UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Commission file number 0-24431)

MANUKA, INC.

(Exact name of registrant as specified in its charter)

DELAWARE		84-1417774
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3 Eliezer Vardinon St., Petach Tikva, Israel		4959507
(Address of principal executive offices)		(Zip Code)

(646) 233-1454

(Registrant’s telephone number, including area code)

Not Applicable

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		MNKA		OTC Pink Open Market

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 ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of November 20, 2023, the registrant had 112,033,909 shares of common stock, par value $0.01, of the registrant issued and outstanding.

In this Quarterly Report, unless otherwise specified, all dollar amounts are expressed in United States dollars. Except as otherwise indicated by the context, references in this Quarterly Report to “Company”, “Manuka”, “we,” “us” and “our” are references to Manuka, Inc. (formerly Artemis Therapeutics, Inc.), a Delaware corporation, together with its consolidated subsidiaries.

MANUKA, INC.

INDEX TO FORM 10-Q

		PAGE

Cautionary Note Regarding Forward-Looking Statements		ii

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1

	Interim Condensed Consolidated Balance Sheet as of September 30, 2023 (unaudited) and December 31, 2022 (audited)	2

	Interim Condensed Consolidated Statement of Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2023 and 2022	3

	Interim Condensed Statements of Stockholders’ Equity (unaudited) for the three and nine months ended September 30, 2023 and 2022	4-7

	Interim Condensed Consolidated Statements of Cash Flows (unaudited) for the three and nine months ended September 30, 2023 and 2022	8

	Notes to Interim Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitive Disclosures Amount Market Risk	17

Item 4.	Controls and Procedures	17

PART II.	OTHER INFORMATION	18

Item 6.	Exhibits	18

SIGNATURES		19

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information set forth in this Quarterly Report on Form 10-Q, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein may address or relate to future events and expectations and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

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 Securities and Exchange Commission (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:

●

sales of our products;

●

the size and growth of our product market;

●

our limited operating history and inability to effectively grow our business;

●

our developing and manufacturing capabilities;

●

supply disruption;

●

our entering into certain partnerships with third parties;

●

obtaining required regulatory approvals for sales or exports of our products;

●

our marketing plans;

●

our expectations regarding our short- and long-term capital requirement;

●

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.

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.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MANUKA, INC.

INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF

September 30, 2023

in thousands U.S. DOLLARS

INDEX

	Page

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS	2

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS	3

INTERIM CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY	4-7

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS	8

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS	9-13

MANUKA, INC.

Interim Condensed Consolidated Balance Sheets

UNAUDITED

in thousands U.S. dollars

			September 30			December 31
	Note		2 0 2 3			2 0 2 2
			Unaudited			Audited
			US $ in thousands
ASSETS

CURRENT ASSETS:
Cash and cash equivalents				1			55
Trade receivables				15			14
Other receivables				8			27
Inventory		3		104			47
Total current assets				128			143

NON-CURRENT ASSETS:
Property and equipment, net				40			50
Operating lease right-of-use assets		4		-			37
Intangible assets, net				32			35
Total long-term assets				72			122

TOTAL ASSETS				200			265

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
Short-term credit				259			86
Trade account payables				664			571
Short-term operating lease liabilities		4					19
Other account payables				316			328
Total current liabilities				1,239			1,004

NON-CURRENT LIABILITIES:
Long-term loans from a related party		6		318			236
Long-term operating lease liabilities		4		-			15
Other liabilities				34			36
Total long-term liabilities				352			287

Total liabilities				1,591			1,291

STOCKHOLDERS’ EQUITY (DEFICIENCY):
Common stock of $0.01 par value – Authorized: 150,000,000, issued and outstanding 112,033,909 as of September 30, 2023 and as of December 31, 2022;		5		1,120			1,120
Capital reserve from transaction with a major stockholder				60			37
Stock based compensation				429			182
Additional paid in capital				-			-
Accumulated deficit				(3,000	)		(2,365	)
Total stockholders’ deficiency				(1,391	)		(1,026	)

Total liabilities and stockholders’ equity (deficiency)				200			265

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

MANUKA, INC.

Interim Condensed Consolidated Statements of Comprehensive Loss

UNAUDITED

in thousands U.S. dollars

	Nine Months ended September 30						Three Months ended September 30
	2 0 2 3			2 0 2 2			2 0 2 3			2 0 2 2
	Unaudited						Unaudited
	$			$			$			$

Revenues		556			195			176			118
Costs of revenues		51			25			9			4

Gross profit		505			170			167			114

Operating expenses
Sales and marketing		534			465			116			269
General and administrative		662			570			204			290
Total operating expenses		1,196			1,035			320			559

Operating loss		(691	)		(865	)		(153	)		(445	)

Financial (expenses) income, net		56			16			25			1

Net Loss and Total Comprehensive Loss		(635	)		(849	)		(128	)		(444	)

Loss per share:

Basic and diluted net loss per common stock		(0.00	)		(0.02	)		(0.00	)		(0.01	)

Weighted average number of shares of common stock used in calculation of net loss per common share:		112,033,909			38,567,577			112,033,909			52,299,318

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

MANUKA, INC.

INTERIM CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

UNAUDITED

IN THOUSANDS U.S. DOLLARS

	Shares of Common Stock				Capital reserve from transaction with related parties		Stock based compensation		Additional Paid in Capital		Accumulated deficiency			Total
	Number		$		$				$		$			$
Balance as of December 31, 2022		112,033,909		1,120		37		182		-		(2,365	)		(1,026	)

Share base compensation								247							247
Transactions with stockholders (Note 6)						23				-					23
Net Loss												(635	)		(635	)
Balance as of September 30, 2023		112,033,909		1,120		60		429		-		(3,000	)		(1,391	)

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

MANUKA, INC.
INTERIM CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
UNAUDITED
IN THOUSANDS U.S. DOLLARS

	Shares of Common Stock				Capital reserve from transaction with related parties		Stock based compensation		Additional Paid in Capital		Accumulated deficiency			Total
	Number		$		$				$		$			$
Balance as of June 30, 2023		112,033,909		1,120		50		358		-		(2,872	)		(1,344	)

Share base compensation								71							71
Transactions with stockholders (Note 6)						10									10
Net Loss												(128	)		(128	)
Balance as of September 30, 2023		112,033,909		1,120		60		429		-		(3,000	)		(1,391	)

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

MANUKA, INC.

INTERIM CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

UNAUDITED

IN THOUSANDS U.S. DOLLARS

	Shares of Common Stock				Preferred Stock A				Preferred Stock C				Preferred Stock D						Capital reserve from transaction with related parties		Share base compensation		Additional Paid in Capital			Accumulated deficiency			Total
*	Number		$		Number		$		Number		$		Number			$			$		$		$			$			$
Balance as of December 31, 2021		31,549,132		315										110,000			1			15		-		186			(397	)		120
Stock based compensation on stock options granted to a service provider		2,242,509		23																				42						65
Effect of reverse recapitalization transaction		11,333,764		113		453		-		250		-												(173	)					(60	)
Conversion of preferred share of common stock		66,000,000		660										(110,000	)		(1	)						(55	)		(604	)		-
Share base compensation																						58								58
Transactions with stockholders (Note 6)																				16										16
Net Loss																											(849	)		(849	)
Balance as of September 30, 2022		111,125,405		1,111		453		-		250		-		-			-			31		58		-			(1,850	)		(650	)

*	Number of shares has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the reverse recapitalization transaction (refer to Note 1).

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

MANUKA, INC.

INTERIM CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

UNAUDITED

IN THOUSANDS U.S. DOLLARS

	Shares of Common Stock				Preferred Stock A				Preferred Stock C				Preferred Stock D						Capital reserve from transaction with related parties		Share base compensation		Additional Paid in Capital			Accumulated deficiency			Total
*	Number		$		Number		$		Number		$		Number			$			$				$			$			$
Balance as of June 30, 2022		45,125,405		451		453		-		250		-		110,000			1			25		-		55			(802	)		(270	)
Conversion of preferred share of common stock		66,000,000		660										(110,000	)		(1	)						(55	)		(604	)		-
Share base compensation																						58								58
Transactions with stockholders (Note 6)		-		-																6							-			6
Net Loss		-		-																				-			(444	)		(444	)

Balance as of September 30, 2022		111,125,405		1,111		453		-		250		-		-			-			31		58		-			(1,850	)		(650	)

*	Number of shares has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the reverse recapitalization transaction (refer to Note 1). The accompanying notes are an integral part of the financial statements.

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

MANUKA, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

UNAUDITED

IN THOUSANDS U.S. DOLLARS

	Nine Months ended September 30
	2 0 2 3			2 0 2 2
	$			$
Cash flows from operating activities:
Net loss		(635	)		(849	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		14			12
Stock based compensation		247			58
Increase (decrease) in operating lease liabilities		4			(6	)
Share-based compensation on stock options granted to a service provider		-			65
Exchange rate differences from stockholders’ loans		(16	)		(6	)
Accrued interest from stockholder loans from a major stockholder		23			16
Decrease (Increase) in trade account receivable and other receivables		18			(48	)
Increase in trade accounts payable and other account payables		129			404
Decrease in other liabilities		(2	)		(3	)
Decrease (increase) in inventory		(57	)		8
Net cash used in operating activities		(275	)		(349	)

Cash flows from investing activities:
Purchase of property and equipment		(1	)		(26	)

Net cash used in investing activities		(1	)		(26	)

Cash flows from financing activities:
Short-term credit		173			11
Loans received from a major stockholder		49			-

Net cash provided by financing activities		222			(11	)

Decrease in cash and cash equivalents		(54	)		(386	)

Cash and cash equivalents at beginning of period		55			471

Cash and cash equivalents at end of period	$	1		$	85

Non-cash activities:
Intangible assets recognized with corresponding other liability		-			6
Reverse recapitalization effect on equity		-			(60	)

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

MANUKA, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1- DESCRIPTION OF BUSINESS AND GENERAL

A. Manuka, Inc., formerly Artemis Therapeutics Inc. (the “Company”) was originally incorporated under the laws of the State of Nevada, on April 22, 1997. Based on the lack of business activities since January 10, 2019, the Company was classified as a “shell” company as defined by the SEC.

Following the completion of the transactions contemplated by the Share Exchange Agreement (as defined and detailed below), the Company is no longer classified as a “shell” Company.

On March 6, 2022, the Company 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 (“Manuka”), pursuant to which Manuka became the Company’s wholly owned subsidiary.

On May 18, 2023, the Company (formerly known as Artemis Therapeutics, Inc.), filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the State of Delaware Division of Corporations to change its corporate name to Manuka, Inc.

Since its inception, Manuka’s business activities primarily consisted of developing and distributing supplements aimed at the beauty and skincare markets and, developing and manufacturing skincare products based on New Zealand’s Manuka honey and bee venom, among other natural ingredients. All of Manuka’s products are marketed and sold solely on its website. Manuka’s skincare products are manufactured in Israel.

As of September 30, 2023, the term Company refers to Manuka, Inc. as adjusted, to reflect the financial statements of Manuka Ltd.

The number of shares included within these financial statements have been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the reverse recapitalization transaction.

The Company’s common stock is not listed on any national stock exchange but is quoted on the OTC Pink Market under the symbol “MNKA.”

B. The Company is in its early stages and has incurred substantial operating losses. There is uncertainty regarding the future of its operations. Moreover, the Company is thinly capitalized and has not yet generated cash from operations. Management expects the Company to continue to generate substantial operating losses and to continue to fund its operations primarily through additional raises of capital and through its credit line. Such conditions raise substantial doubts about the Company’s ability to continue as a going concern. Management’s plan includes raising funds from existing and potential investors. However, there is no assurance such funding will be available to the Company or that it will be obtained on terms favorable to the Company or will provide the Company with sufficient funds to meet its objectives. These financial statements do not include any adjustments relating to the recoverability and classification of assets, carrying amounts or the amount and classification of liabilities that may be required should the Company be unable to continue as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Accounting principles:

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

These financial statements and accompanying notes should be read in conjunction with the 2022 consolidated financial statements and notes thereto included.

B. Use of estimates in the preparation of financial statements:

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

C. Impact of recently issued and adopted accounting standards:

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

NOTE 3 - INVENTORIES

Composition:

(USD in thousands)	September 30,		December 31,
	2 0 2 3		2 0 2 2
Raw materials		51		24
Finished goods		53		23
		104		47

NOTE 4 - LEASES

On August 10, 2021, the Company entered into an operating lease agreement for its office, which originally was to end in 2022. The lease agreement was for one year starting in October 2021 with two options to extend the lease by an additional one year for each option until September 30, 2024. On October 1, 2022, the Company exercised the first option to extend the lease for another year. During the third quarter of 2023, the Company decided not to exercise the second option to extend the lease for another year and ended the lease agreement on September 30, 2023. As a result, the remain lease right of used asset and liability were fully derecognized the difference was recognized in profit and loss.

A. The components of operating lease costs were as follows:

	Nine Months ended September 30
(USD in thousands)	2 0 2 3		2 0 2 2
Operating lease cost		17		16
Total lease costs		17		16

B. Supplemental balance sheet information related to operating leases is as follows:

	September 30,		December 31,
(USD in thousands)	2 0 2 3		2 0 2 2
Operating lease right-of-use assets		-		37
Operating lease liabilities, current		-		19
Operating lease liabilities, long-term		-		15
Weighted average remaining lease term (in years)		-		1.75
Weighted average discount rate		-		7.85	%

NOTE 5 - STOCKHOLDERS’ EQUITY

A. Stockholders’ Rights:

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

B. Stock Option:

On January 19, 2022, the Company entered into an agreement with a services provider according to which the Company granted the services provider options to purchase 2.25% of the Company’s issued and outstanding shares of common stock with exercise price equal to the par value of the shares. The stock option will be fully exercisable a moment before the closing date of the Share Exchange Agreement and can be exercised no later than the closing date. On June 30, 2022, the services provider exercised the stock option and as a result of the Share Exchange Agreement, was issued 2,242,509 shares of common stock of the Company.

In July 2022, the Company granted 370,014 stock options to one of its officers, 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.

A summary of the Company’s option activity related to options to employees and directors, and related information as of September 30, 2023, is as follows:

	For the nine months ended
	September 30, 2023
	Number of stock options		Weighted average exercise price		Aggregate intrinsic value
Outstanding at beginning of period		370,014		0.0624		-
Granted		-		-		-
Exercised		-		-		-
Cancelled		-		-		-

Outstanding at end of period		370,014		0.0624		-
Options exercisable at period end		185,007		0.0624		-

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the fair market value of the Company’s shares on September 30, 2023, multiplied by the number of in-the-money options on those dates) that would have been received by the option holders had all option holders exercised their options on those dates.

Compensation expense recorded by the Company in respect of its stock-based employees and directors compensation awards in accordance with Accounting Standards Codification 718-10 for the nine months ended September 30, 2023, amounted to $247 thousand.

As of September 30, 2023, there was $429 thousand of total unrecognized compensation costs related to non-vested options. The costs are expected to be recognized over a weighted average period of a year and nine months.

NOTE 6 - RELATED PARTY BALANCES AND TRANSACTIONS

During 2020, 2021 and 2022, and the nine months ended on September 30, 2023, the founder of Manuka Ltd., Mr. Shimon Citron, a director, Chief Executive Officer and a major stockholder, provided the Company with several loans at an aggregate amount of $318 thousand as of September 30, 2023. The loans bear no interest and are linked to the Israeli Consumer Prices Index. The repayment date has not been determined.

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

The Company estimated the value of the benefit as the difference between the interest rate stipulated in the contract and the interest rate commensurate with such loans expected in an arms-length transaction (inclusive adjustment to the size of the loan and the fact that it is unsecured, which the Company’s management considers being the best estimate of the Company’s interest rate close to the date of receiving loans from a stockholders). Accordingly, as a result of the fact that the stockholder’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 nine months ended September 30, 2023 and 2022 were $23 and $16 in thousand, respectively.

A. Balances with related parties:

	September 30,		December 31,
(USD in thousands)	2 0 2 3		2 0 2 2
Long-term Loan from a related party		318		236
Trade account payables (*)		453		433

B. Transactions with related parties (unaudited):

	Nine Months ended September 30
	2 0 2 3		2 0 2 2
(USD in thousands)
Management fees to a major stockholder		49		34
Sales and marketing (*)		139		294
Interest on loans from a major stockholder		23		16
Stockholder’s Salaries		43		66

(*) refer to marketing services provided by one of the Company’s stockholders.

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 the “Company” “we,” “us,” or “our,” refer to Manuka, Inc. and its consolidated subsidiaries and dollar amounts are in thousands, except as otherwise stated.

The following management’s discussion and analysis should be read in conjunction with our financial statements, related notes and other information included in this Quarterly Report on Form 10-Q with the risk factors included in Part I, Item 1A of our Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2022. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements”.

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, one of 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 were classified as a “shell” company, as such term is defined in Rule 405 of the Securities Act of 1933, as amended, and Rule 12b-2 of the Securities Exchange Act of 1934, as amended.

On March 6, 2022, we signed the Share Exchange Agreement with Manuka, pursuant to which Manuka became our wholly owned subsidiary. Since its inception, Manuka’s business activities primarily consisted of developing and distributing supplements aimed at the beauty and skincare markets, and developing and manufacturing skincare products based on New Zealand’s Manuka honey and bee venom, among other natural ingredients. All of Manuka’s products are marketed and sold solely on its website. Manuka’s skincare products are manufactured in Israel. 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 common stock (including 2,242,509 shares issued to a service provider) 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., 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. Finally, on June 30, 2022, we entered into a debt forgiveness agreement and warrant exchange agreement with Cutter Mill Capital, pursuant to which we agreed to issue 894,169 shares of our common stock.

We are a beauty company that develops and distributes premium-quality skincare products that are based on Manuka honey and bee venom. Since our inception, Manuka’s business activities primarily consisted of developing and manufacturing skincare products based on Manuka 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 Open Market under the symbol “MNKA”.

On November 16, 2023, we announced that we retained ACP Capital Markets LLC to assist us in exploring strategic alternatives focused on maximizing stockholder value. Strategic alternatives being evaluated include the sale of all or part of the Company, merger or reverse merger. There can be no assurance that this process will result in any agreements or transactions, or that, if completed, any agreements or transactions will be successful. The Company does not expect to provide incremental updates during the evaluation process unless and until the Company’s Board of Directors has concluded that disclosure is appropriate or required.

THREE MONTHS ENDED SEPTEMBER 30, 2023, COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2022

Revenues. During the three months ended September 30, 2023, we generated revenues of $176 thousand, compared to $118 thousand for the three months ended September 30, 2022. The reason for the increase in revenues for the three months ended September 30, 2023, was mainly due to the deployment of seven products, an increase in our marketing and sales efforts, as well as an increase in sales, particularly to repeat customers.

Sales and Marketing Expenses. During the three months ended September 30, 2023, we had sales and marketing expenses of $116 thousand compared to $269 thousand for the three months ended September 30, 2022. The decrease in our sales and marketing expenses for the three months ended September 30, 2023, was mainly due to management’s decision to reduce expenses.

General and Administrative. Our general and administrative expenses for the three months ended September 30, 2023, which consisted primarily of professional services, salaries, and stock-based compensation amounted to $204 thousand, compared to $290 thousand for the three months ended September 30, 2022. The decrease in the general and administrative expenses for the three months ended September 30, 2023, was mainly due to the reduction of professional expenses.

Financial Expense. For the three months ended September 30, 2023, we had financial income, net of $25 thousand, compared to financial income of $1 thousand for the three months ended September 30, 2022. The reason for the increase in financial expenses for the three months ended September 30, 2023, was due to changes in exchange rates and translation differences.

Net Loss. We incurred a net loss of $128 thousand for the three months ended September 30, 2023, as compared to a net loss of $444 thousand for the three months ended September 30, 2022. The reason for the decrease in net loss was mainly due to management’s decision to reduce expenses until additional funds are raised or an improvement in cash flow.

NINE MONTHS ENDED SEPTEMBER 30, 2023, COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2022

Revenues. During the nine months ended September 30, 2023, we generated revenues of $556 thousand, compared to $195 thousand for the nine months ended September 30, 2022. The reason for the increase in revenues for the nine months ended September 30, 2023, was mainly due to deployment of seven products, an increase in our marketing and sales efforts, as well as an increase in sales, particularly to repeat customers.

Sales and Marketing Expenses. During the nine months ended September 30, 2023, we had sales and marketing expenses of $534 thousand compared to $465 thousand for the nine months ended September 30, 2022. The increase in our sales and marketing expenses for the nine months ended September 30, 2023, was mainly due to our efforts to increase our sales and generate new customers.

General and Administrative. Our general and administrative expenses for the nine months ended September 30, 2023, which consisted primarily of professional services, salaries, and stock-based compensation amounted to $662 thousand, compared to $570 thousand for the nine months ended September 30, 2022. The increase in the general and administrative expenses for the nine months ended September 30, 2023, was mainly due to an increase in share-based compensation expenses.

Financial Expense. For the nine months ended September 30, 2023, we had financial income, net of $56 thousand, compared to financial income of $16 thousand for the nine months ended September 30, 2022. The reason for the increase in financial expenses for the nine months ended September 30, 2023, was due to changes in exchange rates and translation differences.

Net Loss. We incurred a net loss of $635 thousand for the nine months ended September 30, 2023, as compared to a net loss of $849 thousand for the nine months ended September 30, 2022. The reason for the decrease in net loss was mainly due to management’s decision to reduce expenses until additional funds are raised or an improvement in cash flow.

LIQUIDITY AND CAPITAL RESOURCES

We had $1 thousand in cash on September 30, 2023, compared to $85 thousand in cash on September 30, 2022. Cash used by operations for the nine months ended September 30, 2023, was $275 thousand as compared to $343 thousand for the nine months ended September 30, 2022. The reason for the decrease in cash is that we are operating our business at a loss, that follows a reduction in expenses and a decrease in current liabilities.

Net cash provided by financing activities was $222 for the nine months ended September 30, 2023, as compared to net cash provided by financing activities of negative $11 thousand for the nine months ended September 30, 2022. The increase is mainly due to increasing short-term loans from banks to finance our current activities, as well as a loan provided to us by a major stockholder.

Cash Flows

	Nine months ended September 30
	2 0 2 3			2 0 2 2
(USD in thousands)	$			$
Cash flows from operating activities:
Net loss		(635	)		(849	)
Net cash used in operating activities		(275	)		(349	)
Cash flows from investing activities:
Net cash used in investing activities		(1	)		(26	)
Cash flows from financing activities:
Net cash provided by financing activities		222			(11	)
Cash and cash equivalents at beginning of period		55			471

Cash and cash equivalents at end of period		1			85
Non-cash activities:
Intangible assets recognized with corresponding other liability		-			6
Reverse recapitalization effect on equity		-			(60	)

Net cash used in operating activities

Net cash used in operating activities was $275 thousand for the nine months ended September 30, 2023, a decrease of 21%, compared to $349 thousand used in operations for the same period in 2022. The cash used in operations decreased mainly due to results from a decrease in the loss that follows a reduction in expenses and a decrease in current liabilities as well as an increase in inventory.

Net cash used in investing activities

Net cash used in investing activities was $1 thousand for the nine months ended September 30, 2023, a decrease of $25 thousand, compared to $26 thousand for the same period in 2022. Cash used in investing activities decreased mainly due to a decrease in fixed assets (purchase of property and equipment) during the six months ended September 30, 2023.

Net cash provided by financing activities

Net cash provided by financing activities was $222 thousand for the nine months ended September 30, 2023, compared to negative $11 thousand net cash provided by financing activities during the same period in 2022. The increase in financing activities is mainly due to an increase in short-term bank credit and a loan from major stockholder.

Inflation and Price Changes

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.

For nine months ended September 30, 2023, and nine months ended September 30, 2022, the rate of inflation in Israel was 2.86% and 4.29%, respectively. The U.S. dollar exchange rate in Israeli Shekels increased in value by approximately 8.67% as of September 30, 2023, and 13.92%, respectively, as of September 30, 2022.

CURRENT OUTLOOK

We are in our early stages and have incurred substantial operating losses. There is uncertainty regarding the future of our operations. Moreover, we are thinly capitalized and have not yet generated cash from operations. Management expects us to continue to generate substantial operating losses and to continue to fund our operations primarily through additional raises of capital and through our credit line. Such conditions raise substantial doubts about our ability to continue as a going concern. Management’s plan includes raising funds from existing and potential investors. However, there is no assurance such funding will be available to us or that it will be obtained on terms favorable to us or will provide us with sufficient funds to meet our objectives. These financial statements do not include any adjustments relating to the recoverability and classification of assets, carrying amounts or the amount and classification of liabilities that may be required should we be unable to continue as a going concern.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company and therefore are not required to provide the information for this item of Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

Under the direction of the Chief Financial Officer, we evaluated our disclosure controls and procedures. Based on the evaluation, and as a result of the material weaknesses described below, the Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2023.

No change in our internal control over financial reporting occurred during the quarter ended September 30, 2023, 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 rule 13a-14(a) and 15d-14(a).*

31.2		Certification of Principal Financial Officer pursuant to rule 13a-14(a) and 15d-14(a).*

32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350.**

32.2		Certification of 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, 2023 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Interim Condensed Consolidated Balance Sheets, (ii) the Interim Condensed Consolidated Statements of Comprehensive Loss, (iii) the Condensed Consolidated Statements of Stockholders Equity, (iv) the Interim Condensed Consolidated Statements of Cash Flows and (v) related notes to these financial statements, tagged as blocks of text and in detail.*

104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

*	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.

	MANUKA, INC.

Date: November 20, 2023	By:	/s/ Shimon Citron
	Name:	Shimon Citron
	Title:	Chief Executive Officer (Principal Executive Officer)

Date: November 20, 2023	By:	/s/ David Dana
	Name:	David Dana
	Title:	Chief Financial Officer (Principal Financial Officer)

DE NONE 0.00 0.00 0.01 0.02 112033909 112033909 38567577 52299318 false --12-31 Q3 0001062128 0001062128 2023-01-01 2023-09-30 0001062128 2023-11-20 0001062128 2023-09-30 0001062128 2022-12-31 0001062128 2022-01-01 2022-09-30 0001062128 2023-07-01 2023-09-30 0001062128 2022-07-01 2022-09-30 0001062128 us-gaap:CommonStockMember 2022-12-31 0001062128 mnka:CapitalReserveFromTransactionWithRelatedPartiesMember 2022-12-31 0001062128 us-gaap:DeferredCompensationShareBasedPaymentsMember 2022-12-31 0001062128 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001062128 us-gaap:RetainedEarningsMember 2022-12-31 0001062128 us-gaap:DeferredCompensationShareBasedPaymentsMember 2023-01-01 2023-09-30 0001062128 mnka:CapitalReserveFromTransactionWithRelatedPartiesMember 2023-01-01 2023-09-30 0001062128 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-09-30 0001062128 us-gaap:RetainedEarningsMember 2023-01-01 2023-09-30 0001062128 us-gaap:CommonStockMember 2023-09-30 0001062128 mnka:CapitalReserveFromTransactionWithRelatedPartiesMember 2023-09-30 0001062128 us-gaap:DeferredCompensationShareBasedPaymentsMember 2023-09-30 0001062128 us-gaap:AdditionalPaidInCapitalMember 2023-09-30 0001062128 us-gaap:RetainedEarningsMember 2023-09-30 0001062128 us-gaap:CommonStockMember 2023-06-30 0001062128 mnka:CapitalReserveFromTransactionWithRelatedPartiesMember 2023-06-30 0001062128 us-gaap:DeferredCompensationShareBasedPaymentsMember 2023-06-30 0001062128 us-gaap:AdditionalPaidInCapitalMember 2023-06-30 0001062128 us-gaap:RetainedEarningsMember 2023-06-30 0001062128 2023-06-30 0001062128 us-gaap:DeferredCompensationShareBasedPaymentsMember 2023-07-01 2023-09-30 0001062128 mnka:CapitalReserveFromTransactionWithRelatedPartiesMember 2023-07-01 2023-09-30 0001062128 us-gaap:RetainedEarningsMember 2023-07-01 2023-09-30 0001062128 us-gaap:CommonStockMember 2021-12-31 0001062128 mnka:PreferredStockDMember 2021-12-31 0001062128 mnka:CapitalReserveFromTransactionWithRelatedPartiesMember 2021-12-31 0001062128 us-gaap:DeferredCompensationShareBasedPaymentsMember 2021-12-31 0001062128 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001062128 us-gaap:RetainedEarningsMember 2021-12-31 0001062128 2021-12-31 0001062128 us-gaap:CommonStockMember 2022-01-01 2022-09-30 0001062128 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-09-30 0001062128 mnka:PreferredStockAMember 2022-01-01 2022-09-30 0001062128 mnka:PreferredStockCMember 2022-01-01 2022-09-30 0001062128 mnka:PreferredStockDMember 2022-01-01 2022-09-30 0001062128 us-gaap:RetainedEarningsMember 2022-01-01 2022-09-30 0001062128 us-gaap:DeferredCompensationShareBasedPaymentsMember 2022-01-01 2022-09-30 0001062128 mnka:CapitalReserveFromTransactionWithRelatedPartiesMember 2022-01-01 2022-09-30 0001062128 us-gaap:CommonStockMember 2022-09-30 0001062128 mnka:PreferredStockAMember 2022-09-30 0001062128 mnka:PreferredStockCMember 2022-09-30 0001062128 mnka:PreferredStockDMember 2022-09-30 0001062128 mnka:CapitalReserveFromTransactionWithRelatedPartiesMember 2022-09-30 0001062128 us-gaap:DeferredCompensationShareBasedPaymentsMember 2022-09-30 0001062128 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0001062128 us-gaap:RetainedEarningsMember 2022-09-30 0001062128 2022-09-30 0001062128 us-gaap:CommonStockMember 2022-06-30 0001062128 mnka:PreferredStockAMember 2022-06-30 0001062128 mnka:PreferredStockCMember 2022-06-30 0001062128 mnka:PreferredStockDMember 2022-06-30 0001062128 mnka:CapitalReserveFromTransactionWithRelatedPartiesMember 2022-06-30 0001062128 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001062128 us-gaap:RetainedEarningsMember 2022-06-30 0001062128 us-gaap:CommonStockMember 2022-07-01 2022-09-30 0001062128 mnka:PreferredStockDMember 2022-07-01 2022-09-30 0001062128 us-gaap:AdditionalPaidInCapitalMember 2022-07-01 2022-09-30 0001062128 us-gaap:RetainedEarningsMember 2022-07-01 2022-09-30 0001062128 us-gaap:DeferredCompensationShareBasedPaymentsMember 2022-07-01 2022-09-30 0001062128 mnka:CapitalReserveFromTransactionWithRelatedPartiesMember 2022-07-01 2022-09-30 0001062128 mnka:AgreementWithServicesProviderMember 2022-01-01 2022-01-19 0001062128 mnka:AgreementWithServicesProviderMember 2022-01-01 2022-06-30 0001062128 srt:OfficerMember 2022-07-01 2022-07-31 0001062128 mnka:StockholdersLoanMember 2023-09-30 0001062128 mnka:StockholdersLoanMember 2023-01-01 2023-09-30 0001062128 mnka:StockholdersLoanMember 2022-01-01 2022-09-30 xbrli:shares iso4217:USD iso4217:USD xbrli:shares xbrli:pure

Manuka, Inc. 10-Q