollar. Unless otherwise expressly stated or the context otherwise requires, references in this prospectus to “NIS”
are to New Israeli Shekels, and references to “dollars” or “$” mean U.S. dollars.
Transactions and balances denominated in foreign currencies
have been re-measured to dollars in accordance with the provisions of ASC 830-10, “Foreign Currency Translation.”
All transaction gains and losses from re-measurement of
monetary balance sheet items denominated in non-dollar currencies are reflected in the statement of operations as financial income or
expenses, as appropriate.
Impact of Inflation and Currency Fluctuations
Our functional and reporting currency is the U.S. dollar.
We incur some of our expenses in other currencies. As a result, we are exposed to the risk that the rate of inflation in countries in
which we are active other than the United States will exceed the rate of devaluation of such countries’ currencies in relation to
the dollar or that the timing of any such devaluation will lag behind inflation in such countries. To date, we have been affected by changes
in the rate of inflation or the exchange rates of other countries’ currencies compared to the dollar, and we cannot assure you that
we will not be adversely affected in the future.
The annual rate of inflation in Israel was 2.8% in 2021
and -0.7% in 2020. The NIS revaluated against the U.S. dollar by approximately -3.3% in 2021 and -7% in 2020.
Moreover, for the first few years after we are able to successfully
commercialize one of our products, we expect that the substantial majority of our revenues from the sale of our products in the United
States, if any, will be denominated in U.S. dollars. Since a portion of our expenses is denominated in NIS and other non-U.S. currencies,
we are exposed to risk associated with exchange rate fluctuations vis-à-vis the non-U.S. currencies. See “Risk Factors- Exchange
rate fluctuations between the U.S. Dollar and the NIS may negatively affect our earnings and could adversely affect our results of operations.”
If the NIS fluctuates significantly against the U.S. dollar it may have a negative impact on our results of operations. As of the date
of this prospectus and for the periods under review, fluctuations in the currencies exchange rates have not materially affected our results
of operations or financial condition.
We do not hedge our foreign currency exchange risk. In the
future, we may enter into formal currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange
rates of our principal operating currencies. These measures, however, may not adequately protect us from the material adverse effects
of such fluctuations.
Internal Control over Financial Reporting
In connection with the audits of our consolidated financial
statements included in this prospectus, we and our independent registered public accounting firm identified one material weakness in our
internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board,
a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented
or detected on a timely basis.
The material weakness identified relates to lack of sufficient
competent financial reporting and accounting personnel with appropriate understanding of US GAAP to design and implement formal period-end
financial reporting controls and procedures to address complex US GAAP technical accounting issues, and to prepare and review the consolidated
financial statements and related disclosures in accordance with US GAAP and financial reporting requirements set forth by the SEC. The
material weakness, if not timely remedied, may lead to material misstatements in our consolidated financial statements in the future.
To remediate the identified material weakness,
we plan to continue to implement several measures, including, among others:
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hiring additional accounting staff with adequate US GAAP and SEC reporting experience
to address complex US GAAP technical accounting issues and to prepare and review the financial statements and related disclosures in accordance
with US GAAP and SEC financial reporting requirements; |
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formulating a formal and regular training program for accounting personnel to equip
them with sufficient knowledge and practical experience of preparing financial statements under US GAAP and SEC reporting requirements,
including mandatory requirements for accounting staff to attend US GAAP course programs offered by third-party organization or accounting
firm on a periodically basis; and |
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establishing clear roles and responsibilities for accounting and financial reporting
staff to develop and implement formal comprehensive financial period-end closing policies and procedures to ensure all transactions are
properly recorded and disclosed. |
However, we cannot assure you that we will remediate our
material weakness in a timely manner.
Corporate 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 our Share Exchange Agreement
between Artemis Therapeutics, Inc. and Manuka Ltd., pursuant to which Manuka became our wholly owned subsidiary. On the Closing Date,
which occurred on
June 30, 2022, Artemis acquired all of Manuka Shares from Manuka’s shareholders in exchange for an aggregate amount
of 33,791,641 shares of Common Stock of Artemis and 110,000 shares of Artemis’ Series D Preferred stock (convertible into 66,000,000
shares of Artemis’ Common Stock), such that Manuka’s shareholders hold, immediately following the Closing, eighty-nine percent
(89%) of Artemis’ 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. (formerly our largest shareholder), for the forgiveness of an aggregate of $306,117
in outstanding debt in exchange for the issuance of 3,031,567 shares of our 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. On
June 30, 2022, we entered into several debt forgiveness agreement
and warrant exchange agreements, including: (i) a debt forgiveness agreement with Cutter Mill Capital LLC, pursuant to which we agreed
to issue 894,169 shares of our Common Stock. We also agreed to register all such shares of Common Stock issued to Cutter Mill Capital,
within the earlier of 60 days following the closing date of the Share Exchange Agreement (provided, however that in the event we have
not cleared comments with the SEC with respect to this filing relating to the transactions contemplated by the Share Exchange Agreement,
such date shall be 90 days following the date if the agreement) and the date that we file its next registration statement, and agreed
to obtain effectiveness within 90 days (or 120 days in the event of a full review by the SEC); (ii) a debt forgiveness agreement with
Tonak Ltd., pursuant to which we agreed to issue 1,573,582 shares of our Common Stock; (iii) a debt forgiveness agreement with Hadasit
Medical Research Services and Development Ltd., pursuant to which we agreed to issue 95,256 shares of our Common Stock; (iv) warrant exchange
agreements with Globis Capital Partners, LP and Globis International Investments LLC, pursuant to which we agreed to issue 1,585,682 and
616,654 shares of our Common Stock, respectively; (v) warrant exchange agreements with Brian M. Culley and Amiad Solomon, pursuant to
which we agreed to issue to each 220,233 shares of our Common Stock; and (vi) an option exchange agreement with Chanan Morris, pursuant
to which we agreed to issue to each 780,934 shares of our Common Stock.
Manuka Ltd. was incorporated under the laws of the State
of Israel on
March 22, 2020. 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 solely
on its
website in Israel,
www.bmanuka.co.il, and to be marketed and sold globally at
www.bmanuka.com.
Manuka’s business activities primarily consisted of
distributing Mānuka 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 Mānuka 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 Company’s Common Stock is not listed on any national stock exchange
but is quoted on the OTC Pink under the symbol
“ATMS.” Our management endeavor to establish a public trading market for our
Common Stock on the OTCQB or other trading systems. Currently our trading volume is limited, and we are subject to the Alternative Reporting
Standard of OTC Pink. Until such time as our Common Stock is quoted on the OTCQB or listed on any national securities exchange or automated
interdealer quotation system, the shares covered by this prospectus will be sold by the Selling Stockholders from time to time at a fixed
price of $1.30 per share, representing the average of the high and low prices as reported on the OTC Pink on
December 19, 2022.
Company Overview
Manuka is a beauty company that develops and distributes
premium-quality skincare products, that are based on Mānuka honey and bee venom. Manuka’s skincare products are manufactured
in Israel by its vendor, Chic Cosmetic Industries 1987 Ltd. (
“Chic”) with Mānuka honey ingredients. Manuka imports Mānuka
honey from its supplier in New Zealand, Waitemata Honey Co. Ltd. (
“Waitemata Honey”) pursuant to the agreement with Waitemata
Honey in July 2021 (the
“Supply Agreement”). On
February 28, 2022, Manuka was granted an import license from the MoH, which
allows it to import Mānuka honey from Waitemata Honey.
The skincare product formulas are the intellectual property
of Manuka, pursuant to an agreement signed by
the Company and Chic on
December 14, 2021 (the
“Formula Agreement”).
Currently, Manuka operates only in Israel through its online
platform
www.bmanuka.co.il. Manuka’s
website and mobile applications currently offer
6 cosmetic skincare products:
“Face Serum with Manuka Honey and Bee Venom”;
“Face Serum with enhanced Vitamin C”;
“Day Cream”;
“Night nourishing Cream”;
“Eye Cream”; and
“Face Cleanser Gel”. In the future,
Manuka plans to expand its business to other markets outside of Israel with the
www.bmanuka.com
website, which is still under development.
Manuka believes its focus on delivering a compelling value
proposition to its clients across all Manuka’s product categories would drive loyalty from clients. Manuka intends to offer a loyalty
program, subscription plans and target promotions. As such, Manuka offers frequent promotions, coupons, and gifts with purchase. For example,
Manuka is currently developing a new shopping experience, its “try before you buy” experience. Subject to the “try before
you buy” plan’s policy, Manuka would offer selected bundles of products, with payment by customers on shipping costs only.
Unsatisfied customers would be able to return the products within 14 days for no other costs (including no return fees). Satisfied customers
would be charged after 14 days for the full amount of purchase.
Manuka plans to broaden its line of products that is currently
focused on Mānuka honey and bee venom skincare market to include the pure Mānuka honey market, based on Mānuka honey from
New Zealand. Manuka’s current MoH License enables Manuka to develop and include the pure Mānuka honey products to its existing
skincare line of products.
Manuka’s Products
Currently, Manuka
features 6 facial skincare products based on Mānuka honey and bee venom. All of Manuka’s products have been granted a license
by the Israel MoH. These products include:
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Face Serum with Manuka Honey and
Bee Venom. This product supports blurring and reduces skin wrinkles. It regenerates skin cells and gives a young and vital appearance
to the skin. The bee venom encourages natural skin revival, boosts production of Collagen, enhances skin elasticity and has healing properties
for damages skin cells. |
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Face Serum with Enhanced Vitamin
C. The single product without bee venom but with enhanced quantity of Vitamin C. Provides a hearty dose of moisture for a firm
skin appearance and reduction of wrinkles. |
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Day Cream. Nourishes the
skin, protects, and guards its flexibility. Bee venom contributes to the toning of the skin for a smooth, radiant and healthy appearance,
with the addition of hyaluronic acid for restoring skin vitality. |
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Night Nourishing Cream with Manuka
Honey and Nee Venom. This product contains a significant number of amino acids, vitamins, and minerals. It also includes bee venom
that contributes to the toning of the skin for a smooth, radiant and healthy appearance, with the addition of hyaluronic acid for restoring
skin vitality. |
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Eye Cream with Manuka Honey and
Bee Venom. This product treats and softens the sensitive area around the eyes. It has properties for nourishing the skin to protect
and guard its flexibility. Bee venom contributes to the toning of the skin for a smooth, radiant and healthy appearance, with the addition
of hyaluronic acid for restoring skin vitality. |
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Face Cleanser Gel. This
is a light and refreshing face cleanser, with Mānuka honey and bee venom. |
Currently all of Manuka’s products are sold in Israel
and are licensed by the Israeli MoH.
In December 2021, Manuka contracted with a regulatory consultant to file a request
to the U.S. Food and Drug Administration (the
“FDA”) to (i) confirm the label instructions and information for each of its
products, and (ii) to list its cosmetic products and file a cosmetic formulation with the FDA (the
“FDA Request”). Manuka’s
requests are pending with the FDA and expected by the end of 2022. If the FDA confirms the labels, we believe that Manuka’s products
will automatically be registered with the FDA pursuant to the FDA’s procedures for a request of this type. While the FDA Request
is pending, and
the Company awaits receipt of the registration numbers for its products, Manuka may begin selling its products in the
U.S. based on its Form FDA 2512 application.
Business Mission & Strategy
Manuka’s mission is to become a prime online platform
that offers a combination of 2 groups of products, all based on Mānuka honey, as follows:
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Pure Mānuka honey for direct consumer consumption; and
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Skincare products based on Mānuka honey and bee venom. |
Manuka currently sells and markets its products in Israel
through the
website,
www.bmanuka.co.il. Manuka plans to offer its products on a global
basis through its global
website,
www.bmanuka.com, which is still under development.
Manuka plans to go ‘live’ with its global platform and start to facilitate sales of its products globally by the end of 2022.
Manuka’s business strategy for commercial sales is intended to be carried
out mainly through its online platform and through
contracts with leading health food chains and outlets. In September 2022, we started
a collaboration with Super-Pharm (Israel) Ltd., one of the leading convenience store chains in Israel, to include our products in their
online platform. We have yet to estimate the impact of this new collaboration. We are also planning to work with other third parties,
including health food chains retail outlets, and other online distributer for future collaboration. Distribution and marketing of Manuka’s
skincare products and nutraceuticals products would be carried out based on the following practices:
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Drive growth across skincare and
health enthusiast consumer communities. Manuka intends to target skincare and wellness groups across multiple demographics and
shopping behaviors. Manuka believes it can drive customer acquisition across both skincare and wellness enthusiasts and up through advertising
on social medias platforms, such as Facebook and Instagram as well as on, Youtube, TikTok and Google, thus driving Manuka’s leadership
as a diversity-forward brand. |
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Deliver world class skincare products
based on Manuka honey. Mānuka honey and bee venom that is included in Manuka’s skincare products, are the focus of Manuka’s
value proposition and represents a core differentiator within the market. Manuka engages skincare and wellness clientele to discover the
unique ingredients and health benefits of its leading component, Mānuka honey, with a combination focused on innovation and leading
trends, differentiation, and exclusivity. Manuka believes that its selection of merchandise and affordable pricing, offer a unique shopping
experience for its customers. |
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Digital engagement. Manuka’s
strategic vision is to build a leading digital experience that engages with its customers through its differentiated products, personalization,
convenience, and interactive experiences. |
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Deliver operational excellence
and drive efficiencies. Its strategic vision is to manage end-to-end speed, quality, and efficiency to deliver exceptional customer
experiences, while leveraging efficiencies of scale to drive profit improvement. |
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Invest in talent that drives a
winning culture. Leadership, culture, and engagement of Manuka’s executives are key drivers of its performance. Manuka has
an experienced management team that brings a creative and experienced online sales approach and a disciplined operating philosophy to
Manuka’s business. |
Manuka believes that skincare is for everyone, regardless
of age, size, ability, skin tone, culture, or gender. Manuka strives to provide an environment where every associate feels they can fully
contribute, and every client is optimally served, regardless of any differences. Manuka’s well-trained associates are highly engaged
and deliver a positive and unique customer experience. Manuka continues to expand the depth of its team at all levels and in all functional
areas to support its growth.
Manuka will coordinate its infrastructure growth based on
future Manuka sales volume and business expansion to the U.S. market, contemporarily with its growth of its Mānuka honey and bee
venom skincare market, as well as with Manuka’s plans to penetrate to the pure Mānuka honey market. Manuka intends to outsource
the following services: technology developments, advertising and social media promotions, and public affair services.
Description of Market
Manuka’s potential market includes two segments: the
Mānuka honey and bee venom skincare market and the pure Mānuka honey market.
Skincare Products containing
both Mānuka Honey and Bee Venom
Manuka operates in a diverse and competitive market of skincare
products that is still in its preliminary phase. Based on an October 2022 DataM Intelligence report titled “Manuka Honey Market
Size, Share, Opportunities and Forecast, 2022-2029” and a November 2022 Allied Market Research report titled “Manuka
Honey Market by Types: Global Opportunity Analysis and Industry Forecast, 2019-2026”, Manuka believes that there is an increasing
interest by the public in healthy and natural skincare products, in general, and particularly in Mānuka honey-based products combined
with bee venom. To this end, only a handful of companies engage in producing skincare products based on these two ingredients.
As the skincare market based on Mānuka honey and bee
venom is still in its infancy, Manuka believes that a significant opportunity exists for Manuka in this market segment. In Israel, Manuka
is currently the sole player in the domestic market for sales of skincare products with Mānuka honey. Manuka plans to further expand
to the global Mānuka Honey and Bee Venom market.
Mānuka Pure Honey
Global Market
Mānuka honey, produced in New Zealand by bees that
pollinate the Manuka plant, is a unique and beneficial form of honey that can be included in cosmetic products.
According to a research report by 360 Research Reports on
global Manuka Market Honey Growth for 2022-2028 from
January 4, 2022, the global Mānuka honey market was valued at USD $313.76 million
in 2021 and is expected to reach close to USD $535 million by the end of 2027, growing at a Compound Annual Growth Rate (
“CAGR”),
of 11.75% during 2022-2027. According to this research, the global Mānuka honey key players include Comvita, Manuka Health New Zealand
Ltd. and Oha Honey LP. (d/b/a Watson & Son). The global top three manufacturers hold a share of about 80% of the global Mānuka
honey market.
The Asia-Pacific market is the largest global market, with
a market share of over 70%, followed by Europe, and North America, both having a market share of about 25%.
In terms of product’s quality rating, the majority
of Mānuka honey’s quality rating is carried out by the Unique Mānuka Factor Honey Association in New Zealand. Mānuka
honey is divided into 6 grades: 5+, +10, +15, 20+, 25+. The highest grade refers to more antibacterial components and mineral that are
within the honey.
Manuka’s honey market segmentation also differs by
type, including, UMF 5+, UMF 10+, UMF 15+, UMF 20+, and other types.
Manuka’s market segmentation by application includes
digestion and inflammation treatment, wound care and skincare products among other applications.
Market Opportunities
Manuka believes that the relatively small number of skincare manufacturers
that are using the combination of Mānuka honey and bee venom as their leading ingredients offers an opportunity for Manuka to become
a player in this market segment. Moreover, Manuka plans to concentrate on the online market, driven by more than 20 years of online marketing
experience by Manuka’s founders. Manuka’s skincare products are currently manufactured in Israel by Chic under the Formula
Agreement with Mānuka honey ingredients that are supplied by Waitemata Honey pursuant to the Supply Agreement.
With respect
to the pure Mānuka honey market, which is controlled by a limited number of distributing companies, Manuka would aspire to provide
an opportunity to conquer a significant niche through Manuka’s developing online presence. Manuka expects to start its operations
in the pure Mānuka honey market both in Israel and globally by the end of 2022. Manuka’s supplier of pure Mānuka honey
is Waitemata Honey pursuant to the Supply Agreement.
Competition
The Mānuka
honey and bee venom skincare market is relatively small but is characterized by a rapidly growing pace and intense competition. Any products
that Manuka may successfully develop and commercialize may compete with existing and similar products. To mention a few of Manuka’s
competitors that are engaged in producing cosmetic products using Mānuka Honey as a substantial ingredient: Manuka Doctor Ltd. from
New Zealand, which also operates in the U.K., in the U.S., in Australia, and Western
Europe; ApiHealth NZ Ltd. from New Zealand; Parrs Products Ltd. (d/b/a Wild Ferns) from New Zealand; and Abeeco Ltd., from New Zealand.
The cosmetics, fragrances and toiletries market is a highly competitive market, within the segments of Manuka’s operations. Strong
brands and new product launches are important to attract and retain customers. Furthermore, in offering a wide range of categories, Manuka’s
brands compete with several different companies that operate through different distribution channels: direct selling, retail and e-commerce.
In the pure
Mānuka honey market, Manuka compete in the same segment of the Mānuka honey producers themselves, as Manuka would purchase the
honey from them. The following is a list of key industry competitors of Manuka in the Mānuka Honey segment: Comvita (which is a public
company listed on NZ stock exchange), Manuka Health New Zealand Ltd., Oha Honey LP. (d/b/a Watson & Son), Arataki Honey Ltd., Manuka
Doctor Ltd., NZ Gold Health Ltd., New Zealand Honey Co. Ltd., Savage Horticulture Ltd. (d/b/a WildCape Manuka Honey), and ApiHealth NZ
Ltd.
Manuka’s
competitors may have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing,
conducting clinical trials, obtaining regulatory approvals and marketing approved products than Manuka does. These competitors also compete
with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration
for clinical trials, as well as in acquiring technologies complementary to, or necessary for, Manuka’s programs.
Manuka’s
commercial opportunity could be reduced or eliminated if Manuka’s competitors develop and commercialize medicines that are safer,
more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that Manuka may develop.
Manuka’s competitors may also obtain FDA, or other regulatory approval for their products more rapidly than Manuka may obtain approval
for its products, which could result in Manuka’s competitors establishing a strong market position before Manuka is able to enter
the market.
Manuka’s
Marketing Strategy
Marketing and advertising
Manuka would
enhance Manuka’s marketing strategy to increase brand awareness, drive traffic to Manuka’s
website and mobile application.
Manuka intends to acquire new clients, improve customer retention, and increase frequency of shopping. Manuka intends to communicate with
Manuka’s clients and prospective customers through multiple vehicles, including digital and social media, and Search Engines Optimization
(SEO). These marketing strategies would induce the breadth of Manuka’s selection of products and services, and special offers. Manuka’s
developing comprehensive public relations strategy would enhance Manuka’s reputation for excellent skin-care products, and as a
future pure Mānuka honey prestigious distributor. Manuka intends to increase Manuka’s brand awareness, support Manuka’s
customers, and drive awareness of new products through, among others, publishing articles on leading dailies and magazine by journalists
and influencers.
Training and Development
Manuka brings
an experienced team with over 20 years of online marketing. Manuka plans on concentrating in internet sales market segment, harnessing
Manuka’s knowledge in online marketing, Search Engine Optimization, and social networks such as Facebook, Instagram, Youtube and
TikTok for optimal marketing results.
Manuka plans
to build an online marketing and sales management organization to create and implement marketing strategies for any product that Manuka
market through Manuka’s own sales organization and to oversee and support Manuka’s sales force. The responsibilities of the
marketing team would include developing marketing initiatives, a loyalty customer club, and other promotional measures.
For Manuka’s
preliminary entry to the U.S., Manuka is in negotiations with a strategic distributor and
contract sales entity to assist in the entry
to various leading retail chains in the U.S.
Manuka’s
success is dependent in part on Manuka’s ability to attract, train, retain, and motivate qualified associates at all levels of the
organization. Manuka is developing a corporate culture that would enable individual
website managers to make comprehensive operating decisions,
and Manuka consistently rewards high performance.
Outside of the
United States and potentially Europe, where appropriate, Manuka may elect in the future to utilize strategic partners, distributors, or
contract sales forces to assist in the commercialization of Manuka’s products. In certain instances, Manuka may consider building
its own commercial infrastructure.
Seasonality
Manuka currently
expects that its business will be subject to seasonal fluctuation. Such estimates of significant portions of net sales and profits to
be realized during the fall, winter and spring seasons as well as peaks during seasonal holidays such as Black Friday, Christmas, New
Year, and Easter.
Distribution
Manuka’s vision is to develop an expanded and optimized end-to-end supply
chain from the manufacturer of Mānuka Honey ingredients to the customer of our products with such ingredients, that improves operational
efficiency, performance, and customer experience. This includes enhanced systems and processes as well as a modernized distribution center
network to support Manuka’s new e-commerce growth globally. Currently, Manuka operates only a single distribution leased center
in the city of Petach Tikva, Israel, that supports Manuka’s e-commerce demand in the territory of Israel. Manuka plans its global
expansion program to start in the U.S. by the end of 2022. For this purpose, Manuka is in negotiations with a leading marketing and distribution
entity in the U.S. to become both Manuka’s online and Business-to-Business representative (as Manuka’s representative for
distributing our products in the U.S. health, convenient stores, retail outlets and other online distributers). The initial plan is to,
firstly, keep on manufacturing in Israel and send the products to a warehouse and distribution center for domestic sales. The second phase
would be to locate a local manufacturer that would manufacture Manuka’s line of cosmetics to be sold in the U.S.
Information
Technology
Manuka depends
on a variety of information systems and technologies (including cloud technologies) to maintain and improve Manuka’s competitive
position and to manage the operations of Manuka’s growing
website base. As Manuka expands, Manuka’s technology plans to also
include a company-wide network that would connect all users,
websites, and its distribution center infrastructure and provides communications
for continual polling of sales and merchandise movement at the
website level. Manuka intends to leverage technology infrastructure and
systems where appropriate to gain operational efficiencies through more effective use of Manuka’s systems, people, and processes.
Manuka would update the technology supporting its
websites, distribution infrastructure, and corporate headquarters on a regular basis.
Manuka will contribute funds and efforts to develop and maintain information systems to facilitate growth and enhance Manuka’s competitive
position.
Intellectual
Property
Manuka owns
9 international domain names and 7 Israeli domains. Manuka has an exclusive agreement with Chic that provides that the skincare product
formulas are owned by Manuka.
Government
Regulation
Manuka currently
plans to focus in the Israeli and U.S. markets for its current operating segment, the beauty and skincare market and its future plan to
expand into the sale of pure Mānuka honey in these jurisdictions.
Israel
Manuka’s
skincare products are authorized for sale by Israeli MoH. On
February 28, 2022, the MoH issued a special sensitive food import license
to Manuka, whereby Manuka has an approval from the MoH to import Manuka Honey for one year, until
February 28, 2023, in accordance with
section 64 of the Public Health Food Protection Law 2015), from Waitemata Honey Co Limited (New Zealand). The import License Permit is
valid as long as no changes are made in any of the information provided. We intend to submit an extension application for an additional
5 years for our import license with the Israeli MoH in the beginning of 2023. The MoH will inspect Waitemata’s confirmation for
a chemical, toxicological and microbiological laboratory tests as well as the marking requirements in Hebrew language.
Furthermore,
Manuka received permits for the import and sale of the following cosmetic products in Israel: Manuka Recreation Serum with enhanced Vitamin
C (valid through
November 30, 2025), Manuka Face Cleanser (valid through
August 31, 2026), Manuka Day Cream (valid through
August 31,
2026), Manuka Eye Cream (valid through
August 31, 2026), Manuka Recreation Serum (valid through
November 30, 2025).
United States
In December
2021, Manuka contracted with a regulatory consultant to file its FDA Request. Manuka’s requests are pending with the FDA and expected
by the end of 2022.
The FDA’s
requirement to register products is included in its Form FDA 2512 - Cosmetic Product Ingredient Statement for filing cosmetic formulation,
to provide details the products ingredients, labeling and warnings. Such registration may take up to several months, however, while waiting
for the FDA to provide us with the registration numbers
the Company may still start selling its products in the U.S. based on its application
on Form FDA 2512.
Once the FDA confirms the labels, Manuka expects that its products would automatically
receive registered numbers with the FDA.
Material
Agreements
On
December 14, 2021, Manuka entered into the Formula Agreement with Chic. Pursuant
to the Formula Agreement, Chic shall supply the following services, including: (1) development of specific formulas for products based
on specifications received by Manuka (
“Formula”); and (2) upon production completion of Formula, the serial production of
such products (
“Products” and together with the Formula,
“Services”). Chic will provide the Services according
to work orders issued by Manuka from time to time. Manuka will have the option to purchase specific Formulas from Chic, as described in
Appendix A to the Formula Agreement for a certain consideration amount of several thousand dollars per Formula. Manuka may purchase the
Formula by a submission of purchase order to Chic for ten (10) years. The agreement bears no royalty payments obligations. Manuka shall
own the intellectual property rights of any such Formula. Chic may not provide the Formula developed for Manuka to any other party and
may not transfer or disclosure the Formulas to any party unless Manuka approves of it in advance and in writing. Nor may Chic manufacture
products developed for Manuka for itself or any other party, even if Manuka does not exercise the option to purchase any of the Formulas.
The Formula Agreement contains a choice of venue clause limiting jurisdiction to courts in Tel-Aviv-Jaffa, Israel. The Service Agreement’s
term is unlimited, but it may be terminated by either party upon providing a written notice of termination 180-day prior; any such termination
shall not detract from the validity of the option to purchase the Formulas. As of
September 30, 2022, the aggregate amount paid to Chic
under the Formula Agreement was $60,567.
On
July 20, 2021, Manuka entered into a manufacture and sale agreement with Waitemata
Honey Direct Ltd. and Waitemata Honey Co Ltd. (jointly referred to as the
“Waitemata”) whereby Manuka agreed to purchase Manuka
Honey products (the
“Honey Products”) from Waitemata and resell them to its customers. Pursuant to the Supply Agreement, Manuka
has the right to relabel and sell Honey Products purchased from Waitemata under its own branding and logo, but must include an indication
on such labeling that it was manufactured by Waitemata and include Waitemata’s license number from the Unique Manuka Factor Honey
Association (
“UMFHA”), which will also comply with labeling requirements by the Israeli Minister of Health (
“MoH”)
and the certification required by New Zealand’s Ministry of Primary Industries (the
“Certification”). Manuka agreed
that it would bear the cost of this Certification up to 10,000 New Zealand Dollars, which payment shall be offset from payments due to
Waitemata for purchased Honey Products, which are not considered to be material costs. Pursuant to the Supply Agreement, Manuka must make
purchase orders from Waitemata, which will include specified information as to, among others, the quantity of Honey Products to be purchase
and requested shipment date. The consideration for any purchased Honey Products by Manuka shall be paid to Waitemata according to the
price list attached to the Supply Agreement by issuing purchase orders to Waitemata from time to time (with the first few orders with
an upfront payment and thereafter with payment upon receipt of orders) in accordance with the pricing consideration specified in Appendix
A to the Supply Agreement with Waitemata. The agreement bears no royalty payments obligations. The termination is set for 60-months after
the effective date, upon such termination the Supply Agreement shall renew itself automatically for an additional 24- month unless either
party provides a written notice of its election not to renew the agreement within 30-days to the end of the term. The Supply Agreement
is governed under the laws of New Zealand and jurisdiction is set in Auckland, New Zealand. The aggregate amount paid to Waitemata as
of
September 30, 2022 was approximately $12,282.
Directors,
Executives and Employees of Manuka Ltd.
Our subsidiary,
Manuka Ltd., is a limited liability company organized under the laws of the State of Israel and has a board of directors consisting of
2 members,
Shimon Citron, who also currently serves as the acting Chief Executive Officer of
the Company, and Mr. Avshalom Shilin, who
was appointed by Adler and Eyal.
Furthermore,
under Manuka Ltd.’s
Articles of Association, Manuka’s directors were appointed: (i) by its founder, Mr.
Shimon Citron, who
has the right to appoint two directors; and (ii) by Adler and Eyal who have the right to appoint one director until the later of: (a)
December 20, 2023; or (b) the date in which they shall hold less than 10% of Manuka’s issued share capital. In addition, under the
SPA, Adler and Eyal also have the right to appoint a director to
the Company until the later of: (i)
December 20, 2023; or (ii) the date
in which they shall hold (together) less than 10% of
the Company's issued share capital. Since
the Company is not a party to the SPA,
such agreement is not binding
the Company. However, Manuka intends to honor it on the parent level.
Currently
the Company’s executives include two individuals,
Shimon Citron, as Chief Executive Officer (
“CEO”) and David
Dana, as Chief Financial Officer (
“CFO”). Manuka also retains Haim Tabak, as an advisor, who serves as Chief Operating Officer
(
“COO”) and we intend to sign an employment agreement to retain him in a fulltime role within the next sixty days.
The Company
plans to hire additional personnel in sales, marketing, and customer support in line with its business growth.
Legal
Matters
From time to
time, Manuka may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business.
Manuka is not currently a party in any legal proceeding or governmental regulatory proceeding nor are we currently aware of any pending
or potential legal proceeding or governmental regulatory proceeding proposed to be initiated against us that would have a material adverse
effect on us or our business.
Description
of Property
Manuka’s
principal executive office is currently located at 3 Eliezer Vardinon St., Suite 701, Petach Tikva, Israel. These premises are leased
under a lease agreement signed on
August 10, 2021 and comprise approximately 85 square meters in size. Manuka does not currently own any
properties.
Our directors and executive officer
and their ages as of
December 20, 2022, are as follows:
Name |
|
Age |
|
Position |
|
|
67 |
|
Chief Executive Officer, Director |
David Dana |
|
58 |
|
Chief Financial Officer |
Haim Tabak |
|
75 |
|
Chief Operating Officer |
Shimon Citron has served as our Chief Executive Officer and Director since our inception in 2020. Mr. Citron has over 25 years
of experience in the online marketing field. During this period, Mr. Citron served as Chief Executive Officer of a publicly trading company
on the Bulletin Board in the U.S. (including the Chief Executive Officer of EZTD Inc. from 2004 to May 2017). Prior to initiating Manuka
Ltd., in year 2017, Mr. Citron became an active shareholder of Maelys Cosmetics Ltd., a leading online brand of skin care products with
sales in Israel and in the U.S. While still maintaining a stake in Maelys Cosmetics Ltd., Mr. Citron initiated the establishment of Manuka
Ltd. Mr. Citron’s vast commercial, internet advertising and marketing experience as a Chief Executive Officer and director at international
private and public companies for over 25 years, which our board of directors believes qualifies him to serve as a director.
David Dana, Chief
Financial Officer
David
Dana is a Certified Public Accountant (ISR) and holds an MBA in Business Administration from Heriot Watt University in the U.K.
Over the last 12 years Mr. Dana has been the owner of CFO4U, an Israeli company providing external financial and accounting services to
various companies. From 2013 to 2017, Mr. Dana provided financial services to Riskified Ltd (NYSE: RSKD). Mr. Dana has been providing
financial services to Joytunes Ltd. since 2011, to Powtoon Ltd. and Powtoon Limited since 2013, to Tradair Ltd. since 2013, and to Substrata
Ltd since 2013. For the past five years Mr. Dana provides a wide range of financial, accounting and business services including outside
CFO counsel services to multiple companies through his company, CFO4U. Mr. Dana’s clients in the past five years include start-up
companies such as Joytunes Ltd., Powtoon Ltd., Substrata Ltd., Jug Technologies Ltd., Roeto Ltd., and Chekkt Ltd. In July 2022 Mr. Dana
was appointed as
the Company’s CFO effective from
July 26, 2022.
Haim Tabak, Chief
Operating Officer, as a consultant
Haim
Tabak serves as our Chief Operating Officer since our inception in 2020. Mr. Tabak is a retiree since 2017, following a career
of over 20 years as a Chief Operating Officer in a publicly trading company on the Bulletin Board in the U.S., including at Win Gaming
Media, Inc. In recent years and since the establishment of Manuka Ltd., Mr. Tabak has been working as an operating advisor and COO.
Family Relationships
There are no
family relationships among our directors or executive officers.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires our directors and officers, and persons who own more than 10% of our Common
Stock, to file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of our Common Stock
and our other equity securities. Officers, directors and greater than 10% beneficial owners are required by SEC regulation to furnish
us with copies of all Section 16(a) forms they file.
To our knowledge,
based solely on review of the copies of such reports furnished to us and written representations that no other reports were required,
during the fiscal year ended
December 31, 2021, all Section 16(a) filing requirements applicable to our officers, directors and greater
than 10% beneficial owners were filed on a timely basis.
Code of Ethics
We currently
do not have a code of ethics in place, as we are in the process of revising our preexisting code of conduct and ethics subsequent to the
consummation of the Share Exchange. Disclosure regarding the adoption of, any amendments to, or waivers from, provisions of the code of
conduct and ethics that apply to our directors, principal executive and financial officers will be included in a Current Report on Form
8-K within four business days following the date of any such amendment or waiver.
CORPORATE GOVERNANCE
Audit Committee. Currently, the Board of Directors recommends retaining
or terminating the services of our independent accountants, reviews annual financial statements, considers matters relating to accounting
policy and internal controls and reviews the scope of annual audits. We do not currently have any audit committee financial expert on
our Board of Directors.
Compensation and Nominating Committees. The Board of Directors has not established
any compensation or nominating committee primarily because the current composition and size of the Board of Directors.
Summary Compensation
of Executive Officers
The following table sets forth all of the compensation awarded to, earned by or paid
to each individual serving as
the Company’s principal executive officer during the last completed fiscal years ending
December 31,
2021, and
2020:
Summary Compensation
of Executive Officers
Name and Principal Position |
|
Year |
|
Salary
|
|
|
Bonus
|
|
|
Equity Awards
|
|
|
Option Awards
|
|
|
All Other Compensation
|
|
|
Total (2)
|
|
|
|
2022 |
|
$ |
98,427 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
$ |
35,572 |
(1) |
|
$ |
133,999 |
|
|
|
2021 |
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$ |
48,808 |
|
|
$ |
48,808 |
|
Haim Tabak, COO |
|
2022 |
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
-- |
|
|
$ |
29,998 |
|
|
$ |
65,643 |
|
|
|
2021 |
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$ |
26,934 |
|
|
$ |
26,934 |
|
David Dana, CFO (3) |
|
2022 |
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
858,120
|
|
|
$ |
23,350 |
|
|
$ |
|
|
|
|
2021 |
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
(1) Represents a management fee.
(2) Aggregated service fees paid in NIS
(converted herein to U.S. dollar annual average rate).
(3) Mr. Dana was appointed as CFO in July
2022.
(4) Represents a consulting fee.
Outstanding Equity
Awards
As of
January 4, 2023,
the Company granted options to its CFO to purchase 370,014
shares of Common Stock of
the Company, with an exercise price per share of $0.0624 for a vesting period of 36 months commencing on
April
1, 2022, with one third (1/3) of the total number of options vesting on the first anniversary of the Start Date (the
“Cliff Date”)
and one twelfth (1/12) of the options vesting every three months following the Cliff Date.
Compensation of Directors
The Company
did not pay any fees to their respective directors for attendance at meetings of the board; however,
the Company may adopt a policy of
making such payments in the future.
The Company may reimburse out-of-pocket expenses incurred by directors in attending board and committee
meetings.
Employment Arrangements
The following
is a summary of the material terms of our employment agreement with Mr. Citron and Mr. Dana.
Shimon Citron, CEO and Director.
Mr. Citron
received no compensation for the year 2020. His management fee for the year 2021
was $48,808 and his total compensation for the year 2022 was $133,999, consisting of salary of $98,427 and a management fee of $35,572.
Mr. Citron’s employment agreement includes education fund in accordance with
the Israeli law and annual 30 vacation days vehicle expenses and a retirement grant. His employment agreement also includes potential
bonuses upon satisfaction of the following milestones: for each calendar year during which
the Company’s total revenues reach at
least $2,000,000, Mr. Citron will be entitled to receive a bonus from
the Company in a gross amount equal to 3 monthly salaries (according
to his last full monthly salary). For each calendar year during which
the Company’s total revenues reach at least $4,000,000, Mr.
Citron will be entitled to receive a bonus from
the Company in a gross amount equal to 5 monthly salaries (according to his last full
monthly salary). For each calendar year during which
the Company’s total revenues reach at least $7,000,000, Mr. Citron will be
entitled to receive a bonus from
the Company in a gross amount equal to 8 monthly salaries (according to his last full monthly salary).
Haim Tabak, COO. Mr. Tabak
is retained by
the Company as a consultant. During 2022, Mr. Tabak received service fee and he is intended to sign an employment agreement
under a full-time employment agreement that would be prepared and signed within the coming 60 days.
Director Independence
As our Common Stock is currently quoted on the OTC Pink, we are not subject to the rules
of any national securities exchange which require that a majority of a listed Company’s directors and specified committees of the
Board of Directors meet independence standards prescribed by such rules. Nonetheless, none of the directors currently serving on the Board
of Directors is an independent director within the meaning of NASDAQ Rule 5605(a)(2).
Indemnification of
Directors and Executive Officers
Section 145 of the Delaware General Corporation Law (which we refer to as the DGCL) provides, in general, that a corporation incorporated
under the laws of the State of Delaware, as we are, may indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation)
by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action,
suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s
conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses (including
attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or
suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests
of the corporation, except that no indemnification will be made in respect of any claim, issue or matter as to which such person will
have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or
any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses.
Our
certificate of incorporation and
bylaws provide that we will indemnify our directors, officers, employees and agents to the extent
and in the manner permitted by the provisions of the DGCL, as amended from time to time, subject to any permissible expansion or limitation
of such indemnification, as may be set forth in any stockholders’ or directors’ resolution or by
contract. In addition, our
director and officer indemnification agreements with each of our directors and officers provide, among other things, for the indemnification
to the fullest extent permitted or required by Delaware law, provided that no indemnitee will be entitled to indemnification in connection
with any claim initiated by the indemnitee against us or our directors or officers unless we join or consent to the initiation of the
claim, or the purchase and sale of securities by the indemnitee in violation of Section 16(b) of the Exchange Act.
Any repeal or modification of these provisions approved by our stockholders will be prospective only and will not adversely affect any
limitation on the liability of any of our directors or officers existing as of the time of such repeal or modification.
We are also permitted to apply for insurance on behalf of any director, officer, employee or other agent for liability arising out of
his actions, whether or not the DGCL would permit indemnification.
Anti-Takeover Effect
of Delaware Law, Certain Charter and
Bylaw Provisions
Our
certificate of incorporation authorizes the issuance of up to 200,000 shares of preferred stock and our Board of Directors is empowered,
without stockholder approval, to issue a new series of preferred stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or other rights of the holders of Common Stock. Such authority, together with certain provisions
of Delaware law and of our
certificate of incorporation and
bylaws, may have the effect of delaying, deterring or preventing a change
in control of us, may discourage bids for the Common Stock at a premium over the market price and may adversely affect the market price,
and the voting and other rights of the holders of the Common Stock.
Although we have no present intention to issue any additional shares of our preferred stock, we may do so in the future. The board of
directors of a Delaware corporation may issue rights, options, warrants or other convertible securities, or rights entitling its holders
to purchase, receive or acquire shares or fractions of shares of the corporation or assets or debts or other obligations of the corporation,
upon such terms as are determined by the board of directors. Our Board of Directors is free, subject to their fiduciary duties to stockholders,
to structure the issuance or exercise of the rights in a manner which may exclude significant stockholders from being entitled to receive
such rights or to exercise such rights or in a way which may effectively prevent a takeover of the corporation by persons deemed hostile
to management. Nothing contained in our
certificate of incorporation will prohibit our Board of Directors from using these types of rights
in this manner.
Our current executive officer of
the Company holds approximately 72% of the voting power of our outstanding shares. This person has a
controlling influence in determining the outcome of any corporate transaction or other matters submitted to our stockholders for approval,
including mergers, consolidations and the sale of all or substantially all of our assets, election of directors, and other significant
corporate actions. As such, our executive officer has the power to prevent or cause a change in control; therefore, without their consent
we could be prevented from entering into transactions that could be beneficial to us. The interests of our executive officer may give
rise to a conflict of interest with
the Company and
the Company’s shareholders.
We are subject
to the provisions of Section 203 of the GCL, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation
from engaging in a “business combination” with an “interested stockholder” for a period of three years after the
date of the transaction in which the person became an interested stockholder, unless the business combination is approved in the following
prescribed manner:
|
•
|
prior to the time of the transaction, the board of directors of the corporation approved
either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
|
•
|
upon completion of the transaction that resulted in the stockholder becoming an interested
stockholder, the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares outstanding (1) shares owned by persons who are directors and also officers
and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer; and
|
|
•
|
on or subsequent to the time of the transaction, the business combination is approved
by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at
least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder. |
Generally, for
purposes of Section 203, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in
a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and
associates, owns or, within three years prior to the determination of interested stockholder status, owned 15% or more of a corporation’s
outstanding voting securities.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table provides information as of
December
20, 2022 regarding beneficial ownership of our Common Stock by: (i) each person known to us who beneficially owns more than five percent
of our Common Stock; (ii) each of our directors; (iii) each of our executive officers; (iv) and all of our directors and executive officers
as a group.
The number of
shares beneficially owned is determined under rules promulgated by the SEC, and the information is not necessarily indicative of beneficial
ownership for any other purpose. The shares in the tables does not, however, constitute an admission that the named stockholder is a direct
or indirect beneficial owner of those shares.
Name and Address of Beneficial Owner |
|
Amount and Nature of
Beneficial Ownership |
|
Percent of
Class(1) |
|
5% Stockholders: |
|
|
|
|
|
Chomsky Group |
|
|
16,819,250 |
|
|
15 |
%(2) |
|
|
|
|
|
|
|
|
Executive Officers: |
|
|
|
|
|
|
|
|
|
|
80,729,883 |
|
|
72 |
%(3) |
David Dana |
|
|
- |
|
|
- |
% |
All directors and executive officers as a group (2 Persons) |
|
|
80,729,883 |
|
|
72 |
% |
(1)
|
Applicable percentage ownership is based on 112,033,909 shares
of Common Stock outstanding. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting
or investment power with respect to securities. Shares of Common Stock that are currently exercisable or exercisable within 60 days of
December 20, 2022 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage
of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
|
(2)
|
Includes shared vote of 12,614,850 shares of Common Stock common beneficially held by Adler Chomsky Marketing
Communication Ltd. and 4,204,382 shares of Common Stock beneficially held by Eyal Chomsky Holdings Ltd. Address: 50 Menachem Begin St.,
Tel Aviv 6777682.
|
(3) |
Includes 32,292,193 shares of Common Stock beneficially owned by Mr. Citron’s wife, Mrs. Sigalit
Citron and 48,437,690 shares of Common Stock beneficially owned by Mr. Shimon Citron. Address: 19 Haim Bar-Lev St., Tel Aviv 5265368.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Set forth below
is a description of certain relationships and related person transactions between us or our
subsidiaries and our directors, executive
officers or holders of more than 5% of our voting securities.
Transactions with Related
Persons
During the period from March 22, (Inception) to
December 31, 2020 and the year
ended
December 31, 2021, the founder of Manuka, Mr.
Shimon Citron, a director and Chief Executive Officer of
the Company, provided
the Company with several loans at an aggregate amount of $233 thousand as of
June 30, 2022. The loans bear no interest and are linked
to the Israeli Consumer Prices Index. The repayment date has not been determined. We describe this more fully in Note 9 to
the Company’s
audited financial statements for the years ended
December 31, 2021 and for the period from March 22, (Inception) to
December 31, 2020.
Loan Agreements
During the period
from March 22, (Inception) to
December 31, 2020 and the year-end
December 31, 2021, Mr.
Shimon Citron, a director and Chief Executive
Officer of
the Company, provided Manuka Ltd. with several loans at an aggregate amount of $239,000 as of
December 31, 2021. The loans
bear no interest and are linked to the Israeli Consumer Prices Index (
“CPI”). The repayment date has not been determined.
The Company estimated the value of the benefit as the difference between the interest rate stipulated in the
contract and the interest
rate commensurate with such loans expected in an arms-length transaction (inclusive adjustment to the size of the loan and the fact that
it is unsecured, which
the Company's management considers being the best estimate of
the Company’s interest rate close to the date
of receiving loans from the shareholders). Accordingly, as a result of the fact that the Mr. Citron’s loan bears no interest and
with no maturity date, the benefit is determined each year at the beginning of the year, as the discount of the loans at the effective
interest rate (determined above) determined to be approximately 8.85%. The benefit for the period from March 22, (Inception) to
December
31, 2020, and the year ended
December 31, 2021 were US$ 2,065 and US$ 12,741 respectively. We describe this more fully in Note 9
to
the Company’s audited financial statements for the years ended
December 31, 2021 and the period from March 22, (Inception) to
December 31, 2020.
Registration Rights
Agreement
The Selling
Stockholders described in this prospectus include registration of 80,729,871 shares of Common Stock of Mr.
Shimon Citron and his wife,
Mrs. Sigalit Citron (the
"Director’s Shares”). Mr.
Shimon Citron serves as our director and Chief Executive Officer.
The Director’s Shares includes 32,292,193 shares of Common Stock beneficially owned by Mr. Citron’s wife, Mrs. Sigalit
Citron and 48,437690 shares of Common Stock beneficially owned by Mr.
Shimon Citron.
Director Independence
As our Common Stock is currently quoted on the OTC Pink, we are not subject to
the rules of any national securities exchange which require that a majority of a listed Company’s directors and specified committees
of the Board of Directors meet independence standards prescribed by such rules. Nonetheless, none of the directors currently serving on
the Board of Directors is an independent director within the meaning of NASDAQ Rule 5605(a)(2).
DESCRIPTION
OF SECURITIES
General
After the Closing of the Share Exchange,
the Company’s authorized capital stock consists of 150,000,000 shares of capital stock,
par value $0.01 per share, of which 200,000 shares are
“blank check” preferred stock, par value $0.01 per share, of which
1,000 are designated as Series A Convertible Preferred Stock (of which 453 have been issued and converted to Common Stock) (the
“Series
A Preferred Stock”), 5,000 are designated as Series B Convertible Preferred Stock (of which none are issued and outstanding) (the
“Series B Preferred Stock”), 250 are designated as Series C Convertible Preferred Stock (250 of which have been issued and
converted to Common Stock) (the
“Series C Preferred Stock”), and 110,000 shares were designated as Series D Convertible Preferred
Stock (the “Series D Preferred Stock) and converted to 66,000,000 Common Stock.
Following the Share Exchange,
the Company
had 45,125,405 shares of Common Stock, 453 shares of Series A Preferred, 250 Series C Preferred, and 110,000 Series D Preferred issued
and outstanding. As of
January 4, 2023 all issued Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock were
converted into Common Stock.
Description of Common
Stock
Number of Authorized and Outstanding Shares. As of the date hereof the authorized
capital stock consists of 150,000,000 shares of capital stock, par value $0.01 per share following an approval of the Board of Directors
of the Company on July 25, 2022 to amend to the Company’s Certificate of Incorporation to increase the Company’s authorized
shares of common stock, $0.01 par value per share from 51,000,000 shares of Common Stock to 150,000,000 shares of Common Stock (the “Amendment”),
which will become effective on September 8, 2022. On July 27, 2022, stockholders holding a majority of the Company’s voting power
approved the Amendment by written consent in lieu of a meeting, in accordance with the Delaware General Corporation Law.
On
September 8, 2022, we filed a Certificate of Amendment to our Certificate
of Incorporation Secretary of State of the State of Delaware, in connection with the Amendment. As a result, the 110,000 shares of Series
D Preferred automatically converted into 66,000,000 shares of our Common Stock.
As of the date hereof, there are 112,033,909
shares of our Common Stock issued and outstanding. All of the outstanding shares of Common Stock are fully paid and non-assessable.
Voting Rights. The holders of our Common Stock are entitled to one vote
for each share held on all matters submitted to a vote of the stockholders and do not have any cumulative voting rights.
Dividends. Holders of our Common Stock are entitled to receive proportionally
any dividends declared by our board of directors.
Liquidation. In the event of our liquidation or dissolution, holders of
our Common Stock are entitled to share ratably in all assets remaining after payment of all debts and other liabilities.
Rights and Preferences. Holders of our Common Stock have no preemptive,
subscription, redemption or conversion rights.
Preferred Stock
The Company’s Amended
Certificate of Incorporation authorizes the issuance
of 200,000 shares of
“Blank Check” preferred stock, par value $0.01 per share, subject to any limitations prescribed by law,
without further vote or action by the stockholders, to issue from time-to-time shares of preferred stock in one or more series. Each such
series of preferred stock shall have such number of shares, designations, preferences, voting powers, qualifications, and special or relative
rights or privileges as shall be determined by
the Company’s board of directors, which may include, among others, dividend rights,
voting rights, liquidation preferences, conversion rights and preemptive rights. There are 1,000 shares of Series A Preferred Stock authorized
and 453 of such shares outstanding held by 1 stockholder (which were converted into 658,506 shares of Common Stock), 250 shares of Series
C Preferred Stock authorized and 250 of such shares outstanding held by 1 stockholder (which were converted into 250,000 shares of Common
Stock), and 110,000 shares of Series D Preferred authorized and 110,000 of such shares outstanding held by 4 stockholders (convertible
into 66,000,000 shares of Common Stock). As of
January 4, 2023, all Series A Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock were converted into Common Stock.
Transfer Agent.
Shares of Common Stock are registered at the transfer agent and are transferable at such office by the registered holder (or duly authorized
attorney) upon surrender of the Common Stock certificate, properly endorsed, or other evidence satisfactory to the transfer agent with
respect to shares not represented by a certificate. No transfer shall be registered unless the Company is satisfied that such transfer
will not result in a violation of any applicable federal or state securities laws. Our transfer agent is Pacific Stock Transfer. Their
address is 6725 Via Austin Pkwy, Suite 300, Las Vegas, NV 89119. Their website is www.pacificstocktransfer.com.
C:
This prospectus relates to the sale, from time to time, by the Selling Stockholders
identified in this prospectus of up to 15,232,243 shares of Company’s Common Stock, consisting of: (i) 2,936,311 shares of Common
Stock issued to certain stockholders in connection with several debt forgiveness agreements with
the Company in consideration of a debt
forgiveness; (ii) 780,934 shares of Common Stock issued to certain stockholder in connection with an option exchange agreement; (iii)
2,642,802 shares of Common Stock issued to certain stockholders in connection with several warrant exchange agreements; and (iv) 8,872,196
shares of Common Stock of certain stockholders.
On
March 6,
2022, we signed a Share Exchange Agreement, as amended, with Manuka, pursuant to which Manuka became our wholly owned subsidiary. Following
the Closing Date, we adopted the business of Manuka. Pursuant to the terms of the Share Exchange Agreement, we acquired all of the Manuka
Shares from Manuka’s shareholders in exchange for an aggregate amount of 33,791,641 shares 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), 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. (formerly our largest shareholder), for the forgiveness of an aggregate of $306,117
in outstanding debt in exchange for the issuance of 3,031,567 shares of our 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. On
June 30, 2022, we entered into several debt forgiveness agreement
and warrant exchange agreements, including: (i) a debt forgiveness agreement with Cutter Mill Capital LLC, pursuant to which we agreed
to issue 894,169 shares of our Common Stock. We also agreed to register all such shares of Common Stock issued to Cutter Mill Capital,
within the earlier of 60 days following the closing date of the Share Exchange Agreement (provided, however that in the event we have
not cleared comments with the SEC with respect to this filing relating to the transactions contemplated by the Share Exchange Agreement,
such date shall be 90 days following the date if the agreement) and the date that we file its next registration statement, and agreed
to obtain effectiveness within 90 days (or 120 days in the event of a full review by the SEC); (ii) a debt forgiveness agreement with
Tonak Ltd., pursuant to which we agreed to issue 1,573,582 shares of our Common Stock; (iii) a debt forgiveness agreement with Hadasit
Medical Research Services and Development Ltd., pursuant to which we agreed to issue 95,256 shares of our Common Stock; (iv) warrant exchange
agreements with Globis Capital Partners, LP and Globis International Investments LLC, pursuant to which we agreed to issue 1,585,682 and
616,654 shares of our Common Stock, respectively; (v) warrant exchange agreements with Brian M. Culley and Amiad Solomon, pursuant to
which we agreed to issue to each 220,233 shares of our Common Stock; and (vi) an option exchange agreement with Chanan Morris, pursuant
to which we agreed to issue to each 780,934 shares of our Common Stock.
We are registering
the shares hereby to satisfy registration rights we have granted to the Selling Stockholders. All of the Resale Shares, when sold, will
be sold by these Selling Stockholders. The Selling Stockholders identified in the table below may offer all or part of the Resale Shares
from time to time. However, the Selling Stockholder is under no obligation to sell all or any portion of such shares nor is the Selling
Stockholder obligated to sell any Resale Shares immediately upon effectiveness of this prospectus.
The term “Selling
Stockholders(s)” also includes any transferees, pledgees, donees, or other successors in interest to the Selling Stockholders named
in the table below. Other than the relationships described herein, to our knowledge, none of the Selling Stockholders are employees
or suppliers of ours or our affiliates. Within the past three years, other than the relationships described herein, none of the Selling
Stockholders has held a position as an officer or director of ours, nor has any Selling Stockholder had any material relationship of any
kind with us or any of our affiliates, except that certain Selling Stockholders acquired shares of our Common Stock. All information with
respect to share ownership has been furnished by the Selling Stockholders, unless otherwise noted. The shares being offered are being
registered to permit public secondary trading of such shares and each Selling Stockholder may offer all or part of the shares it owns
for resale from time to time pursuant to this prospectus. In addition, other than the relationships described below, none of the Selling
Stockholders has any family relationships with our officers, directors or controlling stockholders.
Beneficial ownership is determined
in accordance with Rule 13d-3(d) promulgated by the SEC under the Securities Exchange Act of 1934, as amended, and includes Common Stocks
with respect to which the Selling Stockholders has voting and investment power. The table below lists the Selling Stockholders and other
information regarding the beneficial ownership of the shares of Common Stock by each Selling Stockholder. The second column lists the
number of shares of Common Stock beneficially owned by each Selling Stockholder based on their ownership of Common Stock as of
December
20, 2022.
The third column
lists the maximum shares of Common Stock being offered by this prospectus by the Selling Stockholders. The number of shares of Common
Stock that may actually be sold by the Selling Stockholders may be fewer than the number of shares of Common Stock being offered by this
prospectus
In accordance with the terms of the registration rights of the Selling Stockholders,
this prospectus generally covers the resale of at least 15,232,243 shares of Common Stock issued to the Selling Stockholders. The fourth
column assumes the sale of all of the shares of Common Stock offered by the Selling Stockholders pursuant to this prospectus. The notes
below the table lists the Selling Stockholders and other information regarding the beneficial ownership of the Common Stocks held by them.
The Selling
Stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
Name of Selling Stockholders
|
|
Number of
Common
Stock
Owned Prior to
Offering
|
|
|
Maximum
Number of
Common
Stock to be
Offered
Pursuant
to this
Prospectus
|
|
|
Number of Common
Stock Owned
Immediately After
Sale of
Maximum Number of
Common Stock in this
Offering
|
|
|
|
Number(1)
|
|
|
Percent(2)
|
|
|
Number
|
|
|
Percent
|
|
|
Number(3)
|
|
|
Percent(2)
|
|
Jewish Community Foundation of Greater MetroWest NJ(4) |
|
|
4,101,003
|
|
|
|
3.66 |
% |
|
|
4,101,003
|
|
|
|
3.66 |
% |
|
|
-
|
|
|
|
-
|
|
Harmony (H.A) Investments Ltd.(5) |
|
|
2,711,069
|
|
|
|
2.42 |
% |
|
|
2,711,069
|
|
|
|
2.42 |
% |
|
|
-
|
|
|
|
-
|
|
Nadav Kidron(6) |
|
|
1,176,636
|
|
|
|
1 |
% |
|
|
1,176,636
|
|
|
|
1 |
% |
|
|
-
|
|
|
|
-
|
|
|
|
|
48,437,690
|
|
|
|
72 |
% |
|
|
1,000,000
|
|
|
|
* |
% |
|
|
47,437,690
|
|
|
|
71 |
% |
Sigalit Citron(8) |
|
|
32,292,193
|
|
|
|
72 |
% |
|
|
1,000,000
|
|
|
|
* |
% |
|
|
31,292,193
|
|
|
|
71 |
% |
Globis Capital Partners, LP(9) |
|
|
1,585,682
|
|
|
|
- |
* |
|
|
1,585,682
|
|
|
|
*
|
|
|
|
1,585,682
|
|
|
|
-
|
|
Chanan Morris(10) |
|
|
780,934
|
|
|
|
- |
* |
|
|
780,934
|
|
|
|
*
|
|
|
|
780,934
|
|
|
|
-
|
|
Globis International Investments LLC(11) |
|
|
616,654
|
|
|
|
- |
* |
|
|
616,654
|
|
|
|
*
|
|
|
|
616,654
|
|
|
|
-
|
|
Adler Chomsky Marketing Communications Ltd.(12) |
|
|
12,614,868
|
|
|
|
15 |
% |
|
|
500,000
|
|
|
|
|
|
|
|
12,114,868
|
|
|
|
14 |
% |
Eyal Chomsky Holdings Ltd.(13) |
|
|
4,204,382
|
|
|
|
15 |
% |
|
|
500,000
|
|
|
|
|
|
|
|
3,704,382
|
|
|
|
14 |
% |
Zavit Holding(14) |
|
|
385,461
|
|
|
|
*
|
|
|
|
385,461
|
|
|
|
*
|
|
|
|
385,461
|
|
|
|
-
|
|
Israel Alfassi(15) |
|
|
278,460
|
|
|
|
*
|
|
|
|
278,460
|
|
|
|
*
|
|
|
|
278,460
|
|
|
|
-
|
|
Brian M. Culley(16) |
|
|
220,233
|
|
|
|
*
|
|
|
|
220,233
|
|
|
|
*
|
|
|
|
220,233
|
|
|
|
-
|
|
Amiad Solomon(17) |
|
|
220,233
|
|
|
|
*
|
|
|
|
220,233
|
|
|
|
*
|
|
|
|
220,233
|
|
|
|
-
|
|
ARZ Chemicals International Trade Ltd.(18) |
|
|
155,878
|
|
|
|
*
|
|
|
|
155,878
|
|
|
|
*
|
|
|
|
155,878
|
|
|
|
-
|
|
Total |
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
* less than 1%.
(1) |
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment
power with respect to securities. |
(2)
|
As of December 20, 2022 all Series A Preferred Stock, Series
C Preferred Stock and Series D Preferred Stock were converted into Common Stock.
|
(3)
|
Assumes the sale of all shares being offered pursuant to this prospectus.
|
(4)
|
Consists of 4,101,003 shares of Common Stock. Howard Rabner, Chief Financial Officer, has voting and dispositive
power over our shares held by the selling stockholder Address: 901 Route 10, Whippany, NJ 07981.
|
(5)
|
Includes 468,560 shares of Common Stock issued in connection with a debt forgiveness
agreement with the Company and 2,242,509 shares of Common Stock issued in connection with the Share Exchange Agreement, as amended, entered
into by the selling stockholder. Address: 1 Haharuv St., Ramat Hasharon 4725343, Israel.
|
(6) |
Consists of 1,176,636. Address: 2 Elza St. Jerusalem, Israel.
|
(7)
|
Beneficial ownership calculation includes Mr. Citron’s wife, Mrs. Sigalit Citron.
Address: 19 Haim Bar-Lev St., Tel Aviv 5265368.
|
(8)
|
Beneficial ownership calculation includes Mrs. Citron’s husband, Shimon Citron.
Address: 19 Haim Bar-Lev St., Tel Aviv 5265368.
|
(9)
|
Includes 1,585,682 shares of Common Stock issued in connection with a warrant exchange
agreement, entered into by the selling stockholder. Paul Packer, a Managing Member of Globis Capital Partners, LP, has voting and dispositive
power over our shares held by the selling stockholder. Address: 7100 W. Camino Real- Suite 302-48, Boca Raton, FL 33433.
|
(10)
|
Consists of 780,934 shares of Common Stock issued in connection with an option exchange
agreement, entered into by the selling stockholder. Address: 30 Pitum Haktoret 3, Efrat, Israel 9045830.
|
(11)
|
Includes 616,654 shares of Common Stock issued in connection with a warrant exchange agreement, entered
into by the selling stockholder. Paul Packer, a Managing Member of Globis International Investments LLC, has voting and dispositive power
over our shares held by the selling stockholder. Address: 7100 W. Camino Real- Suite 302-48, Boca Raton, FL 33433.
|
(12)
|
Beneficial ownership calculation includes shared vote beneficially held by Eyal Chomsky Holdings Ltd. Address:
50 Menachem Begin St., Tel Aviv 6777682.
|
(13)
|
Beneficial ownership calculation includes shared vote beneficially held by Adler Chomsky Marketing Communications
Ltd. Address: 50 Menachem Begin St., Tel Aviv 6777682.
|
(14)
|
Consists of 385,461 shares of Common Stock. Amiad Solomon, a CEO and Owner of Zavit Holding, has voting
and dispositive power over our shares held by the selling stockholder. Address: 14 Hameyasdim St., Kfar Adomim, Israel.
|
(15)
|
Consists of 278,460 shares of Common Stock. Address: 73 Weizman St., Tel-Aviv, Israel 6215518.
|
(16)
|
Consists of 220,233 shares of Common Stock issued in connection with a warrant exchange agreement, entered
into by the selling stockholder. Address: 2153 Whisper Wind Lane, Encinitas, CA 92024.
|
(17)
|
Includes 220,233 issued in connection with a warrant exchange agreement, entered into by the selling stockholder.
Address: 14 Hameyasdim St., Kfar Adomim, Israel.
|
(18) |
Consists of 155,878 shares of Common Stock. Address: 27 Hareut St. Netanya, Israel 4256532. |
We may require
the Selling Stockholders to suspend the sales of the Common Stock offered by this prospectus upon the occurrence of any event that makes
any statement in this prospectus or the related registration statement untrue in any material respect or that requires the changing of
statements in these documents in order to make statements in those documents not misleading.
Information concerning additional selling stockholders not identified in this prospectus will be set forth in prospectus supplements from
time to time, if and as required. Information concerning the Selling Stockholders may change from time to time and any changed information
will be set forth in prospectus supplements if and when necessary.
We are registering
the securities issued to the Selling Stockholders to permit the resale of these securities by the holders thereof from time to time after
the date of this prospectus, pursuant to the provisions of the Registration
Rights Agreement. As used in this Prospectus,
“Selling
Stockholders” includes donees, pledgees, transferees or other successors-in-interest selling shares received after the date of this
prospectus from a selling stockholder as a gift, pledge, partnership distribution or other permitted transfer.
We will not
receive any of the proceeds from the sale by the Selling Stockholders of the securities. We will bear all fees and expenses incident to
our obligation to register the securities.
As of the date of this prospectus, our Common
Stock is subject to quotation on the OTC Pink operated by the OTC Markets Group, Inc. The Selling Shareholders may, from time to time,
sell any or all of the shares of our common stock covered by this prospectus at a fixed price of $1.40 per share, representing the average
of the high and low prices as reported on the OTC Markets on 18, 2022. If and when our common stock is regularly quoted on the OTCQB or
listed on any national securities exchange or automated interdealer quotation system, the Selling Stockholders may sell their respective
shares of Common Stock, from time to time, at prevailing market prices at the time of the sale, at varying prices determined at the time
of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions. The selling
Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act. There are no underwriting commissions
involved in this offering. We have agreed to pay all the costs and expenses of this offering. Selling Stockholders will pay no offering
expenses, but all selling and other expenses incurred by the selling Stockholders will be paid by the selling Stockholders. The Selling
Stockholders may use any one or more of the following methods when selling shares:
|
● |
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
|
|
|
|
|
● |
block trades in which the broker-dealer will attempt to sell the securities as agent but may position and
resell a portion of the block as principal to facilitate the transaction; |
|
|
|
|
● |
purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
|
|
|
|
● |
an exchange distribution in accordance with the rules of the applicable exchange; |
|
|
|
|
● |
privately negotiated transactions; |
|
|
|
|
● |
settlement of short sales entered into after the effective date of the registration statement of which
this prospectus is a part; |
|
|
|
|
● |
broker-dealers may agree with the Selling Stockholders to sell a specified number of such securities at
a stipulated price per share; |
|
|
|
|
● |
through the writing or settlement of options or other hedging transactions, whether such options are listed
on an options exchange or otherwise; |
|
|
|
|
● |
a combination of any such methods of sale; and |
|
|
|
|
● |
any other method permitted pursuant to applicable law. |
The Selling
Shareholders may also sell securities under Rule 144 under the Securities Act of 1933, if available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other broker-dealers to participate in sales. If the Selling Stockholders effect such
transactions by selling securities to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may
receive commissions in the form of discounts, concessions or commissions from the Selling Stockholders or commissions from purchasers
of the securities for whom they may act as agent or to whom they may sell as principal. Such commissions will be in amounts to be negotiated,
but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction will not be in excess of a customary
brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in compliance
with FINRA Rule 2121.01.
In connection
with sales of the securities or otherwise, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the securities in the course of hedging in positions they assume. The Selling
Stockholders may also sell securities short and if such short sale shall take place after the date that this Registration Statement is
declared effective by the Commission, the Selling Stockholders may deliver securities covered by this prospectus to close out short positions
and to return borrowed shares in connection with such short sales. The Selling Stockholders may also loan or pledge securities to broker-dealers
that in turn may sell such shares, to the extent permitted by applicable law. The Selling Stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the
delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or
other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). Notwithstanding
the foregoing, the Selling Stockholders have been advised that they may not use shares registered on this registration statement to cover
short sales of our Common Stock made prior to the date the registration statement, of which this prospectus forms a part, has been declared
effective by the SEC.
The Selling
Stockholders may, from time to time, pledge or grant a security interest in some or all of the securities owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties may offer and sell the securities from time to time pursuant
to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Act, amending, if necessary,
the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this
prospectus. The Selling Stockholders also may transfer and donate the securities in other circumstances in which case the transferees,
donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The Selling
Stockholders and any broker-dealer or agents participating in the distribution of the securities may be deemed to be “underwriters”
within the meaning of Section 2(11) of the Act in connection with such sales. In such event, any commissions paid, or any discounts or
concessions allowed to, any such broker-dealer or agent and any profit on the resale of the shares purchased by them may be deemed to
be underwriting commissions or discounts under the Act. Selling Stockholders who are “underwriters” within the meaning of
Section 2(11) of the Act will be subject to the applicable prospectus delivery requirements of the Act including Rule 172 thereunder and
may be subject to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Act and Rule 10b-5 under
the Exchange Act.
Each Selling
Stockholder has informed
the Company that it is not a registered broker-dealer and does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the securities. Upon
the Company being notified in writing by a selling stockholder
that any material arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if
required, pursuant to Rule 424(b) under the Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s),
(ii) the number of shares involved, (iii) the price at which such the securities were sold, (iv) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify
the information set out or
incorporated by reference in this prospectus, and (vi) other facts material to the transaction.
Under the securities
laws of some states, the securities may be sold in such states only through registered or licensed brokers or dealers. In addition, in
some states the securities may not be sold unless such shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with. Subject to the terms of the debt forgiveness agreements between
the Company and the Selling Stockholders,
the Company has no obligation to qualify the resale of any shares in any particular state.
There can be
no assurance that any Selling Stockholder will sell any or all of the securities registered pursuant to the shelf registration statement,
of which this prospectus forms a part.
Each Selling
Stockholder and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may
limit the timing of purchases and sales of any of the securities by the selling stockholder and any other participating person. To the
extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the securities to engage in
market-making activities with respect to the shares of Common Stock. All of the foregoing may affect the marketability of the securities
and the ability of any person or entity to engage in market-making activities with respect to the shares of Common Stock.
We will pay
all expenses of the registration of the securities pursuant to the registration
rights agreement, including, without limitation, SEC filing
fees and expenses of initial compliance with state securities or
“blue sky” laws; provided, however, that each Selling Stockholder
will pay all underwriting discounts and selling commissions, if any and any related legal expenses incurred by it.
We agreed to
keep this prospectus effective until all of the shares have been sold pursuant to this prospectus or Rule 144 under the Act or any other
rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable
state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
SHARES
ELIGIBLE FOR FUTURE SALE
Sale of Restricted Securities
Upon consummation of this offering, we will have 94,549,133 shares of our Common
Stock outstanding (assuming the sale of all shares being offered pursuant to this prospectus). Of these shares, all shares sold in this
offering will be freely tradable without further restriction or registration under the Securities Act, except that any shares purchased
by our affiliates may generally only be sold in compliance with Rule 144, which is described below. Of the remaining outstanding shares,
77,232,049 shares will be deemed “restricted securities” under the Securities Act.
Lock-up Arrangements and Registration Rights
There are no
current lock-up agreements of certain of our officers, our directors and the selling stockholders.
However, certain
stockholders will have the right, subject to certain conditions, to require us to register the sale of their shares of our Common Stock
under federal securities laws. See “Certain Relationships and Related Party Transactions — Registration Rights
Agreement.” There will not be any maximum cash penalties or additional penalties resulting from delays in registering our Common
Stock associated with such registration rights. If these stockholders exercise this right, our other existing stockholders may require
us to register their registrable securities.
Following the
lock-up periods described above, all of the shares of our Common Stock that are restricted securities or are held by our affiliates as
of the date of this prospectus will be eligible for sale in the public market in compliance with Rule 144 under the Securities Act.
Rule 144
The shares of
our Common Stock sold in this offering will be freely transferable without restriction or further registration under the Securities Act,
except that any shares of our Common Stock held by an “affiliate” of ours may not be resold publicly except in compliance
with the registration requirements of the Securities Act or under an exemption under Rule 144 or otherwise. Rule 144 permits
our Common Stock that has been acquired by a person who is an affiliate of ours, or has been an affiliate of ours within the past three months,
to be sold into the market in an amount that does not exceed, during any three-month period, the greater of:
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● |
one percent of the total number of shares of our Common Stock outstanding; or
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the average weekly reported trading volume of our Common Stock for the four calendar
weeks prior to the sale |
Such sales are
also subject to specific manner of sale provisions, a six-month holding period requirement, notice requirements and the availability of
current public information about us.
Shares of our
Common Stock that are not subject to lock-up arrangements described above will be eligible for sale under Rule 144 immediately upon
the closing.
Rule 144
also provides that a person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale,
and who has for at least six months beneficially owned shares of our Common Stock that are restricted securities, will be entitled
to freely sell such shares of our Common Stock subject only to the availability of current public information regarding us. A person who
is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned
for at least one year shares of our Common Stock that are restricted securities, will be entitled to freely sell such shares of our Common
Stock under Rule 144 without regard to the current public information requirements of Rule 144.
Rule 701
Rule 701
generally allows a stockholder who purchased shares of our capital stock pursuant to a written compensatory plan or
contract and who is
not deemed to have been an affiliate of
our company during the immediately preceding 90 days to sell these shares in reliance upon
Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions
of Rule 144. Rule 701 also permits affiliates of
our company to sell their Rule 701 shares under Rule 144 without
complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until
90 days after the date of this prospectus before selling those shares pursuant to Rule 701.
Sullivan
& Worcester LLP, New Yolk, New Yolk, passed upon the validity of the shares of Common Stock that may be offered hereby.
The financial statements
of Artemis Therapeutics, Inc. as of
December 31, 2021 and
December 31, 2020 and for the year ended
December 31, 2021 and the period from
March 22, (inception) to
December 31, 2020 included in this prospectus, have been audited by Brightman Almagor Zohar & Co., Certified
Public Accountants, a firm in the Deloitte Global Network, an independent registered public accounting firm, as stated in their report.
Such financial statements are included in reliance upon the report of such firm given their authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We have filed
with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our Common Stock offered by this
prospectus. For purposes of this section, the term registration statement means the original registration statement and any and all amendments
including the schedules and exhibits to the original registration statement or any amendment. This prospectus, filed as part of the registration
statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules thereto as permitted
by the rules and regulations of the SEC. For further information about us and our Common Stock, you should refer to the registration statement,
including the exhibits. This prospectus summarizes provisions that we consider material of certain
contracts and other documents to which
we refer you. Because the summaries may not contain all of the information that you may find important, you should review the full text
of those documents.
This registration
statement, including its exhibits and schedules, will be filed with the SEC. The SEC maintains a
website at (http://www.sec.gov) from
which interested persons can electronically access the registration statement, including the exhibits and schedules to the registration
statement. We intend to furnish our stockholders with annual reports containing financial statements audited by our independent auditors.
We are subject
to the information and reporting requirements of the Exchange Act and will file annual, quarterly and current reports, proxy statements
and other information with the SEC. You can request copies of these documents, for a copying fee, by writing to the SEC. We intend to
furnish our stockholders with annual reports containing financial statements audited by our independent auditors. You may request a copy
of documents filed with or furnished to the SEC by us, at no cost, by writing to Artemis Therapeutics, Inc., 3 Eliezer Vardinon St., Petach
Tikva, 4959507, Israel. Attn:
Shimon Citron, Chief Executive Officer. Our principal executive office is located at 3 Eliezer Vardinon
St., Petach Tikva, 4959507, Israel.
If hard copies
of the materials are requested, we will send only one Information Statement and other corporate mailings to stockholders who share a single
address unless we received contrary instructions from any stockholder at that address. This practice, known as
“householding,”
is designed to reduce our printing and postage costs. However,
the Company will deliver promptly upon written or oral request a separate
copy of the Information Statement to a stockholder at a shared address to which a single copy of the Information Statement was delivered.
You may make such a written or oral request by (a) sending a written notification stating (i) your name, (ii) your shared address and
(iii) the address to which
the Company should direct the additional copy of the Information Statement, to
the Company at 3 Eliezer Vardinon
St., Petach Tikva, 4959507, Israel, Attn:
Shimon Citron, Chief Executive Officer.
If multiple
stockholders sharing an address have received one copy of this Information Statement or any other corporate mailing and would prefer the
Company to mail each Stockholder a separate copy of future mailings, you may mail notification to, or call
the Company at, its principal
executive offices. Additionally, if current stockholders with a shared address received multiple copies of this Information Statement
or other corporate mailings and would prefer
the Company to mail one copy of future mailings to stockholders at the shared address, notification
of such request may also be made by mail or telephone to
the Company’s principal executive offices.
We have not
authorized anyone to give you any information or to make any representations about us or the transactions we discuss in this prospectus
other than those contained in this prospectus. If you are given any information or representations about these matters that is not discussed
in this prospectus, you must not rely on that information. This prospectus is not an offer to sell or a solicitation of an offer to buy
securities anywhere or to anyone where or to whom we are not permitted to offer or sell securities under applicable law.