Artemis Therapeutics, Inc. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Artemis Therapeutics, Inc.	Financial_Report.xls
EX-32.1 - EXHIBIT 32.1 - Artemis Therapeutics, Inc.	exhibit_32-1.htm
EX-31.2 - EXHIBIT 31.2 - Artemis Therapeutics, Inc.	exhibit_31-2.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 March 31, 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.

Yes x No o

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).

Yes x No o

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 £

The number of shares of Common Stock of the registrant outstanding was 43,173,592 as of May 14, 2015.

NEW YORK GLOBAL INNOVATIONS INC.

INDEX TO FORM 10-Q

		PAGE

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheet as of March 31, 2015 (unaudited) and December 31, 2014 (audited)	3

	Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2015 and 2014	4

	Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2015 and 2014	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7

Item 4.	Controls and Procedures	9

PART II.	OTHER INFORMATION

Item 6.	Exhibits	10

SIGNATURES		11

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NEW YORK GLOBAL INNOVATIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(U.S. DOLLARS IN THOUSANDS)

	MAR 31, 2015		DEC. 31, 2014
	UNAUDITED		AUDITED
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	769	$	613
Restricted cash		-		205
Short-term deposit		30		30
Other accounts receivable and prepaid expenses		44		48

TOTAL CURRENT ASSETS		843		896

TOTAL ASSETS	$	843	$	896

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Trade payables	$	-		$	5
Accrued expenses and other payables		56			61

TOTAL CURRENT LIABILITIES		56			66

Warrants to issue shares		31			40

TOTAL LIABILITIES		87			106

STOCKHOLDERS’ EQUITY:
Capital Stock:
Preferred stock of $ 0.01 par value - Authorized: 10,000,000 shares; Issued and outstanding: 0 shares as of March 31, 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 March 31, 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		(17,590	)		(17,556	)

TOTAL STOCKHOLDERS’ EQUITY		756			790

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	843		$	896

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

NEW YORK GLOBAL INNOVATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

	THREE MONTHS ENDED MARCH 31,
	2015			2014
	UNAUDITED
Revenues	$	-		$	244
Cost of revenues		-			82

Gross profit		-			162

Income from sale of operations, net		-			740

Operating expenses:
Research and development		-			35
Selling and marketing		-			43
General and administrative		34			122

Total operating expenses		(34	)		(200	)

Operating income (loss)		(34	)		702

Financial income (expenses), net		1			(5	)
Financial expenses related to warrants		-			(24	)
Total financial income (expenses), net		1			(29	)

Net profit (loss)	$	(33	)	$	673

Net profit (loss) per share:
Basic and Diluted	$	0.00		$	0.02

Weighted average number of shares of Common Stock used in computing basic and diluted net loss per share		43,173,592			43,173,592

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

NEW YORK GLOBAL INNOVATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. DOLLARS IN THOUSANDS)

	THREE MONTHS ENDED ON MARCH 31,
	2015			2014
	UNAUDITED			UNAUDITED
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit (loss)	$	(33	)	$	673
Adjustments required to reconcile net profit (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		-			4
Increase in trade receivables		-			(14	)
Decrease in other accounts receivable and prepaid expenses		4			18
Decrease in inventories		-			229
Increase (decrease) in trade payables		(5	)		(6	)
Decrease in employees and payroll accruals		-			(31	)
Changes in warrants to issue shares		(9	)		24
Share based compensation		-			(1	)
Increase (decrease) in accrued expenses and other payables		(6	)		171

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(49	)		1,067

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in restricted cash balances		-			(200	)
Release of restricted cash balances		205			16
Investment in short-term deposit		-			(16	)

NET CASH (USED IN) INVESTING ACTIVITIES		205			(200	)

Increase in cash and cash equivalents		156			867
Cash and cash equivalents at the beginning of the year		613			334

Cash and cash equivalents at the end of the period	$	769		$	1,201

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

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 March 31, 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, 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, including the reduction of employee headcount and overhead costs.

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. 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 MARCH 31, 2015 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2014

REVENUES. Revenues, in the first quarter of 2014, consisted of gross sales of products less discounts. Our revenues, mostly derived by the sales of taggants and readers, decreased by $244, or 100%, to no revenues in the three months ended March 31, 2015 from $244 in the three months ended March 31, 2014. This decrease in revenues is a result of the Asset Sale. Since the closing 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, travel and compensation costs. Cost of revenues decreased by $82, or 100%, to no cost of revenues in the three months ended March 31, 2015 from $82 in the three months ended March 31, 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, in the first quarter of 2014, consisted primarily of compensation costs attributable to employees engaged in ongoing research and development activities, development-related raw materials and fees of sub-contractors. Research and development expenses decreased by $35, or 100% to no Research and development expenses in the three months ended March 31, 2015 from $35 in the three months ended March 31, 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, in the first quarter of 2014, consisted primarily of costs relating to compensation attributable to employees engaged in sales and marketing activities, promotion, advertising, trade shows and exhibitions, sales support, travel, commissions and related expenses. Selling and marketing expenses decreased by $43, or 100%, to no selling and marketing expenses in the three months ended March 31, 2015, from $43 in the three months ended March 31, 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 $88, or 72%, to $34 in the three months ended March 31, 2015, from $122 in the three months ended March 31, 2014. This decrease in general and administrative expenses was primarily related to decreases in lower payroll and professional expenses. We have taken steps to reduce as much of our general and administrative expenses as possible.

FINANCIAL EXPENSES (INCOME), NET. Financial expenses, net, decreased by $30, or 103%, from financial expense net of $29 in the three months ended March 31, 2014 to financial income, net of $1 in the three months ended March 31, 2015. This decrease in financial expense, net was primarily related to a zero expense related to a decrease in the value of warrants as compared to a $24 expense in the prior period.

NET PROFIT (LOSS). We incurred a net loss of $33 in the three months ended March 31, 2015, compared with a net profit of $673 in the three months ended March 31, 2014, which represents a decrease of $706 in net profit. This decrease in net profit was related to the income of $740 from the Asset Sale, and the decrease in our operational expenses, which was due to ceasing revenue-producing operations.

LIQUIDITY AND CAPITAL RESOURCES. We have incurred substantial losses since our inception in April 1997. As of March 31, 2015, we had an accumulated deficit of $17,590 and a positive working capital (current assets less current liabilities) of $787. Losses will probably continue in the foreseeable future.

We do not have any material commitments for capital expenditures as of March 31, 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 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 including the reduction of employee headcount and overhead costs.

As a result of the Closing, the Company received $841 in cash, plus Spectra’s and the Company’s good faith estimate of the inventory value at the Closing, and $134, an amount equal to 50% of all pre-closing accounts receivable collected after the Closing. 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 date of the Closing.

As of March 31, 2015, we had cash and cash equivalents of $769, compared to $1,201 as of March 31, 2014. We had negative cash flow from operating activities of $49 in the quarter ended March 31, 2015, compared to a positive cash flow of $1,067 in the quarter ended March 31, 2014. The negative cash flow from operating activities in the quarter ended March 31, 2015 is attributable mainly to the net loss of $33, a decrease of $4 in accounts receivable and prepaid expenses, a decrease of $5 in trade payables, a decrease in accrued expenses and other payables of $6 and a $9 change in warrants to issue shares.

We had positive cash flows from investing activities of $205 in the quarter ended March 31, 2015, compared to negative cash flow from investing activities of $200 for the quarter ended March 31, 2014. The positive cash flows from investing activities in the quarter ended March 31, 2015 are 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 quarter ended March 31, 2015 or 2014.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

As of March 31, 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 March 31, 2015.

No change in our internal control over financial reporting occurred during the quarter ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.

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 March 31, 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

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: May 14, 2015	By: /s/ Gadi Peleg
	Gadi Peleg
	Chairman of the Board
	(Principal Executive Officer)

Dated:May 14, 2015	By: /s/ Chanan Morris
	Chanan Morris
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

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