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EX-31.2 - EXHIBIT 31.2 - Artemis Therapeutics, Inc.exhibit_31-2.htm
EX-32.1 - EXHIBIT 32.1 - Artemis Therapeutics, Inc.exhibit_32-1.htm
EX-31.1 - EXHIBIT 31.1 - Artemis Therapeutics, Inc.exhibit_31-1.htm


 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-Q

þ       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2015
 
o       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Commission file number 0-24431)
________________
 
NEW YORK GLOBAL INNOVATIONS INC.
(Exact name of registrant as specified in its charter)
 
DELAWARE
 
84-1417774
(State or other jurisdiction of
(I.R.S. Employer Identification No.)
incorporation or organization)
 

18 East 16th Street, Suite 307, New York, NY
10003
(Address of principal executive offices)
(Zip Code)

(646) 233-1454
(Registrant’s telephone number, including area code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
x   Yes       o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
o Yes     x No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer ¨   Accelerated filer ¨  
Non-accelerated filer ¨(do not check if a smaller reporting company)  Smaller reporting company x  
 
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes x     No o

The number of shares of Common Stock of the registrant outstanding was 43,173,592 as of  November 3, 2015.
 
 
 

 
 
NEW YORK GLOBAL INNOVATIONS INC.
 
INDEX TO FORM 10-Q
 
   
PAGE
       
PART I.
FINANCIAL INFORMATION
   
       
   
       
 
3
 
       
 
4
 
       
 
5
 
       
 
6
 
       
7
 
       
9
 
       
PART II.
OTHER INFORMATION
   
       
10
 
       
SIGNATURES
11
 
 
 
2

 

PART I.                      FINANCIAL INFORMATION

ITEM 1.                      FINANCIAL STATEMENTS

NEW YORK GLOBAL INNOVATIONS INC.
 
CONDENSED CONSOLIDATED BALANCE SHEET
 
(U.S. DOLLARS IN THOUSANDS)

   
SEP. 30,
2015
   
DEC. 31,
2014
 
   
UNAUDITED
   
AUDITED
 
ASSETS
           
             
CURRENT ASSETS:
           
Cash and cash equivalents
  $ 655     $ 613  
Restricted cash
    -       205  
Short-term deposit
    30       30  
Other accounts receivable and prepaid expenses
    40       48  
                 
TOTAL CURRENT ASSETS
    725       896  
                 
TOTAL ASSETS
  $ 725     $ 896  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY
           
             
CURRENT LIABILITIES:
           
Trade payables
  $ -     $ 5  
Accrued expenses and other payables
    51       61  
                 
TOTAL CURRENT LIABILITIES
    51       66  
                 
Warrants to issue shares
    7       40  
                 
TOTAL LIABILITIES
    58       106  
                 
STOCKHOLDERS’ EQUITY:
               
Capital Stock:
               
Preferred stock of $0.01 par value - Authorized: 10,000,000 shares; Issued and outstanding: 0 shares as of September 30, 2015 and as of December 31, 2014
    -       -  
Common stock of $0.01 par value - Authorized: 75,000,000; Issued and outstanding: 43,173,592 as of  September 30, 2015 and as of December 31, 2014
    432       432  
Additional paid-in capital
    17,796       17,796  
Accumulated other comprehensive income
    118       118  
Accumulated deficit
    (17,679 )     (17,556 )
                 
TOTAL STOCKHOLDERS’ EQUITY
    667       790  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 725     $ 896  
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
3

 
 
NEW YORK GLOBAL INNOVATIONS INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
   
THREE MONTHS ENDED
SEPTEMBER 30,
   
NINE MONTHS ENDED
SEPTEMBER 30,
 
   
2015
   
2014
   
2015
   
2014
 
   
UNAUDITED
   
UNAUDITED
 
    Revenues
  $ -     $ -     $ -     $ 244  
Cost of revenues
    -       -       -       82  
                                 
Gross profit
    -       -       -       162  
                                 
Income from sale of operations, net
    -       -       -       740  
                                 
Operating expenses:
                               
   Research and development
    -               -       48  
   Selling and marketing
    -       -       -       43  
   General and administrative
    30       54       142       269  
                                 
Total operating expenses
    30       54       142       360  
                                 
Operating income (loss)
    (30 )     (54 )     (142 )     542  
                                 
Financial income (expenses), net
    (8 )     (4 )     (14 )     (18 )
Financial income (expenses) related to warrants
    20       -       33       (24 )
Total financial income (expenses), net
    12       (4 )     19       (42 )
                                 
Other loss
    -       -       -       (12 )
                                 
Net profit (loss)
  $ (18 )   $ (58 )   $ (123 )   $ 488  
                                 
Net profit  (loss) per share:
                               
Basic and diluted
  $ 0.00     $ 0.00     $ 0.00     $ 0.01  
                                 
Weighted average number of shares of Common Stock used in computing basic and diluted net loss per share
    43,173,592       43,173,592       43,173,592       43,173,592  
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
4

 
 
NEW YORK GLOBAL INNOVATIONS INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(U.S. DOLLARS IN THOUSANDS)
 
   
NINE MONTHS ENDED ON
SEPTEMBER 30,
 
   
2015
   
2014
 
   
UNAUDITED
   
UNAUDITED
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net profit (loss)
  $ (123 )   $ 488  
Adjustments required to reconcile net profit (loss) to net cash provided by (used in) operating activities:
               
Loss on disposal of property
    -       12  
Depreciation and amortization
    -       6  
Decrease in trade receivables
    -       28  
Decrease (increase) in other accounts receivable and prepaid expenses
    8       (37 )
Decrease in inventories
    -       229  
Decrease in trade payables
    (5 )     (144 )
Decrease in employees and payroll accruals
    -       (50 )
Changes in warrants to issue shares
    (33 )     24  
Share based compensation
    -       (1 )
Decrease in accrued expenses and other payables
    (10 )     (17 )
                 
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    (163 )     538  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Increase in restricted cash balances
    -       (200 )
Release of restricted cash balances
    205       16  
Proceeds from sales of property
    -       9  
Investment in short-term deposit
    -       (16 )
                 
NET CASH (USED IN) INVESTING ACTIVITIES
    205       (191 )
                 
Increase in cash and cash equivalents
    42       347  
Cash and cash equivalents at the beginning of the year
    613       334  
                 
Cash and cash equivalents at the end of the period
  $ 655     $ 681  
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
5

 
 
NEW YORK GLOBAL INNOVATIONS INC.
 
(U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
NOTE 1: BASIS OF PRESENTATION
 
The accompanying condensed unaudited interim consolidated financial statements have been prepared by New York Global Innovations Inc., or the Company, in accordance with accounting principles generally accepted in the United States of America, or US GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. These financial statements reflect all adjustments, consisting of normal recurring adjustments and accruals, which are, in the opinion of management, necessary for a fair presentation of the financial position of the Company as of September 30, 2015 and the results of operations and cash flows for the interim periods indicated in conformity with US GAAP applicable to interim periods. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted. These financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company for the year ended December 31, 2014 that are included in the Company’s Form 10-K filed with the Securities and Exchange Commission on April 15, 2015, or our Annual Report. The results of operations presented are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2015.

In October 2013, the Company entered into an Asset Purchase Agreement, as amended, or APA, with Spectra Systems Corporation, or Spectra. Pursuant to the terms of the APA, Spectra acquired at the closing in February 2014 substantially all of the assets of the Company, or the Asset Sale, with certain exclusions described below.

In consideration for the acquisition of assets pursuant to the APA, Spectra paid the Company $840,684, plus Spectra’s and the Company’s joint good faith estimate of the closing date inventory value on the closing date. Spectra also paid the Company the following post-closing conditional payments:

·
$185,000 in post-closing conditional payments depending on orders placed by a former customer and agreements to be entered into with a separate customer assigned to Spectra;
 
·
$200,000, which was deposited with Wells Fargo Bank, National Association and held in accordance with the terms of an escrow agreement to secure the Company’s obligations to pay Spectra any indemnification claims for a period of up to one year after the date of the Closing (which amount was released to the Company in March 2015); and
 
·
$134,000, an amount equal to 50% of all pre-closing accounts receivable collected after the Closing.
 
In addition, as a result of the closing of the sale of our assets, the Company’s former President and Chief Executive Officer, Tal Gilat, received 5% of the net proceeds of the net consideration received by the Company.
 
Following the Asset Sale, the Company’s Board of Directors is exploring strategic alternatives to deploy the proceeds of the Asset Sale, which may include future acquisitions, a merger with another company, or other actions to redeploy capital, including, without limitation, the sale of the public shell company into which the net proceeds may be retained.

Shell Company Status

Based on the lack of Company business activities since the closing of the Asset Sale, our Company is classified as a “shell” company by the Securities and Exchange Commission. The term shell company means a Company that has:

(1) No or nominal operations; and
(2) Either:
(i) No or nominal assets;
(ii) Assets consisting solely of cash and cash equivalents; or
(iii) Assets consisting of any amount of cash and cash equivalents and nominal other assets.

As a result of the Asset Sale completion on February 28, 2014, the Company no longer has revenue-producing operations. The Company believes that it will continue to experience losses and negative cash flows in the near future and will not be able to return to positive cash flow without obtaining additional financing in the near term or entering into a business transaction. The Company experiences difficulties accessing the equity and debt markets and raising such capital or entering into a business transaction, and there can be no assurance that the Company will be able to raise such additional capital on favorable terms or at all or enter into a business transaction. If additional funds are raised through the issuance of equity securities or by entering into a business transaction, the Company’s existing stockholders will experience significant dilution. As a result of the foregoing factors, there is substantial doubt about the Company’s ability to continue as a going concern. In order to conserve the Company’s cash and manage its liquidity, the Company has implemented cost-cutting initiatives.
 
 
6

 
 
ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
In this section, “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” references to “we,” “us,” or “our,”  refer to New York Global Innovations Inc. and its consolidated subsidiaries and dollar amounts are in thousands, except as otherwise stated.
 
This Quarterly Report on Form 10-Q contains statements that may constitute “forward-looking statements.” Generally, forward-looking statements include words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “could,” “may,” “might,” “should,” “will,” the negative of such terms, and words and phrases of similar import. For examples when we discuss possible strategic alternatives, we are using forward-looking statements.  Such statements are based on management’s current expectations and are subject to a number of risks and uncertainties, including, but not limited to, the risks detailed from time to time in our filings with the Securities and Exchange Commission, or the SEC. These risks and uncertainties could cause our actual results to differ materially from those described in our forward-looking statements. Any forward-looking statement represents our expectations or forecasts only as of the date it was made and should not be relied upon as representing its expectations or forecasts as of any subsequent date. Except as required by law, we undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, even if our expectations or forecasts change.
 
The following discussion and analysis should be read in conjunction with the financial statements, related notes and other information included in this Quarterly Report on Form 10-Q and with the Risk Factors included in Part I, Item 1A of our Annual Report.
 
OVERVIEW
 
The Company’s Board of Directors is now exploring strategic alternatives to deploy the proceeds of the Asset Sale, which may include future acquisitions, a merger with another company, or other actions to redeploy capital, including, without limitation, the sale of the public shell company into which the net proceeds may be retained.
 
REVENUES
 
As a result of the Asset Sale completion on February 28, 2014, the Company no longer generates revenues.
 
COSTS AND OPERATING EXPENSES
 
Costs and operating expenses consist of cost of revenues, research and development expenses, selling expenses, marketing expenses, general and administrative expenses and profit from sale of operations, net as described below.
 
THREE MONTHS ENDED SEPTEMBER 30, 2015 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2014
 
REVENUES. Since the closing of the Asset Sale on February 28, 2014, the Company no longer has revenue-producing operations.
 
COST OF REVENUES. Cost of revenues in the three months ended September 30, 2015 and September 30, 2014 were zero. There was no cost of revenues because the Company no longer has revenue-producing operations.
 
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses in the three months ended September 30, 2015 and September 30, 2014 were zero due to the cessation of our operations.
 
SELLING AND MARKETING EXPENSES. Selling and marketing expenses were zero in the three months ended September 30, 2015 and September 30, 2014 due to the cessation of our operations.
 
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist primarily of compensation costs for administrative, finance and general management personnel, insurance, legal, accounting and administrative costs. General and administrative expenses decreased by $24, or 44%, to $30 in the three months ended September 30, 2015, from $54 in the three months ended September 30, 2014. This decrease in general and administrative expenses was primarily related to decreases in payroll and professional expenses. We have taken steps to reduce as much of our general and administrative expenses as possible.
 
 
7

 
 
FINANCIAL EXPENSES (INCOME), NET. Financial income, net, increased by $16, or 400%, from financial expense net of $4 in the three months ended September 30, 2014 to financial income, net of $12 in the three months ended September 30, 2015. This change in financial income, net was primarily related to $20 of income related to a  change in the value of warrants as compared to no expense in the prior period, and financial expenses of $8 as compared to $4 in the prior period.

NET LOSS. We incurred a net loss of $18 in the three months ended September 30, 2015, compared with a net loss of $58 in the three months ended September 30, 2014, which represents a decrease of $40 in net loss. This decrease in net loss was primarily related to the decrease in our operational expenses, due to the cessation of our operations.
 
NINE MONTHS ENDED SEPTEMBER 30, 2015 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2014
 
REVENUES. Our revenues, historically mostly derived by the sales of taggants and readers, decreased by $244, or 100%, to zero revenues in the nine months ended September 30, 2015 from $244 in the nine months ended September 30, 2014. This decrease in revenues is a result of the Asset Sale. Since the closing of the Asset Sale on February 28, 2014, the Company no longer has revenue-producing operations.
 
COST OF REVENUES. Cost of revenues in the first quarter of 2014, consisted of materials, including taggants and electronic and optical parts, sub-contractors, sub-contractors, travel and compensation costs. Cost of revenues decreased by $82, or 100%, to zero cost of revenues in the nine months ended September 30, 2015 from $82 in the nine months ended September 30, 2014. The decrease in cost of revenues was due to the fact that the Company no longer has revenue-producing operations.
 
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses decreased by $48, or 100%, to zero research and development expenses in the nine months ended September 30, 2015 from $48 in the nine months ended September 30, 2014. This decrease in research and development expenses was due to the cessation of our operations. We did not capitalize research and development expenses in 2014, as all such expenses were charged to operating expenses as incurred.
 
SELLING AND MARKETING EXPENSES. Selling and marketing expenses decreased by $43, or 100%, to zero selling or marketing expenses in the nine months ended September 30, 2015, from $43 in the nine months ended September 30, 2014. This decrease in selling and marketing expenses was due to the cessation of our operations.
 
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist primarily of compensation costs for administrative, finance and general management personnel, insurance, legal, accounting and administrative costs. General and administrative expenses decreased by $127, or 47%, to $142 in the nine months ended September 30, 2015, from $269 in the nine months ended September 30, 2014. This decrease in general and administrative expenses was primarily related to the decrease in office expenses and payroll expenses. We have taken steps to reduce as much of our general and administrative expenses as possible.
 
FINANCIAL INCOME (EXPENSES), NET. Financial income, net, increased by $61, or 145%, to financial income, net of $19 in the nine months ended September 30, 2015 from financial expense, net of $42 in the nine months ended September 30, 2014. This change in financial expenses, net was primarily related to income of $33 related to a change in the value of warrants as compared to an expense of $24 in the prior period, and financial expenses, net of $14 as compared to $18 in the prior period.
 
NET PROFIT (LOSS). We incurred a net loss of $123 in the nine months ended September 30, 2015, compared with a net profit of $488 in the nine months ended September 30, 2014, which represents a decrease of $611. This decrease was primarily related to income of $740 from the Asset Sale in 2014, which was offset by the decrease in our operational expenses in 2015, due to ceasing revenue-producing operations.
 
        LIQUIDITY AND CAPITAL RESOURCES. We have incurred substantial losses since our inception in April 1997. As of September 30, 2015, we had an accumulated deficit of $17,679 and a positive working capital (current assets less current liabilities) of $674. Losses will probably continue in the foreseeable future.
 
We do not have any material commitments for capital expenditures as of September 30, 2015.

We have sustained significant operating losses in recent periods, which has resulted in a significant reduction in our cash reserves. Due to the Asset Sale, the Company no longer has revenue-producing operations. The Company believes that it will continue to experience losses and negative cash flows from operating activities in the near future and will not be able to return to positive cash flow without obtaining additional financing in the near term or entering into a business transaction. The Company is experiencing difficulties accessing the equity and debt markets and raising such capital or entering into business transaction, and there can be no assurance that the Company will be able to raise such additional capital on favorable terms or at all or entering into a business transaction. If additional funds are raised through the issuance of equity securities or entering into a business transaction, the Company’s existing stockholders will experience significant further dilution. In order to conserve the Company’s cash and manage its liquidity, the Company has implemented cost-cutting initiatives.
 
 
8

 

As a result of the Asset Sale, the Company received $841 in cash, plus Spectra’s and the Company’s good faith estimate of the inventory value at the closing date, and $134, an amount equal to 50% of all pre-closing accounts receivable collected after the closing date. In addition, in March 2015, the Company also received $200 previously held by Wells Fargo Bank, National Association in accordance with the terms of an escrow agreement to secure the Company’s obligations to pay Spectra any indemnification claims for a period of up to one year after the closing date.
 
Following the Asset Sale, the Company’s Board of Directors is exploring strategic alternatives to deploy the proceeds of the Asset Sale, which may include future acquisitions, a merger with another company, or other actions to redeploy capital, including, without limitation, the sale of the public shell company into which the net proceeds may be retained.
 
As of September 30, 2015, we had cash and cash equivalents of $655, compared to $681 as of September 30, 2014. We had negative cash flows from operating activities of $ in the nine months ended September 30, 2015, compared to a positive cash flow of $538 in the nine months ended September 30, 2014. The negative cash flows from operating activities in the nine months ended September 30, 2015 is attributable mainly to the net loss of $123, in addition to a $33 change in the valuation of warrants to issue shares.
 
We had positive cash flows from investing activities of $205 in the nine months ended September 30, 2015, compared to negative cash flow from investing activities of $191 for the nine months ended September 30, 2014. The positive cash flows from investing activities in the nine months ended September 30, 2015 were primarily attributable to the release of restricted cash balances (related to the escrow agreement described above). We did not have any cash flows from financing activities in either the nine months ended September 30, 2015 or September 30, 2014.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS
 
As of September 30, 2015, the Company has no contractual commitments.
 
ITEM 4.     CONTROLS AND PROCEDURES

Under the direction of the Chairman, who performs the duties of our principal executive officer, and Chief Financial Officer, we evaluated our disclosure controls and procedures and concluded that our disclosure controls and procedures were effective as of September 30, 2015.

No change in our internal control over financial reporting occurred during the quarter ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.
 
 
9

 
 
PART II.   OTHER INFORMATION
 
ITEM 6.     EXHIBITS
 
The following exhibits are being filed or furnished with this Report:
     
EXHIBIT
NUMBER
 
DESCRIPTION
 
 
31.1
 
 
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.*
     
31.2
 
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.*
     
32.1
 
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.**
     
101.1
 
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheet, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) related notes to these financial statements, tagged as blocks of text and in detail.*
 
* Filed herewith
 
**Furnished herewith
 
 
10

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
NEW YORK GLOBAL INNOVATIONS INC.
   
Dated: November 3, 2015
By: /s/ Gadi Peleg
 
 
      Gadi Peleg
 
      Chairman of the Board
 
      (Principal Executive Officer)
   
   
Dated: November 3, 2015
By: /s/ Chanan Morris
 
 
     Chanan Morris
 
     Chief Financial Officer
 
 
     (Principal Financial and Accounting Officer)
 
11