UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
FORM 10-Q
Amendment No. 1
[X]
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172022
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission file number: 000-15476000-15746
Emerald Medical Applications CorpVIEWBIX INC.
(Exact Name Of Registrant As Specified In Its Charter)
| Delaware | 68-0080601 | |
| (State of | (I.R.S. Employer | |
| Incorporation) | Identification Number) |
| 11 Derech Menachem Begin Street, Ramat Gan, Israel | 5268104 | |
| (Address of Principal Executive | ( |
Registrant’s Telephone Number, Including Area Code: +(972) 3-744-4505+9729-774-1505
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
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 [ ]☐
Indicate by check mark whether the registrant is a shell company (as defined inhas submitted electronically every Interactive Data File required to be submitted pursuant to Rule 12b-2405 of Regulation S-T (§232.405 of this chapter) during the Exchange Act)preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [ ] ☒ No [X]☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act) or a smaller reporting company.
| 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 check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
On December 27, 2017,November 20, 2022, the Registrant had 22,544,260 shares of common stock issued and outstanding.
EXPLANATORY NOTE
Throughout this report, references to the “Registrant”, “Company,” “Viewbix,” “we,” “us,” and “our” refers to Viewbix Inc., unless the context requires otherwise.
This Amendment No. 1 on Form 10-Q is filed to amend the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022 (“the Form 10-Q/A”), which was filed with Securities and Exchange Commission (the “SEC”) on November 21, 2022 (the “Original Form 10-Q”), for the purpose of correcting the disclosure regarding the changes in internal control over financial reporting and management’s plan to remediate the material weaknesses that were identified in the evaluation of the disclosure controls and procedures, in the last two paragraphs of “Item 4. Controls and Procedures” of the Original Form 10-Q. In addition this Form 10-Q/A is to correct certain technical and typographical errors, consisting primarily of corrections of the numbering of cross references in the Interim Financial Statements and accompanying Notes to Interim Financial Statements.
The following items included in the Original Form 10-Q are amended by this Form 10-Q/A:
| ● | Part I, Item 1. Financial Statements |
| ● | Part I, Item 2. Management’s Discussion and Analysis and Results of Operations |
| ● | Part I, Item 4. Controls and Procedures |
In addition, the Registrant’s Principal Executive and Principal Financial Officer has provided new certifications dated as of the date of this filing in connection with this Form 10-Q/A (Exhibits 31.1 and 32.1).
Except as described above, this Form 10-Q/A does not modify or update the disclosures presented in, or exhibits to, the Original Form 10-Q in any way. Those sections of the Original Form 10-Q that are unaffected by this Form 10-Q/A have been included herein as required by the SEC. This Form 10-Q/A continues to speak as of the date of the Original Form 10-Q. Furthermore, the Form 10-Q/A does not reflect events occurring after the filing of the Original Form 10-Q. Accordingly, this Form 10-Q/A should be read in conjunction with the Company’s other filings made with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, amended.
TABLE OF CONTENTS
| Item | Description | Page | ||
| PART I - FINANCIAL INFORMATION | ||||
| ITEM 1. | FINANCIAL STATEMENTS | 3 | ||
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS | |||
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | |||
| ITEM 4. | CONTROLS AND PROCEDURES | |||
| PART II - OTHER INFORMATION | ||||
| ITEM 1. | LEGAL PROCEEDINGS | |||
| ITEM 1A. | RISK FACTORS | |||
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | |||
| ITEM 3. | DEFAULT UPON SENIOR SECURITIES | |||
| ITEM 4. | MINE SAFETY DISCLOSURE | |||
| ITEM 5. | OTHER INFORMATION | |||
| ITEM 6. | EXHIBITS | |||
| SIGNATURES | 47 |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VIEWBIX INC
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2022
CONTENTS
| -3- |
PART I - FINANCIAL INFORMATIONVIEWBIX INC
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
ITEM 1. FINANCIAL STATEMENTSBack to Table of Contents
U.S. dollars in thousands (except share data)
Emerald Medical Applications Corp.
As of | As of December 31 | |||||||||||
| Note | 2022 | 2021 | ||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | 3,609 | 5,208 | ||||||||||
| Restricted deposits | 223 | 234 | ||||||||||
| Accounts receivable |
| 16,398 | 16,415 | |||||||||
| Loan to parent company | 15 | 7,096 | 6,384 | |||||||||
| Other receivables | 3 | 814 | 1,004 | |||||||||
| Total current assets | 28,140 | 29,245 | ||||||||||
| NON-CURRENT ASSETS | ||||||||||||
| Severance pay funds | 73 | 83 | ||||||||||
| Deferred taxes | 11 | 62 | 133 | |||||||||
| Property and equipment, net | 4 | 317 | 334 | |||||||||
| Operating lease right-of-use assets | 5 | 505 | 569 | |||||||||
| Intangible assets, net | 6 | 15,762 | 8,414 | |||||||||
| Goodwill | 6 | 17,615 | 12,483 | |||||||||
| Total non-current assets | 34,334 | 22,016 | ||||||||||
| Total assets | 62,474 | 51,261 | ||||||||||
As of September 30, 2017 (Unaudited) and December 31, 2016
| September 30, 2017 | December 31, 2016 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 3,429 | $ | 4,486 | ||||
| Other receivables | 31,230 | 9,356 | ||||||
| Total current assets | 34,659 | 13,842 | ||||||
| Restricted cash | 57 | 11,925 | ||||||
| Fixed assets, net of accumulated depreciation of $30,700 at September 30, 2017 and $21,029 at December 31, 2016 | 24,178 | 31,803 | ||||||
| Total assets | $ | 58,894 | $ | 57,570 | ||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 386,235 | $ | 198,795 | ||||
| Accounts payable - related party | 58,944 | 125,962 | ||||||
| Employee payable | 95,840 | 161,341 | ||||||
| Accrued interest payable | 29,501 | 32,768 | ||||||
| Short term portion of convertible notes | 316,989 | 439,331 | ||||||
| Derivative Liability | - | (**)336,272 | ||||||
| Total current liabilities | 887,509 | 1,294.469 | ||||||
| Convertible notes | 606,165 | - | ||||||
| Total liabilities | 1,493,674 | 1,294,469 | ||||||
| Stockholders’ equity (deficit) | ||||||||
| Preferred stock, $0.0001 par value; 10,000,000 shares authorized; 529 and none issued at September 31, 2017 and December 31, 2016, respectively. | (*) | - | ||||||
| Common stock, $0.0001 par value; 490,000,000 shares authorized; 21,321,613 and 19,962,728 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively. | 2,145 | 1,994 | ||||||
| Accumulated other comprehensive income | (19,337 | ) | (19,337 | ) | ||||
| Additional paid-in capital | 14,964,914 | 13,826,957 | ||||||
| Receipt on account of shares | 80,000 | - | ||||||
| Accumulated deficit | (16,462,502 | ) | (**)(15,046,513 | ) | ||||
| Total stockholders’ deficit | (1,434,780 | ) | (1,236,899 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 58,894 | $ | 57,570 | ||||
(*) less than $1
(**) Restated – see Note 8.
The accompanying notes are an integral part of these condensed consolidated financial statements.
VIEWBIX INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Cont.)
U.S. dollars in thousands (except share data)
As of | As of December 31 | |||||||||||
| Note | 2022 | 2021 | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Current maturities of long-term loan | 10 | 1,500 | 1,500 | |||||||||
| Loan from parent company | 15 | 2,527 | 2,116 | |||||||||
| Accounts payable | 8 | 16,144 | 16,676 | |||||||||
| Other payables | 9 | 1,862 | 1,386 | |||||||||
| Short-term loans | 10 | 5,000 | 5,000 | |||||||||
| Operating lease liabilities - short term | 6 | 93 | 91 | |||||||||
| Total current liabilities | 27,126 | 26,769 | ||||||||||
| NON-CURRENT LIABILITIES | ||||||||||||
| Accrued severance pay | 176 | 188 | ||||||||||
| Long-term loan | 10 | 3,225 | 4,270 | |||||||||
| Operating lease liabilities - long term | 6 | 433 | 491 | |||||||||
| Deferred taxes | 11 | 1,853 | 1,026 | |||||||||
| Total non-current liabilities | 5,687 | 5,975 | ||||||||||
| SHAREHOLDERS’ EQUITY | 13 | |||||||||||
| Share Capital | ||||||||||||
| Common stock of $par value - Authorized: shares; Issued and outstanding: shares as of September 30, 2022 and December 31, 2021, respectively (*) | 3 | 3 | ||||||||||
| Additional paid-in capital | 27,564 | 16,074 | ||||||||||
| Accumulated deficit | (4,043 | ) | (2,366 | ) | ||||||||
| Equity attributed to the company’s shareholders | 23,524 | 13,711 | ||||||||||
| Non-controlling interests | 6,137 | 4,806 | ||||||||||
| Total equity | 29,661 | 18,517 | ||||||||||
| Total liabilities and shareholders’ equity | 62,474 | 51,261 | ||||||||||
| (*) | Retroactively adjusted to reflect the reverse stock split effected on August 31, 2022 (see note 1.d) for all periods presented and to reflect the equivalent number of shares corresponding to the combined financial information of the Company and Gix Media Ltd. for all periods preceding the Reorganization Transaction (see note 1.c) |
Emerald Medical Applications Corp.
For the Three and Nine Months ended September 30, 2017 and 2016
(Unaudited)
| Three months | Three months | Nine Months | Nine Months | |||||||||||||
| ended | ended | ended | ended | |||||||||||||
| September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |||||||||||||
| Revenues | $ | - | $ | - | $ | - | $ | - | ||||||||
| Expenses: | ||||||||||||||||
| Research and development | 9,779 | 155,338 | 359,600 | 450,688 | ||||||||||||
| General and administrative expenses | 134,829 | 577,937 | 817,435 | 3,346,673 | ||||||||||||
| Total operating expenses | 144,608 | 733,275 | 1,177,035 | 3,797,361 | ||||||||||||
| Loss from operations | (144,608 | ) | (733,275 | ) | (1,177,035 | ) | (3,797,361 | ) | ||||||||
| Finance income (expense) | 86,954 | (*)(367,205 | ) | (238,954 | ) | (*)(391,323 | ) | |||||||||
| Net loss available to shareholders of the company | $ | (57,654 | ) | $ | (1,100,480 | ) | $ | (1,415,989 | ) | $ | (4,188,684 | ) | ||||
| Net loss attributable to shareholders of preferred stock | (5,216 | ) | - | (47,691 | ) | - | ||||||||||
| Net loss used in the calculation of basic and diluted loss per share | (52,438 | ) | (1,100,480 | ) | (1,368,298 | ) | (4,188,684 | ) | ||||||||
| Basic and diluted net loss per share | $ | (0.00 | ) | $ | (0.06 | ) | $ | (0.07 | ) | $ | (0.22 | ) | ||||
| Weighted average shares outstanding - basic and diluted | 22,543,008 | 19,795,343 | 21,523,127 | 18,659,674 | ||||||||||||
(*) Restated – see Note 8.
The accompanying notes are an integral part of these condensed consolidated financial statements.
Emerald Medical Applications Corp.VIEWBIX INC.
Statements Stockholders’ DeficitCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Nine Months Ended September 30, 2017
(Unaudited)U.S. dollars in thousands (except share data)
| Note | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
For the nine months ended September 30 | For the three months ended September 30 | |||||||||||||||||||
| Note | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
| Revenues | 66,115 | 23,874 | 22,778 | 8,079 | ||||||||||||||||
| Costs and Expenses: | ||||||||||||||||||||
| Traffic-acquisition and related costs | 56,400 | 19,582 | 19,464 | 6,738 | ||||||||||||||||
| Research and development | 14A | 2,957 | 1,530 | 987 | 471 | |||||||||||||||
| Selling and marketing | 14B | 1,853 | 584 | 628 | 215 | |||||||||||||||
| General and administrative | 14C | 1,326 | 907 | 450 | 313 | |||||||||||||||
| Depreciation and amortization | 4,6 | 2,051 | 1,289 | 736 | 427 | |||||||||||||||
| Other expenses | 121 | 26 | 86 | 26 | ||||||||||||||||
| Operating income (loss) | 1,407 | (44 | ) | 427 | (111 | ) | ||||||||||||||
| Financial income (expenses), net | 14D | (1,374 | ) | 91 | (301 | ) | 121 | |||||||||||||
| Income before income taxes | 33 | 47 | 126 | 10 | ||||||||||||||||
| Taxes on income | 11 | (63 | ) | 41 | (55 | ) | 81 | |||||||||||||
| Net income (loss) | (30 | ) | 88 | 71 | 91 | |||||||||||||||
| Net income (loss) for the period is attributable to: | ||||||||||||||||||||
| Shareholders | (677 | ) | 88 | (147 | ) | 91 | ||||||||||||||
| Non-controlling interests | 647 | - | 218 | - | ||||||||||||||||
| Net income (loss) | (30 | ) | 88 | 71 | 91 | |||||||||||||||
| Net income (loss) per Share – Basic and Diluted attributed to shareholders: | (0.05 | ) | 0.01 | (0.01 | ) | 0.01 | ||||||||||||||
| Weighted average number of shares (*) – Basic: | 14,783,964 | 14,783,964 | 14,783,964 | 14,783,964 | ||||||||||||||||
| Weighted average number of shares (*) – Diluted: | 14,783,964 | 15,044,630 | 14,783,964 | 15,044,630 | ||||||||||||||||
| (*) | Retroactively adjusted to reflect the reverse stock split effected on August 31, 2022 (see note 1.d) for all periods presented and to reflect the equivalent number of shares corresponding to the combined financial information of the Company and Gix Media Ltd. for all periods preceding the Reorganization Transaction (see note 1.c) |
| Additional | Receipt on | Other | Total | |||||||||||||||||||||||||||||||||
| Common | Preferred | Paid-in | Account of | Comprehensive | Accumulated | stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Stock | Amount | Capital | Shares | Income | Deficit | deficit | ||||||||||||||||||||||||||||
| Balance as of December 31, 2016 | 19,931,478 | $ | 1,994 | - | $ | - | $ | 13,826,957 | $ | - | $ | (19,337 | ) | $ | (**)(15,046,513 | ) | $ | (1,236,899 | ) | |||||||||||||||||
| Common stock issued for cash | 1,315,563 | 132 | - | - | 526,081 | - | - | - | 526,213 | |||||||||||||||||||||||||||
| Cashless exercise of Warrants | 1,096,395 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Conversion of Convertible Note to shares | 74,572 | 7 | - | - | 10,393 | - | - | - | 10,400 | |||||||||||||||||||||||||||
| Issuance of Ordinary Shares | 125,000 | 12 | - | - | (12 | ) | - | - | - | - | ||||||||||||||||||||||||||
| Issuance of Preferred Stock | 529 | (*) | 529,000 | - | - | - | 529,000 | |||||||||||||||||||||||||||||
| Receipt on Account of Shares | - | - | - | 80,000 | - | - | 80,000 | |||||||||||||||||||||||||||||
| ESOP options | - | - | - | - | 72,495 | - | - | - | 72,495 | |||||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | - | (1,415,989 | ) | (1,415,989 | ) | |||||||||||||||||||||||||
| Balance as of September 30, 2017 | 22,543,008 | $ | 2,145 | 529 | $ | - | $ | 14,964,914 | $ | 80,000 | $ | (19,337 | ) | $ | (16,462,502 | ) | $ | (1,434,780 | ) | |||||||||||||||||
(*) less than $1
(**) Restated – see Note 8.
The accompanying notes are an integral part of these condensed consolidated financial statements.
VIEWBIX INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
Emerald Medical Applications Corp.
For the Nine Months Ended September 30, 2017 and 2016
(Unaudited)
Back to Table of ContentsU.S. dollars in thousands (except share data)
| Number | Amount(*) | capital | Earnings | Shareholders | Interests | Equity | ||||||||||||||||||||||
| Ordinary shares (*) | Additional paid-in | Retained | Total Attributed to the company’s | Non- Controlling | Total | |||||||||||||||||||||||
| Number | Amount | capital | Earnings | Shareholders | Interests | Equity | ||||||||||||||||||||||
| Balance as of January 1, 2022 | 14,783,964 | 3 | 16,074 | (2,366 | ) | 13,711 | 4,806 | 18,517 | ||||||||||||||||||||
| Net income (loss) | - | - | - | (677 | ) | (677 | ) | 647 | (30 | ) | ||||||||||||||||||
Adjustment to ultimate parent’s carrying values (see note 1.c) | 11,462 | 11,462 | 1,867 | 13,329 | ||||||||||||||||||||||||
| Share-based compensation | - | - | 28 | - | 28 | 12 | 40 | |||||||||||||||||||||
| Dividend declared to shareholders | - | - | - | (1,000 | ) | (1,000 | ) | - | (1,000 | ) | ||||||||||||||||||
| Dividend distributed to non-controlling interests | - | - | - | - | - | (1,195 | ) | (1,195 | ) | |||||||||||||||||||
| Balance as of September 30, 2022 | 14,783,964 | 3 | 27,564 | (4,043 | ) | 23,524 | 6,137 | 29,661 | ||||||||||||||||||||
| Nine Months | Nine Months | |||||||
| ended | ended | |||||||
| September 30, 2017 | September 30, 2016 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | (1,752,261 | ) | $ | (*)(4,188,684 | ) | ||
| Depreciation expense | 11,063 | 3,392 | ||||||
| Interest and amortization of discount on convertible notes | 360,599 | 211,715 | ||||||
| Non cash finance, general and administrative expenses arising from settlement with debt and warrant holders | 659,960 | - | ||||||
| Change in derivative liability | 336,272 | (*)425,109 | ||||||
| Share based compensation | 72,495 | 2,766,823 | ||||||
| Increase (decrease) in accounts payable and accrued liabilities | 121,939 | (66,851 | ) | |||||
| Increase (decrease) in amounts due to related party | (64,372 | ) | 509 | |||||
| Increase (decrease) in accrued interest | (3,267 | ) | 1,025 | |||||
| Decrease (increase) in other receivables | (21,875 | ) | 20,231 | |||||
| Net cash used in operating activities | (615,719 | ) | (826,731 | ) | ||||
| Investing Activities: | ||||||||
| Decrease in restricted cash | 11,868 | - | ||||||
| Purchase of fixed assets | (3,438 | ) | - | |||||
| Net cash provided by investing activities | 8,430 | - | ||||||
| Financing Activities: | ||||||||
| Proceeds from sale of common stock (net of issuance expenses) | 526,232 | - | ||||||
| Receipt on account of stock | 80,000 | - | ||||||
| Borrowings on debt | - | 783,049 | ||||||
| Net cash provided by financing activities | 606,232 | 783,049 | ||||||
| Net decrease in cash | (1,057 | ) | (43,682 | ) | ||||
| Cash and cash equivalents - beginning of period | 4,486 | 115,449 | ||||||
| Cash and cash equivalents - end of period | $ | 3,429 | $ | 71,767 | ||||
| Non-cash transactions: | ||||||||
| Issuance of Preference Shares in connection with settlement with debt and warrant holders | $ | 529,000 | $ | - | ||||
| Settlement agreement with debt and warrant holders accounted for as extinguishment and re issuance of debt: | ||||||||
| Extinguishment of convertible note | (470,200 | ) | ||||||
| Re issuance of convertible note | 606,160 | -- | ||||||
| Ordinary shares (*) | Additional paid-in | Retained | Total Attributed to the company’s | Non- Controlling | Total | |||||||||||||||||||||||
| Number | Amount | capital | Earnings | Shareholders | Interests | Equity | ||||||||||||||||||||||
| Balance as of July 1, 2022 | 14,783,964 | 3 | 27,541 | (2,897 | ) | 24,647 | 6,364 | 31,011 | ||||||||||||||||||||
| Net income (loss) | - | - | - | (146 | ) | (146 | ) | 217 | 71 | |||||||||||||||||||
| Share-based compensation | - | - | 23 | - | 23 | 9 | 32 | |||||||||||||||||||||
| Dividend declared to shareholders | - | - | - | (1,000 | ) | (1,000 | ) | - | (1,000 | ) | ||||||||||||||||||
| Dividend distributed to non-controlling interests | - | - | - | - | - | (453 | ) | (453 | ) | |||||||||||||||||||
| Balance as of September 30, 2022 | 14,783,964 | 3 | 27,564 | (4,043 | ) | 23,524 | 6,137 | 29,661 | ||||||||||||||||||||
| Ordinary shares (*) | Additional paid-in | Retained | Total Attributed to the company’s | Non- Controlling | Total | |||||||||||||||||||||||
| Number | Amount | capital | Earnings | Shareholders | Interests | Equity | ||||||||||||||||||||||
| Balance as of January 1, 2021 | 14,783,964 | 3 | 15,933 | (2,666 | ) | 13,270 | - | 13,270 | ||||||||||||||||||||
| Net income | - | - | - | 88 | 88 | - | 88 | |||||||||||||||||||||
| Share-based compensation | - | - | (38 | ) | - | (38 | ) | - | (38 | ) | ||||||||||||||||||
| Balance as of September 30, 2021 | 14,783,964 | 3 | 15,895 | (2,578 | ) | 13,320 | - | 13,320 | ||||||||||||||||||||
| Ordinary shares (*) | Additional paid-in | Retained | Total Attributed to the company’s | Non- Controlling | Total | |||||||||||||||||||||||
| Number | Amount | capital | Earnings | Shareholders | Interests | Equity | ||||||||||||||||||||||
| Balance as of July 1, 2021 | 14,783,964 | 3 | 15,898 | (2,669 | ) | 13,232 | - | 13,232 | ||||||||||||||||||||
| Net income | - | - | - | 91 | 91 | - | 91 | |||||||||||||||||||||
| Net income (loss) | - | - | - | 91 | 91 | - | 91 | |||||||||||||||||||||
| Share-based compensation | - | - | (3 | ) | - | (3 | ) | - | (3 | ) | ||||||||||||||||||
| Balance as of September 30, 2021 | 14,783,964 | 3 | 15,895 | (2,578 | ) | 13,320 | - | 13,320 | ||||||||||||||||||||
(*) Restated – see note 8.
| (*) | Retroactively adjusted to reflect the reverse stock split effected on August 31, 2022 (see note 1.d) for all periods presented and to reflect the equivalent number of shares corresponding to the combined financial information of the Company and Gix Media Ltd. for all periods preceding the Reorganization Transaction (see note 1.c) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
VIEWBIX INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
U.S. dollars in thousands (except share data)
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
For the nine months ended September 30 | For the three months ended September 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Unaudited | Unaudited | |||||||||||||||
| Cash flows from Operating Activities | ||||||||||||||||
| Net income (loss) | (30 | ) | 88 | 71 | 91 | |||||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||||
| Depreciation and amortizations | 2,051 | 1,289 | 736 | 427 | ||||||||||||
| Share-based compensation | 40 | (38 | ) | 32 | (3 | ) | ||||||||||
| Deferred taxes | (219 | ) | (65 | ) | (96 | ) | (41 | ) | ||||||||
| Accrued interest, net | (50 | ) | (26 | ) | (11 | ) | 62 | |||||||||
| Fair value revaluation and exchange rate differences on loans | 1,033 | 14 | 72 | 5 | ||||||||||||
| Adjustment total | 2,855 | 1,174 | 733 | 450 | ||||||||||||
| Changes in assets and liabilities items: | ||||||||||||||||
| Decrease in accounts receivable | 17 | 968 | 20 | 447 | ||||||||||||
| Decrease (increase) in other receivables | 190 | (39 | ) | 378 | (122 | ) | ||||||||||
| Decrease in operating lease right-of-use assets | 64 | 48 | 22 | 21 | ||||||||||||
| Increase (decrease) in severance pay, net | (2 | ) | (229 | ) | (1 | ) | 3 | |||||||||
| Increase (decrease) in accounts payable | (532 | ) | (57 | ) | 535 | (248 | ) | |||||||||
| Decrease in other payables | (525 | ) | (522 | ) | (228 | ) | (158 | ) | ||||||||
| Decrease in operating lease liabilities | (56 | ) | (39 | ) | (19 | ) | (17 | ) | ||||||||
| Increase in parent company loan | 194 | 172 | 66 | 55 | ||||||||||||
| Increase (Decrease) in Operating Capital | (650 | ) | 302 | 773 | (19 | ) | ||||||||||
| Net cash provided by operating activities | 2,175 | 1,564 | 1,577 | 522 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| -8- |
VIEWBIX INC.
Emerald Medical Applications Corp.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Cont.)
Notes to Unaudited Interim Financial Statements
September 30, 2017U.S. dollars in thousands (except share data)
For the nine months ended September 30 | For the three months ended September 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Unaudited | Unaudited | |||||||||||||||
| Cash flows from Investing Activities | ||||||||||||||||
| Purchase of property and equipment | (54 | ) | (298 | ) | (7 | ) | (70 | ) | ||||||||
| Capitalization of software development costs | (14 | ) | (211 | ) | - | (69 | ) | |||||||||
| Net cash used in investing activities | (68 | ) | (509 | ) | (7 | ) | (139 | ) | ||||||||
| Cash flows from Financing Activities | ||||||||||||||||
| Receipt of short-term loan | 1,000 | 602 | ||||||||||||||
| Repayment of short-term loan | (1,000 | ) | (1,219 | ) | (1,000 | ) | (619 | ) | ||||||||
| Increase in loan to parent company | (1,462 | ) | (1,308 | ) | (606 | ) | (822 | ) | ||||||||
| Repayment of long-term loan | (1,060 | ) | - | (358 | ) | - | ||||||||||
| Payment of dividend to non-controlling interests | (1,195 | ) | - | (453 | ) | - | ||||||||||
| Net cash used in financing activities | (3,717 | ) | (1,925 | ) | (2,417 | ) | (1,441 | ) | ||||||||
| Increase in cash and cash equivalents and restricted cash | (1,610 | ) | (870 | ) | (847 | ) | (1,058 | ) | ||||||||
| Cash and cash equivalents and restricted cash at beginning of the period | 5,442 | 3,564 | 4,679 | 3,752 | ||||||||||||
| Cash and cash equivalents and restricted cash at end of the period | 3,832 | 2,694 | 3,832 | 2,694 | ||||||||||||
| Supplemental Disclosure of Cash Flow Activities: | ||||||||||||||||
| Cash paid and received during the period | ||||||||||||||||
| Taxes paid | (551 | ) | (222 | ) | (135 | ) | (88 | ) | ||||||||
| Interest paid | (391 | ) | (21 | ) | (164 | ) | (7 | ) | ||||||||
| Total Cash paid and received during the period | (942 | ) | (243 | ) | (299 | ) | (95 | ) | ||||||||
| Substantial non-cash activities: | ||||||||||||||||
Right of use assets obtained in exchange for operating lease liabilities | - | 637 | - | - | ||||||||||||
| Dividend declared | 1,000 | - | 1,000 | - | ||||||||||||
The accompanying notes are an integral part of Contentsthese condensed consolidated financial statements.
| -9- |
Note 1. The Company and Significant Accounting Policies.
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 1:GENERAL
A. Organizational Background:Background
Emerald Medical Applications CorpViewbix Inc. (formerly known as Virtual Crypto Technologies, Inc.) (the “Company” or “Registrant”), was incorporated in the State of Ohio in 1989Delaware on August 16, 1985, under a predecessor name, Zaxis International Inc.The InFerGene Company (“Zaxis”InFerGene Company”). On August 25, 1995, Zaxisa wholly owned subsidiary of InFerGene Company merged with a subsidiary of TheZaxis International, Inc., an Ohio corporation, which following such merger, the surviving entity, InFerGene Company, a Delaware corporation, which entity changed its name to Zaxis International, Inc. andInc (“Zaxis”). In 2015, the Company was reincorporated in Delaware as Zaxis. On December 30, 2014, Zaxis entered into a Memorandum of Understanding withchanged its name to Emerald Medical Applications Ltd., which was thenCorp.
On January 17, 2018, the Company formed a private limited liability company incorporatednew wholly-owned subsidiary under the laws of the State of Israel, Virtual Crypto Technologies Ltd. (“VCT Israel”), to develop and market software and hardware products facilitating and supporting the purchase and/or sale of cryptocurrencies. Effective as of March 7, 2018, the Company’s name was changed from Emerald Israel”Medical Applications Corp. to Virtual Crypto Technologies, Inc. to reflect its new operations and business focus.
On February 7, 2019, the Company entered into a share exchange agreement (the “Share Exchange Agreement” or “Emerald”). On March 16, 2015, Zaxis and Emerald Israel executed the Share Exchange Agreement, which closed on July 14, 2015. The Share Exchange Agreement was accounted for as“Recapitalization Transaction”) with Gix Internet Ltd., a reverse recapitalization. As a result, the historical financial statements of the Registrant were replaced with the historical financial statements of Emerald Israel.
The Company and its subsidiary, Emerald, are collectively referred to as the “Company”.
Emerald, a wholly-owned subsidiary of the Registrant effective July 14, 2015, wascompany organized as a privately-owned company under the laws of the State of Israel on February 17, 2010. Emerald is(“Gix” or “Parent Company’’), pursuant to which, Gix assigned, transferred and delivered its % holdings in Viewbix Ltd., a mobile digital-health startup company engagedorganized under the laws of the State of Israel (“Viewbix Israel”), to the Company in exchange for shares of the development, sale and serviceCompany, which resulted in Viewbix Israel becoming a subsidiary of imaging solutions utilizing its proprietary DermaCompare software that it developed for use in derma imaging and analytics (“DermaCompare”). Emerald believes that its proprietary DermaCompare software represents an advancement in skin cancer screening that should enable physiciansthe Company. In connection with the Share Exchange Agreement, effective as of August 7, 2019, the Company’s name was changed from Virtual Crypto Technologies, Inc. to more readily identify and monitor changes in their patients’ skin characteristics.Viewbix Inc.
B. Definitions
Emerald’s DermaCompare solution allows dermatologists and other medical care professionals, using a set of 25 total body photography (“TBP”), to capture sets of skin lesion images with, among other devices, digital cameras, camera-equipped smart phones or tablets. These TBP images are then transmitted online and are remotely analyzed by professionals using our DermaCompare software.In these financial statements:
Beginning in July 2017, theThe Company commenced a process of outsourcing the development– Viewbix Inc.
The Group – Viewbix Inc. and maintenance of our patented DermaCompare imaging solution to a major Israeli software company, which company has been involved in the continued development of our technology. The purpose for this outsourcing was to conserve the Company’s capital resources. Certain key external consultants and medical professionals continue to assist and serve the Company as we advance the implementation of our marketing plan. As of September 30, 2017, and the date of this report, the Company has no employees on its payroll. However, certain liabilities with respect to payroll and severance payments remain outstanding.subsidiaries
Going ConcernThe Parent Company or Gix – Gix Internet Ltd.
Until we are able to raise additional funds to continue to finance our operations and to sell licenses for our DermaCompare imaging software, our sales and marketing plan has been effectively been delayed. We continue to devote efforts to sell licenses for our DermaCompare imaging software to, among others, NHSs, HMOs, health insurance companies, hospitals and medical clinics through distributers, health care channel partners or directly through independent salespersons and/or web purchase to dermatologists and other physicians (GPs) (collectively, the “Licensees”). We believe that these licenses will be purchased based on the number of potential numbers of patients the respective Licensees will serve.Gix Media – Gix Media Ltd.
The Registrant is currently in late-stage negotiations with several potential private investors to invest additional equity capital in the Company to fund the Company’s ongoing operations and sales and marketing plan as well as to pay the negotiated liabilities owed to Emerald Israel’s ex-employees (see note 6)Cortex – Cortex Media Group Ltd.
The Company has incurred significant operating losses and negative cash flows from operating activities since incorporation. The Company will be required to obtain additional liquidity resources in order to support the commercialization of its products and maintain its research and development activities. The Company is addressing its liquidity needs by seeking additional funding from public and/or private sources. There are no assurances, however, that the Company will be able to obtain an adequate level of financial resources that are required for the short and long-term requirements.
VIEWBIX INC.
These conditions raise substantial doubt aboutNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 1:GENERAL (Cont.)
C. Reorganization Transaction
On December 5, 2021, the Company entered into a certain Agreement and Plan of Merger with Gix Media, an Israeli company and the majority-owned subsidiary of Gix, the Parent Company and Vmedia Merger Sub Ltd., an Israeli company and wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which, Merger Sub merged with and into Gix Media, with Gix Media being the surviving entity and a wholly-owned subsidiary of the Company (the “Reorganization Transaction”).
On September 19, 2022, (the “Closing Date”) the Reorganization Transaction was consummated and as a result, all outstanding ordinary shares of Gix Media, having no par value (the “Gix Media Shares”) were delivered to the Company’s abilityin exchange for the Company’s shares of common stock. Prior to continuethe closing of the Reorganization Transaction, Gix Media was a majority-owned subsidiary of Gix. As a result of the Reorganization Transaction, the former holders of Gix Media Shares, who previously held approximately 69% of the Company’s shares on a fully diluted basis, hold 90% of the Company’s Common Stock on a fully diluted basis, and Gix Media became a wholly-owned subsidiary of the Company , which holds 100% of its share capital.
As the Company and Gix Media Ltd. were consolidated by the same parent and ultimate parent, Gix Internet Ltd. and Medigus Ltd., respectively, before and after the Reorganization Transaction, the Reorganization Transaction was accounted for as a going concern. The accompanyingtransaction between entities under common control. Accordingly, the combined financial information of the Company and Gix Media Ltd. is presented in these financial statements, for all periods presented, reflecting the historical cost of the Company and Gix Media Ltd., as it is reflected in the consolidated financial statements do not include any adjustmentsof the direct parent, Gix Internet Ltd., for all periods preceding March 1, 2022, the date Medigus Ltd. obtained control in Gix Internet Ltd., and as it is reflected in the consolidated financial statements of Medigus Ltd. for all periods subsequent to March 1, 2022.
Share and per share data in these financial statements have been retrospectively adjusted, for all periods preceding the Reorganization Transaction, to reflect the possible future effects on recoverabilityequivalent number of shares of the Company corresponding to the combined financial information of the Company and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.Gix Media Ltd.
D. Business Overview
The Group, through its subsidiaries Gix Media Ltd. and Cortex Media Group Ltd., operates in the field of digital advertising. The Group has two main activities that are reported as separate business segments: the search segment and the digital content segment.
The search segment develops a variety of technological software solutions, which perform automation, optimization and monetization of internet campaigns, for the purposes of acquiring and routing internet user traffic to its customers. The search segment activity is operated by Gix Media.
The digital content segment is engaged in the creation and editing of content, in different languages, for different target audiences, for the purposes of generating revenues from leading advertising platforms, including Google, Facebook, Yahoo and Apple, by utilizing such content to obtain internet user traffic for its customers. The digital content activity is operated by Cortex. Gix Media holds 70% of Cortex’s share capital.
The Group’s technological tools allow advertisers and website owners to earn more from their advertising campaigns and generate additional profits from their websites.
E. Reverse Stock Split
In connection with the Closing of the Reorganization Transaction, the Company filed an Amended and Restated Certificate of Incorporation (the “Amended COI”) with the Secretary of State of Delaware, effective as of August 31, 2022, pursuant to which, concurrently with the effectiveness of the Amended COI, the Company, among other things, effected a reverse stock split of its Common Stock at a ratio of 1-for-28. Share and per share data in these financial statements have been retrospectively adjusted to reflect the reverse stock split for all periods presented.
| -11- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 2:SIGNIFICANT ACCOUNTING POLICIES
A.Basis of Presentation and significant Accounting Policies:Principles of Consolidation:
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company or in the first person notations “we,” “us” and “our”) and its wholly owned subsidiarywholly-owned subsidiaries and were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
All intercompany accounts and with the instructions to Form 10-Q. transactions have been eliminated in consolidation.
B.Unaudited Interim Financial Information
The Company’s unaudited condensed consolidated financial statements presented herein have not been audited by an independent registered public accounting firm, but include all material adjustments (consisting of normal recurring adjustments) which are,prepared in accordance with U.S. GAAP and pursuant to the opinion of management, necessary for a fair statementrules and regulations of the financial condition, results of operationsSecurities and cash flows for the period. However, these results are not necessarily indicative of results for any other interim period or for the full fiscal year. The preparation of financial statements in conformity with generally accepted accounting principles requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.
Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principlesU.S .GAAP have been condensed or omitted pursuant to thefrom this report, as is permitted by such rules of the Securities and Exchange Commission (“SEC”). The accompanyingregulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidatedaudited financial statements as of and for the year ended December 31, 2021 and the notes thereto included in ourthe Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2021 filed with referencethe SEC on March 17, 2022 (the “2021 Annual Report”). The results for any interim period are not necessarily indicative of results for any future period.
In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented. The results for the nine months ended September 30, 2022, are not necessarily indicative of the results for the year ending December 31, 2022, or for any future period.
As of September 30, 2022, following the retrospective presentation of the combined financial information of the Company and Gix Media Ltd., the Company adopted the significant accounting policies described in Note 82 in these unaudited condensed consolidated financial statements. Other than these significant accounting policies, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 2021 Annual Report.
| -12- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 2:SIGNIFICANT ACCOUNTING POLICIES (Cont.)
C.Use of Estimates
The preparation of financial statements in relationconformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported of assets and liabilities and disclosure at the date of the consolidated financial statements and the reported amounts of income and expense during the reporting period. The Company evaluates on an ongoing basis its assumptions, including those related to contingencies, income taxes, deferred taxes, share-based compensation and leases. Actual results could differ from those estimates.
D.Functional Currency and Foreign Currency Transactions
Most of the revenues of the Company are received in U.S. dollars. In addition, a substantial portion of the costs of the Company are incurred in U.S. dollars. Therefore, the Company’s management believes that the U.S. dollar is the currency of the primary economic environment in which the Company and each of its subsidiaries operates. Thus, the functional and reporting currency of the Company is the U.S. dollar.
Accordingly, monetary balances denominated in currencies other than the U.S. dollar are re-measured into U.S. dollars in accordance with Statement of the Accounting Standard Codification (“ASC”) No. 830 “Foreign Currency Matters” (“ASC No. 830”).
Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Balances in non U.S. dollar currencies are translated into U.S. dollars using historical and current exchange rates for non-monetary and monetary balances, respectively. For non-U.S. dollar transactions and other items restated in the Company's December 31, 2016statements of operations (indicated below), the following exchange rates are used: (i) for transactions exchange rates at transaction dates and (ii) for other items (derived from non-monetary balance sheet items such as depreciation and amortization) historical exchange rates. Currency transaction gains and losses are presented in the financial statements.income or expenses, as appropriate
E.Cash and cash equivalents
The Company considers all short-term investments, which are highly liquid investments with original maturities of three months or less at the date of purchase, to be cash equivalents.
F.Restricted Deposits
Restricted cash held in interest bearing saving accounts which are used as a security for the Group’s credit card and lease obligations.
G.Accounts receivable and allowance for credit losses
Accounts receivables are recorded at the invoiced amount, net of an allowance for credit losses. The Group evaluates its outstanding accounts receivables and establishes an allowance for credit losses based on information available on their credit condition, current aging, historical experience, future economic and market conditions. These allowances are reevaluated and adjusted periodically as additional information is available. Changes in the allowance for expected credit losses are recorded under general and administrative expenses in the condensed consolidated statements of income.
| -13- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 2:SIGNIFICANT ACCOUNTING POLICIES (Cont.)
H.Fixed assets
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line basis over the estimated useful lives, at the following annual rates:
SCHEDULE OF ESTIMATED USEFUL LIVES
| % | ||||
| Computers and peripherals equipment | 33 | |||
| Office furniture and equipment | 6-15 | |||
| Leasehold improvements | (*) | |||
| (*) | Over the shorter of the lease term (including options if any that are reasonably certain to be exercised estimated useful life). |
I.Leases
In accordance with ASC No. 842 “Leases”, the Company determines if an arrangement is a lease at inception. If an arrangement is a lease, the Company determines whether it is an operating lease or a finance lease at the lease commencement date. Operating leases are included in operating lease assets, operating lease liabilities – current, and non-current operating lease liabilities in the Company’s condensed consolidated balance sheets.
Operating lease assets represent the Company’s right to control the use of an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the estimated lease.
Operating lease assets and liabilities are recognized on the commencement date based on the present value of lease payments over the lease term.
The Company uses its incremental borrowing rate based on the information available at the commencement date to determine the present value of the lease payments. The incremental borrowing rate is estimated based on factors such as the lease term, credit standing and the economic environment of the location of the lease.
Variable lease payments, including payments based on an index or a rate, are expensed as incurred and are not included within the operating lease asset and operating lease liabilities. The Company does not separate non-lease components from lease components for its leases of real estate.
The Company’s lease terms are the noncancelable periods, including any rent-free periods provided by the lessor, and include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. At lease inception, and in subsequent periods as necessary, the Company estimates the lease term based on its assessment of extension and termination options that are reasonably certain to be exercised. Lease costs are recognized on a straight-line basis over the lease term.
The Company does not recognize operating lease asset and operating lease liabilities for leases with terms shorter than 12 months. Lease costs for short-term leases are recognized on a straight-line basis over the lease term.
The Company has material non-functional currency leases. Lease liabilities in respect of leases denominated in a foreign currency are remeasured using the exchange rate at each reporting date. Lease assets are measured at historical rates, which are not affected by subsequent changes in the exchange rates.
Recent Accounting Pronouncements
| -14- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 2:SIGNIFICANT ACCOUNTING POLICIES (Cont.)
J.Revenue Recognition
As described in note 1.d the Company generates revenues from obtaining internet user traffic and routing such traffic to its customers. The Company assesses the adoption impacts of recently issued accounting standardsis entitled to receive consideration for its service upon each individual internet user traffic routed to and is monetized by the Financial Accounting Standards Board on its financial statements. Following are newly issued standards or material updates to the Company’s previous assessments from its Annual Report on Form 10-K for the fiscal year ended December 31, 2016:customers.
In May 2014,The Company’s revenues are measured according to the Financial Accounting Standards Board (the “FASB”ASC 606, “Revenue from Contracts with Customers” (“ASC 606”) issued a new standard. Under ASC 606, revenues are measured according to achieve a consistent applicationthe amount of revenue recognition withinconsideration that the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of the promised goods or services in an amount that reflects the consideration to which the entityCompany expects to be entitled in exchange for thosetransferring promised goods or services. In addition,services to a customer, excluding amounts collected on behalf of third parties, such as VAT taxes. Revenues are presented net of VAT. The Company’s payments terms are less than one year. Therefore, no finance component is recognized.
The Company recognizes revenues upon routing of internet users’ traffic that is monetized by its customers. As the new standard requiresCompany operates as the primary obligor in its arrangements and has sole discretion in determining to which of its customers internet user traffic is to be routed, revenues are presented on a gross basis.
K.Traffic-acquisition and related costs
Traffic acquisition and related costs consist primarily of fees paid to suppliers in connection with the Company’s internet traffic sources, as well as internal costs incurred in connection with the acquisition of such traffic. Traffic acquisition costs are expensed as incurred.
L.Research and development expenses
Research and development costs are charged to the condensed consolidated statements of income as incurred, except for certain costs relating to internally developed software, which are capitalized.
The Company capitalizes certain internal software development costs, consisting of direct subcontractors’ costs associated with creating the internally developed software. Software development projects generally include three stages: (i) the preliminary project stage (all costs expensed as incurred); (ii) the application development stage (costs are capitalized) and (iii) the post implementation/operation stage (all costs expensed as incurred).
The costs capitalized in the application development stage primarily include the costs of designing the application, coding and testing of the system. Capitalized costs are amortized using the straight-line method over the estimated useful life of the software, once it is ready for its intended use.
The Company believes that the straight-line recognition method best approximates the manner in which the expected benefit will be derived. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
| -15- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 2:SIGNIFICANT ACCOUNTING POLICIES (Cont.)
M.Income taxes
The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”, and (“ASC 740”). ASC 740 prescribes the use of the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting companies discloseand tax bases of assets and liabilities and for carry forward tax losses. Deferred taxes are measured using the nature, amount, timing,enacted tax rates and uncertaintylaws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more-likely-than-not that some portion or all of revenuethe deferred tax asset will not be realized.
Uncertain tax positions are accounted for in accordance with the provisions of ASC 740-10, under which a company may recognize the tax benefit from an uncertain tax position claimed or expected to be claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by the taxation authorities, based on the technical merits of the position, at the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Interest and penalties, if any, related to unrecognized tax benefits, are recognized in tax expense.
N.Fair Value of Financial Instruments
The carrying amounts of cash and cash flows arising from contracts with customers. The new standard is effective with respectequivalents, restricted deposits, accounts receivable, loan to parent company, other current assets, current maturities of long-term loan, accounts payable, other payables and short-term loans approximate their fair value due to the short-term maturities of such instruments.
The carrying amount of the variable interest rate long-term loan is approximates to its fair value as it bears interest at approximate market rate.
O.Business Combinations
The Company beginningaccounts for its business combinations in accordance with ASC 805, “Business Combinations” (“ASC 805”). ASC 805 specifies the first quarteraccounting for business combinations and the criteria for recognizing and reporting intangible assets apart from goodwill. ASC 805 requires recognition of 2018; early adoptionassets acquired, liabilities assumed and any non-controlling interest at the acquisition date, measured at their fair values as of that date.
Acquisition-related intangible assets result from the Company’s acquisitions of businesses accounted for under the purchase method and consist of the fair value of identifiable intangible assets including customer relations, technology, as well as goodwill. Goodwill is prohibited. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effectamount by which the acquisition cost exceeds the fair values of initially applying it recognized atidentifiable acquired net assets on the date of purchase. Acquisition-related definite lived intangible assets are reported at cost, net of accumulated amortization.
| -16- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 2:SIGNIFICANT ACCOUNTING POLICIES (Cont.)
P.Goodwill
The Company’s goodwill reflects the excess of the consideration paid or transferred including the fair value of contingent consideration over the fair values of the identifiable net assets acquired.
Goodwill is not amortized but instead is tested for impairment, in accordance with ASC 350, “Intangibles – Goodwill and Other” (“ASC 350”), at the reporting unit level, at least annually at December 31 each year, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.
The goodwill impairment test is performed by evaluating an initial application. Asqualitative assessment of the likelihood of impairment. If this step indicates that the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the impairment test is performed.
In the impairment test, the Company hascompares the fair value of the reporting unit to the carrying value of the reporting unit. If the fair value of the reporting unit exceeds the carrying value of the net assets allocated to that unit, goodwill is not incurred revenuesimpaired, and no further testing is required. If the fair value is less than the carrying value of the reporting unit, then the second step of the impairment test is performed to measure the amount of the impairment.
Q.Intangible assets, other than goodwill
Intangible assets are identifiable non-monetary assets that have no physical substance. Intangible assets with indefinite useful lives are not amortized and are tested for impairment once a year, or whenever there is a sign indicating that impairment may have occurred, in accordance with ASC 350. An estimate of the useful life of intangible assets with an indefinite useful life is examined at the end of each reporting year. A change in the estimated useful life of an intangible asset that changes from indefinite to defined is treated prospectively.
Intangible assets with a defined useful life are amortized in a straight line over their estimated useful life subject to impairment testing. A change in the estimated useful life of an intangible asset with a defined useful life is treated prospectively.
The useful life used to amortize intangible assets with a defined useful life is as follows:
SCHEDULE OF AMORTIZE INTANGIBLE ASSETS
| % | ||||
| Customer relations | 14.3 | |||
| Technology | 16.7-22 | |||
| Internal software | 33 | |||
| -17- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 2:SIGNIFICANT ACCOUNTING POLICIES (Cont.)
R.Impairment of long-lived assets
The Company’s long-lived assets to be held or used, including property and equipment, right of use assets and intangible assets subject to amortization are reviewed for impairment in accordance with ASC 360, “Property, Plants and Equipment” (“ASC 360”), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset.
S.Severance Pay
The Company’s liability for severance pay for some of its Israeli employees is calculated pursuant to Israeli Severance Pay Law, 1963 (the “Israeli Severance Pay Law”) based on the most recent salary of the employee multiplied by the number of years of employment, as of the balance sheet date. These employees are entitled to one month’s salary for each year of employment or a portion thereof. The Company records the liability as if it were payable at each balance sheet date iton an undiscounted basis. The liability is unable to determineclassified based on the expected impactdate of settlement and therefore is usually classified as a long-term liability unless the new standard will havecessation of the employees is expected during the upcoming year.
The Company’s liability for these Israeli employees is partially covered by monthly deposits for insurance policies and the remainder by an accrual. The deposited funds for these policies are recorded as an asset in the Company’s balance sheet and include profits and losses accumulated up to the balance sheet date. The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to the Israeli Severance Pay Law or labor agreements. The value of the deposited funds is based on the cash redemption value of these policies.
With respect to other Israeli employees, the Company acts pursuant to the general approval of the Israeli Ministry of Labor and Welfare, pursuant to the terms of Section 14 of the Israeli Severance Pay Law (“Section 14”), according to which the current deposits with the pension fund and/or with the insurance company exempt the Company from any additional obligation to these employees for whom the said depository payments are made. As a result, the Company does not recognize any liability for severance pay due to these employees and the deposits under Section 14 are not recorded as an asset in the Company’s balance sheet.
Severance expenses for the nine months ended September 30, 2022, and September 30, 2021, amounted to $101 and $120, respectively.
The Company accounts for share-based compensation in accordance with ASC 718, “Stock Compensation” (“ASC 718”), which requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods, which is generally the vesting period, in the Company’s condensed consolidated statement of income.
| -18- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 2:SIGNIFICANT ACCOUNTING POLICIES (Cont.)
T. Share-based compensation (Cont.)
The Company selected the Black-Scholes option pricing model as the most appropriate fair value method for its consolidatedshare-options awards. The option-pricing model requires several assumptions, of which the most significant are the expected share price volatility and the expected option term.
The Company accounts for forfeitures as they occur.
In accordance with ASC 260, “Earnings Per Share” (“ASC 260”), basic net earnings per share is computed by dividing net earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted net earnings per share reflects the potential dilution that could occur if share options, warrants or other commitments to issue ordinary shares were exercised or equity awards vested, resulting in the issuance of ordinary shares that could share in the net earnings of the Company.
V.Segment reporting
The Company reports financial statements.and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria as defined in ASC 280, “Segments Reporting”.
Operating segments are distinguishable components of an entity for each of which a separate financial information is available and is reported in a manner consistent with the internal reporting provided to the entity’s Chief Operating Decision Maker (“CODM”) in making decisions about how to allocate resources and in assessing performance.
The review of the CODM is carried out according to the results of the segment’s activity. His review does not include certain expenses that are not related specifically to the activity of each of the segments. Those expenses are presented as reconciliation between segments operating results to total operating results in financial statements.
W.Recent accounting pronouncements
ASU 2019-12, Income Taxes
In February 2016,December 2019, the FASB issued a new leaseASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting standard requiringfor income taxes, eliminates certain exceptions to the recognitiongeneral principles in Topic 740 and clarifies certain aspects of lease assets and liabilities on the balance sheet. This standardcurrent guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for annual periods beginning in the first quarter of 2019;after January 1, 2022 and interim periods within annual periods beginning after January 1, 2023, and early adoption iswas permitted.
The Company currently does not expect the adoption of this accounting standard towill have a material impact on its consolidated financial statements.statements
| -19- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 2:SIGNIFICANT ACCOUNTING POLICIES (Cont.)
W. Recent accounting pronouncements (cont.)
ASU 2019-10, Financial Instruments—Credit Losses (Topic 326)
In September 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326)” (“ASU 2016-13”), which requires the immediate recognition of management’s estimates of current and expected credit losses. In June 2016,November 2018, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses: Measurement2018-19, which makes certain improvements to Topic 326. In April and May 2019, the FASB issued ASUs 2019-04 and 2019-05, respectively, which adds codification improvements and transition relief for Topic 326. In November 2019, the FASB issued ASU 2019-10, which delays the effective date of Credit Losses on Financial Instruments.” With respectTopic 326 for Smaller Reporting Companies to assets measured at amortized cost, such as held-to-maturity assets,interim and annual periods beginning after December 15, 2022, with early adoption permitted. In November 2019, the update requires presentationFASB issued ASU 2019-11, which makes improvements to certain areas of Topic 326. In February 2020, the amortized cost net of a credit loss allowance. The update eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflectFASB issued ASU 2020-02, which adds an entity’s current estimate of all future expected credit losses as opposedSEC paragraph, pursuant to the previous standard, when an entity only considered past eventsissuance of SEC Staff Accounting Bulletin No. 119, to Topic 326.
The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and current conditions. With respect to available for sale debt securities, the update requires that credit losses be presented as an allowance rather than as a write-down. The update is effective beginning in the first quarter of 2020; early adoption is permitted.
The Company currently does not expect that the adoption of this accounting standard towill have a material impact on its consolidated financial statements.statements
ASU 2021-08, Business Combinations
In May 2017,October 2021 the FASB issued “ASU No. 2017-09, “Compensation-Stock CompensationASU 2021-08, “Business Combinations (Topic 718): Scope of Modification805) – Accounting” which clarifies when for Contract Assets and Contract Liabilities from Contracts with Customers”. The amendments in this update require that an entity (acquirer), recognize and measure contract assets and contract liabilities acquired in a changebusiness combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to terms or conditions of a share-based payment award must be accounteddetermine what to record for as a modification. the acquired revenue contracts.
The new guidance requires modification accounting if the vesting condition, fair value or the award classification is not the same both before andamendments in this update are effective for fiscal years beginning after a change to the terms and conditions of the award. The new guidance is effective on a prospective basis beginning on January 1, 2018December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted.
The Company currently does not expect that the adoption of this accounting standard towill have a material impact on its consolidated financial statements.statements
In July 2017, the FASB issued ASU 2017-11, which includes Part I “Accounting for Certain Financial Instruments with Down Round Features” and Part II “Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-Controlling Interests With a Scope Exception”. The ASU makes limited changes to the Board’s guidance on classifying certain financial instruments as either liabilities or equity. The ASU’s objective is to improve (1) the accounting for instruments with “down-round” provisions and (2) the readability of the guidance in ASC 480 on distinguishing liabilities from equity by replacing the indefinite deferral of certain pending content with scope exceptions. This standard is effective beginning in the first quarter of 2019; early adoption is permitted. The Company early adopted the standard, retrospectively, for each prior period presented in these financial statements.
VIEWBIX INC.
Note 2. Stockholders’ Equity.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Recent Issuances of Common StockU.S. dollars in thousands (except share data)
On February 24, 2017, Publicis Groupe 90 (“Publicis 90”) invested 500,000 Euros or approximately U$526,000NOTE 3:OTHER RECEIBALES
Composition:
SCHEDULE OF OTHER ACCOUNTS RECEIVABLES COMPOSITION
As of September 30 | As of December 31 | |||||||
| 2022 | 2021 | |||||||
| Prepaid expenses | $ | 301 | $ | 350 | ||||
| Government authorities | $ | 513 | $ | 624 | ||||
| Other receivables | $ | - | $ | 30 | ||||
| Other accounts receivables | 814 | 1,004 | ||||||
NOTE 4:PROPERTY AND EQUIPMENT, NET
Composition:
SCHEDULE OF PROPERTY AND EQUIPMENT, NET
| As of September 30 | As of December 31 | |||||||
| 2022 | 2021 | |||||||
| Cost: | ||||||||
| Computers and peripheral equipment | $ | 490 | $ | 436 | ||||
| Office furniture and equipment | $ | 134 | $ | 134 | ||||
| Leasehold improvements | $ | 273 | $ | 273 | ||||
| Total cost | $ | 897 | $ | 843 | ||||
| Less: accumulated depreciation | (580 | ) | (509 | ) | ||||
| Property and equipment, net | 317 | 334 | ||||||
Depreciation expenses totaled to $71 and the Registrant accepted a Reg S Subscription Agreement from Publicis 90 in consideration$54 for the issuance to Publicis 90 of 1,315,563 restricted shares of the Registrant’s common stock at a subscription price of $0.40 per share. The issuance was made in reliance upon the exemptions provided in Section 4(2) of the Securities Act of 1933, as amended (the “Act”) and Regulation S promulgated by the SEC under the Act.
On April 25, 2017, a holder of a convertible note in the principal amount of $100,000 converted $10,400 into 74,572, shares based on an adjusted conversion price of $0.14. The conversion price was adjusted on March 22, 2017 pursuant to the provisions of the 2016 Secured Convertible Note Agreement.
On June 12, 2017, certain warrant holders holding 1,100,000 Class A Warrants and 1,100,000 Class B Warrants, elected to exercise certain warrants on a cashless basis. In accordance with the 2016 Secured Convertible Note Agreement the Class A warrants and Class B warrants were increased to 5,665,626 each, based on an adjusted share price of $0.14 per share and 3,451,490 Class B Warrants were converted to 1,096,395 shares at $0.14 per share. The exercise price and amount of shares issued were adjusted on March 22, 2017.
On June 12, 2017, the Company completed the issuance of 125,000 shares of the Company’s common stock to Alpha Anstalt Capital (“Alpha”) pursuant to the Company’s agreement with Alpha in the prior year.
In July and August 2017, the Company received a total of $80,000 from two accredited investors, for which the Company will issue a total of 571,429 restricted shares of its common stock (the “Shares”) at a price of $0.14 per Share, representing total proceeds to the Registrant of $80,000.
A summary of the Company’s activity related to options to employees, executives and directors and related information is as follows:
| For the nine month period ended September 30, 2017 | ||||||||||||
| Number of Options | Weighted Average Exercise Price ($) | Aggregate Intrinsic Value ($) | ||||||||||
| Outstanding at December 31, 2016 | 4,405,552 | 0.11 | - | |||||||||
| Granted | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
| Forfeited | (2,206,488 | ) | 0.28 | - | ||||||||
| Outstanding at September 30, 2017 | 2,199,064 | 0.10 | 0 | |||||||||
| Options exercisable at end of period | 1,741,150 | 0.10 | 0 | |||||||||
The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the fair market value of the Company’s common shares on September 30, 2017 and the exercise price, multiplied by the number of in-the-money stock options on those dates) that would have been received by the stock option holders had all stock option holders exercised their stock options on those dates.
The stock options outstanding as of September 30, 2017 have been separated into exercise prices, as follows:
| Exercise Price ($) | Stock options outstanding | Weighted average remaining contractual life - years | Stock options exercisable | |||||||||||
| 0.2 | 1,055,000 | 8.50 | 998,750 | |||||||||||
| (*) | 1,144,064 | 8.75 | 742,400 | |||||||||||
| 2,199,064 | 8.75 | 1,741,150 | ||||||||||||
(*) Less than $0.01.
Compensation expense recorded by the Company in respect of its stock-based employee compensation awards in accordance with ASC 718-10 for the three and nine month periods ended September 30, 2017, were $13,845 and $72,495, respectively (three and nine month periods ended September 30, 2016 – 371,515 and $2,766,823, respectively).
Note 3. Convertible Notes
Effective August 7, 2017, the Company entered into the settlement agreement with Alpha Anstalt Capital and Chi Squared Capital Inc. as a result of the fact that Alpha and Chi Squared had taken the position that certain defaults may have occurred as a result of actions and/or inactions by the Company with respect to the Company’s obligations under convertible notes (the “Notes”) issued during 2016, which the Company did not deem to be defaults (the “Settlement Agreement”).
Pursuant to the Settlement Agreement, the Notes, which had originally provided for a maturity date of June 19, 2017 and were in the original principal amounts of $400,000 and $40,000, respectively, were extended until June 19, 2019, in consideration for which the Company agreed to an increase in the principal amounts to $551,600 and $55,160, respectively, both of which retain the adjusted conversion price of $0.14, calculated in accordance with the terms of the original Notes. Such conversion price is subject adjustments in the event of future financing at a price of less than $0.14 per share. As a further part of the settlement, the Company agreed to issue Alpha and Chi Squared a total of 528.82 newly authorized shares of Series A Convertible Preferred Stock having a stated value and liquidation preference of $1,000 per share, and are convertible into a total of 3,778,647 shares based upon a conversion price of $0.14 per share, subject to adjustment in the event of a future financing such that the amount of ordinary shares to be issued pursuant to conversion of Series A Convertible Preferred Stock will represent the value of $1,000, per 1 Series A Convertible Preferred Stock, based on a conversion price which is identical to the ordinary share price at which securities are offered in such future financing. The Series A Convertible Preferred Stock shall be entitled to receive dividends on the same basis as Ordinary Shares and shall have no voting rights.
As part of the Settlement Agreement, the Company extended an option, granted in July 2016 to Alpha and Chi Squared (“Option”) to purchase Notes for an aggregate of up to $385,000 (up to $350,000 for Alpha Capital Anstalt and up to $35,000 for Chi Squared Capital Inc.) (“Option Notes”) and Warrants (“Option Warrants”) substantially identical to the Notes and Warrants issued pursuant to Settlement Agreement. The Option is exercisable through to July 15, 2018.
The settlement was accounted for as extinguishment of the pre-settlement notes and re issuance of the Notes and Series A Convertible Preferred Stock. As a result of the Settlement Agreement, the Company recorded a charge to general and administrative expenses in the Statement of Operation Losses of $440,684 representing the penalties and liquidation damages portion of the above-mentioned provision, and $219,276 was charged to finance expenses in the Statement of Operating Losses. The Series A Convertible Preferred Stock were recorded in shareholders’ equity at their fair value at the effective date of the settlement. As the Company concluded the conversion feature embedded in the amended notes is not a beneficial conversion feature pursuant to the provisions of ASC 470-20 (“Debt with Conversion and Other Options”), the post amendment carrying amount of the convertible notes, which was based on the fair value of the convertible notes at the effective date of the settlement, was recorded in liabilities in its entirely.
Other the aforementioned notes, all notes with a total principle amount of $195,000 fell due during the nine months ended September 30, 2017. The Company is currently in discussions to extend these notes2022, and believe that these discussions will be successful. There are no contractual penalties in relation to the notes that fell due other than the accumulation of their pre-default contractual interest.
Note 4. Derivative Liabilities.
The Company accounts for options to purchase convertible notes and warrants (refer to Note 3.) as derivative liabilities that are measured at their far value at each cut-off date, in accordance with ASC 815 (“Derivatives and Hedging”).
The Company uses directly observable inputs as well as significant unobservable inputs in the valuation of these derivative liabilities (level 3 measurements). The inputs used in the valuation are risk free interest rate, expected volatility, expect option term, expected dividend yield and Company specific discount rate.
The fair value of the derivative liabilities at September 30 2017, as well prior to and following the effective date of the aforementioned settlement, was immaterial. The fair value of the derivative liabilities as of December 31, 2016 was $336,272. Finance expense from revaluation of the derivative liabilities included in the Company's statement of operations was $336,272 for the year ended December 31 2016 and finance income was $336,272 for the nine month period ended September 30 2017.2021, respectively.
VIEWBIX INC.
Note 5. Related Party Transactions.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
There were no transactionsU.S. dollars in thousands (except share data)
NOTE 5: LEASES
On February 25, 2021, Gix Media entered into a lease agreement for a new corporate office of 479 square meters in Ramat Gan, Israel, at a monthly rent fee of $10. The lease period is for 36 months (the “initial lease period”) with related parties duringan option by the nine-month period ended September 30, 2017 and thereCompany to extend for two additional terms of 24 months each. In accordance with the lease agreement, the Company made leasehold improvements in exchange for a rent fee discount of $67 which will be spread over the initial lease period.
The Company includes renewal options that it is $43,680 outstandingreasonably certain to related partyexercise in respect of costs paid on behalfthe measurement of the Companylease liabilities.
Leases recorded on the balance sheet consist of the following:
SCHEDULE OF LEASE
As of September 30 | As of December 31 | |||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Right-of-use assets | $ | 505 | $ | 569 | ||||
| Liabilities | ||||||||
| Operating lease – current | $ | 93 | $ | 91 | ||||
| Operating lease – non-current | $ | 433 | $ | 491 | ||||
| Total lease liabilities | $ | 526 | $ | 582 | ||||
Weighted-average remaining lease term and discount rate were as follows:
SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERMS AND DISCOUNT RATES
| As of September 30, 2022 | ||||
| Operating leases weighted average remaining lease term (in years) | 5.42 | |||
| Operating leases weighted average discount rate | 3.10 | % | ||
Maturities of operating lease liabilities as of September 30, 2017.2022 and December 31, 2021, are as follows:
SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES
As of September 30 | As of December 31 | |||||||
| 2022 | 2021 | |||||||
| 2022 | $ | 22 | $ | 99 | ||||
| 2023 | $ | 88 | $ | 100 | ||||
| 2024 | $ | 88 | $ | 100 | ||||
| 2025 | $ | 88 | $ | 100 | ||||
| Thereafter | $ | 251 | $ | 285 | ||||
| Total lease payments | 537 | 684 | ||||||
| Less: imputed interest | (11 | ) | (102 | ) | ||||
| Present value of lease liabilities | 526 | 582 | ||||||
DuringOperating lease expenses amounted to $77 and $60 for the nine months ended September 30, 2016,2022, and September 30, 2021, respectively.
| -22- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 6: GOODWILL AND INTANGIBLE ASSETS
SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS
| (*) | ||||||||||||||||||||
| Internal Software (*) | Customer Relations | Technology | Goodwill | Total | ||||||||||||||||
| Cost: | ||||||||||||||||||||
| Balance as of January 1, 2022 | 449 | 10,720 | 4,790 | 12,483 | 28,442 | |||||||||||||||
| Adjustments to ultimate parent company earning values (see note 1.c) | - | 2,356 | 6,958 | 5,132 | 14,446 | |||||||||||||||
| Additions | 14 | - | - | - | 14 | |||||||||||||||
| Acquisitions | ||||||||||||||||||||
| Balance as of September 30, 2022 | 463 | 13,076 | 11,748 | 17,615 | 42,902 | |||||||||||||||
| Accumulated amortization: | ||||||||||||||||||||
| Balance as of January 1, 2022 | - | 4,261 | 3,284 | - | 7,545 | |||||||||||||||
| Amortization recognized during the period | 85 | 667 | 1,228 | - | 1,980 | |||||||||||||||
| Balance as of September 30, 2022 | 85 | 4,928 | 4,512 | - | 9,525 | |||||||||||||||
| Amortized cost: | ||||||||||||||||||||
| As of September 30, 2022 | 378 | 8,148 | 7,236 | 17,615 | 33,377 | |||||||||||||||
| Internal Software (*) | Customer Relations | Technology | Goodwill | Total | ||||||||||||||||
| Cost: | ||||||||||||||||||||
| Balance As of January 1, 2021 | 180 | 6,080 | 3,117 | 2,902 | 12,279 | |||||||||||||||
| Cost: beginning balance | 180 | 6,080 | 3,117 | 2,902 | 12,279 | |||||||||||||||
| Acquisition of Cortex (see note 7) | - | 4,640 | 1,673 | 9,581 | 15,894 | |||||||||||||||
| Additions | 269 | - | - | - | 269 | |||||||||||||||
| Balance as of December 31, 2021 | 449 | 10,720 | 4,790 | 12,483 | 28,442 | |||||||||||||||
| Cost: ending balance | 449 | 10,720 | 4,790 | 12,483 | 28,442 | |||||||||||||||
| Accumulated amortization: | ||||||||||||||||||||
| Balance as of January 1, 2021 | - | 3,274 | 2,424 | - | 5,698 | |||||||||||||||
| Accumulated amortization: beginning balance | - | 3,274 | 2,424 | - | 5,698 | |||||||||||||||
| Amortization recognized during the year | - | 987 | 860 | - | 1,847 | |||||||||||||||
| Balance as of December 31, 2021 | - | 4,261 | 3,284 | - | 7,545 | |||||||||||||||
| Accumulated amortization: ending balance | - | 4,261 | 3,284 | - | 7,545 | |||||||||||||||
| Amortized cost: | ||||||||||||||||||||
| As of December 31, 2021 | 449 | 6,459 | 1,506 | 12,483 | 20,897 | |||||||||||||||
| Amortized cost: | 449 | 6,459 | 1,506 | 12,483 | 20,897 | |||||||||||||||
(*) During 2020, Gix Media engaged with a subcontractor for the development of an internal software (the “Software”). Gix Media capitalized its developments costs. Total expenses capitalized as of September 30, 2022, and December 31, 2021, were $463 and $449, respectively. Since March 1, 2022, the Software is available for use. Accordingly, Gix Media recognized amortization expenses over the estimated useful life of the Software determined to be three years. For the period from March 1, 2022, until September 30, 2022, Gix Media recorded amortization expenses of $85. The Company estimates the useful life of the software to be amortized over 36 months. |
| -23- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 7: BUSINESS COMBINATION
Cortex Acquisition
On October 13, 2021, Gix Media acquired 70% (on a fully diluted basis) of the Company issued 1,195,000 shares of Cortex (“Cortex Transaction”), a private company operating in the field of online media and advertising. In consideration for Cortex Transaction, Gix Media paid NIS 35 million in cash (approximately $11 million), out of which an amount of $0.5 million was deposited in trust for a period of 12 months from the closing date.
The Cortex Transaction also included the following main terms:
| ● | Gix Media will acquire 30% of Cortex’s shares in three equal stages, (at the beginning of 2023, at the beginning of 2024 and at the beginning of 2025) (the “Remaining Balance Shares”), so that following the completion of the acquisition of all of the Remaining Balance Shares, Gix Media will hold 100% of Cortex’s share capital on a fully diluted basis. | |
| ● | The obligation (and right) to acquire the Remaining Balance Shares will expire in the event of an initial public offering of Cortex’s shares or in the event of a 50% or more decrease in Cortex’s annual net income, for a period of 12 consecutive months, compared to the net income during the period of 12 months ended July 31, 2021. As of the date of filling of these financial statements, this right and obligation has not expired. | |
| ● | If Gix Media does not fulfill its obligation to acquire the Remaining Balance Shares, within 90 days from the Designated Acquisition Date as stated above, the selling shareholders of Cortex (the original shareholders of Cortex) will be released from their obligation not to sell or transfer their holdings in Cortex to a third party, in relation to the same stage of the balance of the shares not acquired as aforesaid. If Gix Media does not fulfilled its obligation to acquire the Remaining Balance Shares in a certain stage, its right to acquire the Remaining Balance Shares in the subsequent stage, will be conditioned upon the acquisition of the Remaining Balance Shares not purchased by it in the previous stage as well, provided that the Remaining Balance Shares were not transferred or pledged by the selling shareholders of Cortex to a third party. |
The Cortex Transaction was financed by Gix Media’s existing cash balances and substantially by debt through a bank financing in the aggregate amount of $9.5 million, that consists of a line of credit of up to three acting directors, for services valued at$3.5 million and a total valuelong-term loan of $1,194,403, arrived at using the stock price on date of grant of $1.00 per Nasdaq.com.$6 million (see note 10).
| -24- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 6. CommitmentsU.S. dollars in thousands (except share data)
NOTE 7: BUSINESS COMBINATION (Cont.)
Cortex Acquisition (Cont.)
Fair Value of Cortex’s Identifiable Assets and Contingencies.Liabilities:
SCHEDULE OF BUSINESS COMBINATION OF ASSETS AND LIABILITIES
| Cash and cash equivalents | 775 | |||
| Restricted deposits | 29 | |||
| Trade receivables | 10,662 | |||
| Other accounts receivables | 346 | |||
| Property and Equipment, net | 9 | |||
| Goodwill arising from the acquisition | 9,581 | |||
| Intangible assets | 6,134 | |||
| Total assets | 27,716 | |||
| Accounts payables | 8,906 | |||
| Short-term loan | 1,500 | |||
| Accrued expenses and other current liabilities | 854 | |||
| Deferred taxes and taxes payable | 758 | |||
| Non-Controlling Interests | 4,709 | |||
| Total liabilities | 16,727 | |||
| Total acquisition cost | 10,989 |
The Company received grants to fund research and development projects from the State of Israel according to guidelines and procedures of the Innovation Authority of the Ministry of Industry and Trade. According to the agreement, the Company is obligated to pay royalties on the sale of products developed with the participation of the Chief Scientist. The royalty rate is 3.5% of sales and the total royalties will not exceed
Gix Media recorded acquisition costs in the amount of $197 with respect to Cortex Transaction.
Net Cash Flow from the grants received.Cortex Transaction:
| Consideration paid in cash | 10,989 | |||
| Less cash and cash equivalents and restricted deposits received from acquisition of Cortex | (804 | ) | ||
| Total net cash paid | 10,185 |
| -25- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 8: ACCOUNTS PAYABLE
SCHEDULE OF ACCOUNTS PAYABLE
As of September 30 | As of December 31 | |||||||
| 2022 | 2021 | |||||||
| Trade payables | $ | 11,665 | $ | 10,491 | ||||
| Accrued expenses | $ | 4,479 | $ | 6,185 | ||||
| Accounts payable | 16,144 | 16,676 | ||||||
NOTE 9:OTHER PAYABLES
SCHEDULE OF OTHER ACCOUNTS PAYABLE
As of September 30 | As of December 31 | |||||||
| 2022 | 2021 | |||||||
| Dividend declared | $ | 1,000 | $ | - | ||||
| Government authorities | $ | 155 | $ | 615 | ||||
| Employees and payroll accruals | $ | 567 | $ | 655 | ||||
| Other accounts payable | $ | 140 | $ | 116 | ||||
| Accounts payable other | 1,862 | 1,386 | ||||||
NOTE 10: LOANS
Bank Financing:
On the the closing date of the Cortex Transaction, Gix Media entered into a financing agreement with Bank Leumi Le Israel Ltd (“Leumi”), an Israeli bank, for the provision of a line of credit in the total amount of up to $3.5 million and a long-term loan totaling $6 million, which Gix Media used to finance the Cortex Transaction (see note 9) (the “Financing Agreement”).
The Financing Agreement included the following main terms:
| 1) | A loan of $6 million to be provided to Gix Media for a period of 48 months at an annual interest rate of LIBOR + 4.12%. | |
| 2) | A renewable monthly line of credit, of up to $3.5 million to be provided to Gix Media, which will be available for utilization for a period of two years and will be determined on a monthly basis, at 80% of Gix Media’s accounts receivable balance (“Line of Credit”). The amounts that will be withdrawn from the Line of Credit will bear annual interest of LIBOR + 3.2%. | |
| 3) | Gix Media undertook to meet financial covenants over the life of the loans as follows: (1) the ratio of debt to EBITDA, based on the Gix Media’s consolidated financial statements in all 4 consecutive quarters, will not exceed 2.4 in the first two years and will not exceed 1.75 in the following two years. As of September 30, 2022, and December 31, 2021, Gix Media is in compliance with the financial covenants in connection with the Financing Agreement. | |
| 4) | As part of the Financing Agreement, Gix Media and the Company provided several liens in favor of Leumi (see Note 12). |
| -26- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 10: LOANS (Cont.)
On April 7, 2022, Cortex and Leumi entered into an addendum to an existing loan agreement between the parties, dated August 15, 2021. As part of the addendum to the loan agreement, Leumi provided Cortex with a monthly renewable credit line (the “Additional Credit Line”) in the amount of up to $1,000, which is an addition to the existing credit line of $1,500. The aggregate amount of the credit lines is $2,500 (the “Total Credit Line”). The Total Credit Line was available for utilization by Cortex until September 24, 2022. The Total Credit Line was determined every month at the level of 70% of Cortex’s customers’ balance. The amounts that were drawn from the Additional Credit Line bear an annual interest of SOFR + 3.52%(Overnight Financing Rate Secured, guaranteed daily interest as determined in accordance with the Federal Bank in New York). The Additional Credit Line was required for the purpose of increasing the traffic-acquisition and related costs and as part of the continuation growth trend in Cortex’s business activity. As of September 30, 2017,2022, the Additional Credit Line was not renewed.
On July 25, 2022, Gix Media and December 31, 2016, total grants received amounted approximately $222 thousands.
The obligation to pay royalties is contingent upon the successful outcome of the Company’s research and development projects and the attainment of sales. The Company has no obligation to pay royalties, if sales are not generated, and if the research and development project fails.
In April 2017, a lawsuit was filed with the Tel Aviv court by Emerald’s former CEO and founder, claiming certain damagesLeumi entered into an addendum to the total amount of $100,000, under the assertion of wrongful dismissal by the Company. The Company believes these claims to be unsubstantiated and wholly without merit and intends to defend itself against these claims. At this early stage of the proceeding and based on the limited information that is currently available, the Company’s legal advisors are unable to estimate the outcome of the claim.
In December 2017, a liquidation request was filed with the Tel Aviv District Court by a group of former Company’s employees (“Applicants”), under the assertion of delay of pay and insolvency. On December 20, 2017, a hearing discussion took placeFinancing Agreement, according to which, Leumi will provide Gix Media with a loan of $1,500, to be withdrawn at the court decision thatdiscretion of Gix Media no later than January 31, 2023 (the “Additional Loan”).
The Additional Loan will bear an annual interest of SOFR + 5.25% to be repaid in 42 equal monthly payments starting from the Company shall settle its pension debtsdate of the Additional Loan’s receipt. The Additional Loan will be used to purchase an additional 10% of Cortex’s shares in accordance with Cortex Transaction.
As of the date of issuance of these financial statements, no amounts under the Additional Loan were withdrawn.
Composition of long-term loans, short-term loans and line of credit of the Group:
The following is the composition of the balance of the Group’s loans according to their nominal value:
SCHEDULE OF COMPOSITION OF THE BALANCE OF THE GROUP’S LOANS
| As of | ||||||||||||
| Interest rate (*) | September 30 2022 | December 31 2021 | ||||||||||
| Short-term bank loan – Gix Media | LIBOR + 3.20% | 3,500 | 3,500 | |||||||||
| Short-term bank loan – Cortex | SOFR + 3.52% | 1,500 | 1,500 | |||||||||
| Long-term bank loan, including current maturity – Gix Media | LIBOR + 4.12% | 4,725 | 5,770 | |||||||||
| Bank Loan | 9,725 | 10,770 | ||||||||||
| (*) | The LIBOR interest rate will continue to be published until June 2023 and then will be replaced by the Secured Overnight Financing Rate (“SOFR”). |
Maturities of the Group’s bank loans as of September 30, 2022, are as follows:
SCHEDULE OF MATURITIES OF DEBT
| 2022 | 6,500 | (*) | ||
| 2023 | 1,500 | |||
| 2024 | 1,500 | |||
| 2025 | 225 | |||
| Total | 9,725 |
| (*) | Includes a sum of $5,000 which is a renewable monthly credit line. |
| -27- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 11: INCOME TAXES
A. Tax rates applicable to the Applicants within 21 days and settle its other debtsincome of the Company:
Viewbix Inc. is taxed according to them in 60 days, otherwise a winding-up order could be given. Based on the collaboration of both parties and the fact that the Company is in negotiation with third-parties for the infusion of equity capital and has started negotiating the sale of certain assets, the Company’s legal advisors believe that the liquidation claim will be dismissed by the court. The amounts being claimed by the Applicants are less than $96,000 and are included in current liabilities.
Note 7. Income Taxes.
The Company is subject to income taxes under the Israeli and U.S. tax laws:laws.
CorporateOn December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which among other provisions, reduced the U.S. corporate tax ratesrate from 35% to 21%, effective January 1, 2018.
The CompanyViewbix Israel is subjecttaxed according to Israeli tax laws. The Israeli corporate tax rate is 23% in the years 2022, 2021 and onwards.
Gix Media and Cortex are recognized as a “Preferred-Technology Enterprise” in accordance with Section 51 of 25% in 2016, 24% in 2017the Encouragement of Capital Investments Law, 1959 and 23% from 2018. The Company is subject toare taxed at a blended U.S.reduced corporate tax rate (federal as well as state corporate tax) of 35%12%.
B. Tax assessments:
As of September 30, 2022, Gix Media has a final tax assessment for tax years prior to and including the tax year ended December 31, 2016,2014.
Cortex has a final tax assessment for tax years prior to and including the tax year ended December 31, 2018.
Viewbix Israel has a final tax assessment for tax years prior to and including the tax year ended December 31, 2015.
During 2022, the Israeli tax authority commenced a tax assessment of Gix Media for the tax years 2017 to 2020. As of the date of issuance of these financial statements, tax assessment have not been completed.
| -28- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 11: TAXES ON INCOME (Cont.)
C. Deferred taxes are comprised of the following components:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Deferred taxes are comprised of the following components:
SCHEDULE OF DEFERRED INCOME TAXES
| As of September 30 | As of December 31 | |||||||
| 2022 | 2021 | |||||||
| Deferred tax assets | ||||||||
| Deferred research and development expenses | $ | 34 | $ | 38 | ||||
| Employee compensation and benefits | $ | 12 | $ | 19 | ||||
| Operating loss carryforward | $ | 7,672 | $ | 7,479 | ||||
| Operating lease right of use asset | $ | 61 | 68 | |||||
| Accrued severance pay | $ | 12 | $ | 13 | ||||
| Total deferred tax assets | $ | 7,791 | $ | 7,617 | ||||
| Deferred tax liabilities: | ||||||||
| Differences between tax basis and carrying values of loans | $ | - | $ | 184 | ||||
| Operating lease right of use liability | $ | 63 | 70 | |||||
| Intangible assets associated with business combinations | $ | 1,853 | $ | 1,026 | ||||
| Total deferred tax liabilities | $ | 1,916 | 1,280 | |||||
| Net deferred tax assets before valuation allowance | $ | 5,875 | $ | 6,337 | ||||
| Valuation allowance | (7,666 | ) | (7,230 | ) | ||||
| Net deferred tax liabilities | $ | 1,791 | $ | 893 | ||||
As of September 30, 2022, the Company generated nethas recorded a valuation allowance of $7,666 in respect of the deferred tax assets resulting primary from tax loss carryforward of Viewbix Inc., as management currently believes these deferred tax assets will not be released in the foreseeable future.
| -29- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 11:TAXES ON INCOME (Cont.)
Income tax expenses are comprised as follows:
SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFITS)
| 2022 | 2021 | |||||||
For the nine months ended September 30 | ||||||||
| 2022 | 2021 | |||||||
| Current tax expenses | $ | 393 | $ | 78 | ||||
| Tax benefit in respect of prior years | $ | (102 | ) | $ | (54 | ) | ||
| Deferred tax income | $ | (227 | ) | $ | (65 | ) | ||
| Total | $ | 63 | $ | (41 | ) | |||
| 2022 | 2021 | |||||||
For the three months ended September 30 | ||||||||
| 2022 | 2021 | |||||||
| Current tax expenses | $ | 130 | $ | (23 | ) | |||
| Taxes expenses (benefit) in respect of previous years | $ | 21 | $ | (18 | ) | |||
| Deferred tax income | $ | (96 | ) | $ | (40 | ) | ||
| Total Income tax expenses | $ | 55 | $ | (81 | ) | |||
D.Reconciliation of the theoretical tax expenses to the actual tax expenses:
A reconciliation between the theoretical tax expense, assuming all income is taxed at the statutory tax rate applicable to income of the Company, and the actual tax expense as reported in the statement of operations is as follows:
SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION
| 2022 | 2021 | |||||||
| For the nine months ended September 30 | ||||||||
| 2022 | 2021 | |||||||
| Income before income taxes as reported in the consolidated statements of operations | $ | 33 | $ | 44 | ||||
| Statutory tax rate in USA | 21 | % | 21 | % | ||||
| Theoretical tax expense | $ | 7 | $ | 9 | ||||
| Increase (decrease) in tax expenses resulting from: | ||||||||
| Lower tax rates for preferred technology enterprises | (322 | ) | (29 | ) | ||||
| Non-deductible expenses | 5 | 1 | ||||||
| Tax benefits in respect of prior years | (102 | ) | (54 | ) | ||||
| Change in valuation allowance | 436 | 58 | ||||||
| Others | 39 | (26 | ) | |||||
| Taxes on income | $ | 63 | $ | (41 | ) | |||
| -30- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 11:TAXES ON INCOME (Cont.)
E. Available carryforward tax losses:
As of September 30, 2022 Viewbix Israel incurred operating losses in Israel of approximately $2,972,501,$15,015 which may be carried forward and offset against taxable income in the future for an indefinite period.
As of December 31, 2016,June 30, 2022 the Company generated net operating losses in the U.S. of approximately $15,746,103. $19,000. Net operating losses in the United StatesU.S. are available through 2035.2035. Utilization of U.S. net operating losses may be subject to substantial annual limitation due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.
F. Loss from continuing operations, before taxes on income, consists of the following:
SCHEDULE OF LOSS (INCOME) FROM CONTINUING OPERATIONS, BEFORE TAXES ON INCOME
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
For the nine months ended September 30 | For the three months ended September 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| USA | $ | 385 | $ | 69 | $ | 190 | $ | 27 | ||||||||
| Israel | 574 | 185 | 432 | 71 | ||||||||||||
| Total loss before taxes on income | $ | 959 | $ | 254 | $ | 622 | $ | 98 | ||||||||
NOTE 12:COMMITMENTS AND CONTINGENCIES
Liens:
As of September 30, 2022, the Company has provided several liens under Gix Media’s Financing Agreement with Leumi in connection with the Cortex Transaction, as follows: (1) a guarantee to Bank Leumi of all of Gix Media’s obligations and undertakings to Bank Leumi unlimited in amount; (2) a subordination letter signed by the company to Leumi Bank; (3) A first ranking all asset charge over all of the assets of the Company; and (4) a Deposit Account Control Agreement over the Company’s bank accounts.
Gix Media has provided several liens under the Financing Agreement with Leumi in connection with the acquisition of Cortex Transaction, as follows: (1) a floating lien on Gix Media’s assets; (2) a lien on Gix Media’s bank account in Leumi; (3) a lien on Gix Media’s rights under the Cortex Transaction; (4) a fixed lien on Gix Media’s intellectual property; and (5) a lien on Gix Media’s full holdings in Cortex.
Gix Media restricted deposits in the amount of $195are used as a security in respect of credit cards, bank guaranties, office lease agreement and hedge transactions on the USD exchange rate.
Cortex has a restricted deposit in the amount of $27 which is used as a security in respect of its leased offices.
| -31- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 13:SHAREHOLDERS’ EQUITY
A.Ordinary Shares:
Ordinary shares confer the right to: (i) participate in the general meetings, to one vote per share for any purpose, to an equal part, on share basis, (ii) in distribution of dividends and (iii) to equally participate, on share basis, in distribution of excess of assets and funds from the Company and will not confer other privileges unless stated hereunder or in the Companies Law otherwise. Some investors have standard anti-dilutive rights, registration rights, and information and representation rights.
B.Warrants:
The following table summarizes information of outstanding warrants as of September 30, 2022:
SUMMARY OF OUTSTANDING WARRANTS
| Warrants | Warrant Term | Exercise Price | Exercisable | |||||||||||||
| Class J Warrants | 130,333 | July 2029 | 13.44 | 130,333 | ||||||||||||
| Class K Warrants | 130,333 | July 2029 | 22.4 | 130,333 | ||||||||||||
All of the Company’s warrants meet the U.S. GAAP criteria for equity classification.
C.Reverse Stock Split:
On August 31, 2022, the Company filed the Amended COI with the Secretary of State of Delaware to effect a 28 to 1 reverse stock split of the Company’s outstanding shares of Common Stock. As a result of the reverse stock split, every 28 shares of the Company’s outstanding Common Stock prior to the effect of the amended COI was combined and reclassified into one share of the Company’s shares of Common Stock. The number of authorized share capital of the Company’s Common Stock and par value of the shares remained unchanged. All share and stock options information related to the Company, was adjusted to reflect the reverse stock split on a retroactive basis.
| -32- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 13: SHAREHOLDERS’ EQUITY (Cont.)
D.Share option plan:
After the completion of Gix Media’s acquisition by the Parent Company, the Parent Company granted options to Gix Media’s employees. These options entitle the employees to purchase ordinary shares of the Parent Company that its shares are traded on Tel-Aviv stock exchange.
SCHEDULE STOCK OPTION ACTIVITY
| As of September 30, 2022 | As of December 31, 2021 | |||||||||||||||
| Number of options | Weighted average exercise price | Number of options | Weighted average exercise price | |||||||||||||
| $ | $ | |||||||||||||||
| Options outstanding at beginning of the year | 737,915 | 1.61 | 1,120,000 | 1.56 | ||||||||||||
| Changes during the period: | ||||||||||||||||
| Granted | - | - | - | - | ||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Expired or forfeited | (577,915 | ) | 1.41 | (382,085 | ) | 1.61 | ||||||||||
| Outstanding at end of period | 160,000 | 1.41 | 737,915 | 1.61 | ||||||||||||
| Options exercisable at end of period | 157,086 | 1.41 | 504,585 | 1.61 | ||||||||||||
SCHEDULE OF OPTION OUTSTANDING AND EXERCISABLE
| Options outstanding | ||||||||||||||
| As of September 30, 2022 | ||||||||||||||
| Range of exercise price | Number of options | Weighted average exercise price | Weighted average remaining contractual life (years) | |||||||||||
| $ | $ | |||||||||||||
| 160,000 | ||||||||||||||
| Options Exercisable | ||||||||||||||
| As of September 30, 2022 | ||||||||||||||
| Range of exercise price | Number of options | Weighted average exercise price | Weighted average remaining contractual life (years) | |||||||||||
| $ | $ | |||||||||||||
| 157,086 | ||||||||||||||
| -33- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 13: SHAREHOLDERS’ EQUITY (Cont.)
SCHEDULE OF STOCK BASED COMPENSATION EXPENSES
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
For the nine months ended September 30 | For the three months ended September 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Research and development | 31 | (37 | ) | 29 | (3 | ) | ||||||||||
| Selling and marketing | 11 | (6 | ) | 3 | - | |||||||||||
| General and administrative | (2 | ) | 5 | - | - | |||||||||||
| Total | 40 | (38 | ) | 32 | (3 | ) | ||||||||||
E.Dividends:
During the nine months ended September 30,2022, Cortex distributed a dividend in the amount of $1,195 to the non-controlling interests.
On September 30, 2022, Gix Media declared a dividend in a total amount of $1,000. As of September 30, 2022, the dividend was not distributed (see note 9).
NOTE 14:ADDITIONAL INFORMATION REGARDING TO PROFIT AND LOSS ITEMS
Composition:
SCHEDULE OF INFORMATION REGARDING TO PROFIT AND LOSS
A. Research and development expenses:
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
For the nine months ended September 30 | For the three months ended September 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Salaries and related expenses | 1,633 | 1,124 | 519 | 327 | ||||||||||||
| Professional services and subcontractors | 906 | 297 | 282 | 96 | ||||||||||||
| Share-based compensation | $ | 31 | $ | (37 | ) | $ | 29 | $ | (3 | ) | ||||||
| Others | 387 | 146 | 157 | 51 | ||||||||||||
| Research and development expenses | $ | 2,957 | $ | 1,530 | $ | 987 | $ | 471 | ||||||||
| -34- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 14:ADDITIONAL INFORMATION REGARDING TO PROFIT AND LOSS ITEMS (Cont.)
B.Sales and marketing expenses:
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
For the nine months ended September 30 | For the three months ended September 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Salaries and related expenses | $ | 1,401 | $ | 482 | $ | 476 | $ | 179 | ||||||||
| Share-based compensation | 11 | (6 | ) | 3 | - | |||||||||||
| Advertising and marketing expenses | 363 | 17 | 124 | 7 | ||||||||||||
| Other | $ | 78 | $ | 91 | $ | 25 | $ | 29 | ||||||||
| Sales and marketing expenses: | $ | 1,853 | $ | 584 | $ | 628 | $ | 215 | ||||||||
C.General and administrative expenses:
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
For the nine months ended September 30 | For the three months ended September 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Salaries and related expenses | 691 | 545 | 243 | 183 | ||||||||||||
| Professional services | 394 | 279 | 140 | 104 | ||||||||||||
| Share-based compensation | (2 | ) | 5 | - | - | |||||||||||
| Other | $ | 243 | $ | 78 | $ | 67 | $ | 26 | ||||||||
| General and administrative | $ | 1,326 | $ | 907 | $ | 450 | $ | 313 | ||||||||
D.Financial expenses, net:
Financial income:
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
For the nine months ended September 30 | For the three months ended September 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Exchange rate differences | $ | 124 | $ | 45 | $ | 55 | $ | 103 | ||||||||
| Interest income from loan to related party | 110 | 108 | 39 | 40 | ||||||||||||
| Financial income | $ | 234 | $ | 153 | $ | 94 | $ | 143 | ||||||||
| -35- |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 14:ADDITIONAL INFORMATION REGARDING TO PROFIT AND LOSS ITEMS (Cont.)
Financial expenses:
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
For the nine months ended September 30 | For the three months ended September 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Bank interest and fees | $ | 115 | $ | 20 | $ | 58 | $ | 10 | ||||||||
| Interest expense from loans | 605 | 21 | 240 | 7 | ||||||||||||
| Exchange rate differences | 846 | 2 | 86 | - | ||||||||||||
| Other | 42 | 19 | 11 | 5 | ||||||||||||
| Financial expenses | $ | 1,608 | $ | 62 | $ | 395 | $ | 22 | ||||||||
NOTE 15:LOANS - PARENT COMPANY
A. Loan to Parent Company:
SCHEDULE OF LOAN TO PARENT COMPANY
As of September 30 | As of December 31 | |||||||
| 2022 | 2021 | |||||||
| Loan to Parent Company | $ | 7,096 | $ | 6,384 | ||||
The balance with the Parent Company represents a balance of an intercompany loan under a loan agreement signed between Gix Media and the Parent Company (the “Loan”) on March 22, 2020. The Loan bears interest at a rate to be determined from time to time in accordance with Section 3(j) of the Income Tax Ordinance, new version, and the Income Tax Regulations (Determination of Interest Rate for the purposes of Section 3(j), 1986) or according to a market interest rate decision as agreed between the parties.
During the nine months ended September 30, 2022, and 2021, Gix Media recognized interest income in respect of the Loan in the amount of $110 and $108 respectively.
B. Loan from Parent Company:
SCHEDULE OF LOAN TO PARENT COMPANY
As of September 30 | As of December 31 | |||||||
| 2022 | 2021 | |||||||
| Loan from Parent Company | $ | 2,527 | $ | 2,116 | ||||
The balance with the Parent Company represents certain expenses with respect to the Company’s ongoing operation (mainly salary expenses and other general and administrative expenses) which were financed by the Parent Company (the “Intercompany Balance”).
The Company is stillentered into an agreement with the Parent Company, according to which, effective as of December 31, 2021, the Intercompany Balance was modified into a loan, which may be increased from time to time, upon the written mutual consent between the Company and the Parent Company. The Parent Company loan bears interest at a rate equivalent to the minimal interest rate recognized and attributed by the Israel Tax Authority and will be repaid, together with the accrued interest, in its development stageone payment until December 31, 2022, unless extended upon mutual consent of the Company and has not yet generatedthe Parent Company.
As of September 30, 2022, no amounts were repaid by the Company to the Parent Company.
NOTE 16:MAJOR CUSTOMERS
The following table sets forth the customers that represent 10% or more of the Group’s total revenues therefore, it is more likely than not that sufficient taxable income will not be available forin each of the tax losses to be utilized in the future. Therefore, a valuation allowance was recorded to reduce the deferred tax assets to its recoverable amounts.periods presented below:
SCHEDULE OF TOTAL REVENUES
| As of September 30, 2017 | As of December 31, 2016 | |||||||
| Net loss carry-forward | $ | 19,561,247 | $ | 17,155,076 | ||||
| Total deferred tax assets | 6,477,250 | 5,730,945 | ||||||
| Valuation allowance | (6,477,250 | ) | (5,730,945 | ) | ||||
| Net deferred tax assets | $ | - | $ | - | ||||
For the nine months ended September 30 | For the three months ended September 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Customer A | 26 | % | 98 | % | 19 | % | 97 | % | ||||||||
| $ | 17,340 | $ | 23,337 | $ | 4,242 | $ | 7,863 | |||||||||
| Customer B | 18 | % | - | 20 | % | - | ||||||||||
| $ | 12,240 | $ | - | $ | 4,460 | $ | - | |||||||||
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 17:SEGMENT REPORTING
The Group operates in two different segments in such a way that each company in the Group operates as a separate business segment.
Search segment- the search segment develops a variety of technological software solutions, which perform automation, optimization and monetization of internet campaigns, for the purposes of acquiring and routing internet user traffic to its customers.
Digital content segment- the digital content segment is engaged in the creation and editing of content, in different languages, for different target audiences, for the purposes of generating revenues from leading advertising platforms, including Google, Facebook, Yahoo and Apple, by utilizing such content to obtain internet user traffic for its customers.
The segments’ results include items that directly serve and/or are used by the segment’s business activity and are directly allocated to the segment. As such they do not include depreciation and amortization expenses for intangible assets created at the time of the purchase of those companies, financing expenses created for loans taken for the purpose of purchasing those companies, and therefore these items are not allocated to the various segments.
Segments’s assets and liabilities are not reviewed by the CODM and therefore were not reflected in the segment reporting.
A.Segments revenues and operating results:
SCHEDULE OF SEGMENTS REVENUES AND OPERATING RESULTS
Search segment | Digital content segment | Adjustments (See below) | Nine months ended September 30, 2022 | |||||||||||||
| Revenues from external customers | 17,600 | 48,515 | - | 66,115 | ||||||||||||
| Depreciation and amortization | - | - | 2,051 | 2,051 | ||||||||||||
| Segment operating income | 316 | 3,586 | (2,495 | ) | 1,407 | |||||||||||
| Financial expenses, net | 99 | 1 | 1,274 | 1,374 | ||||||||||||
| Segment Income (loss), before income taxes | 217 | 3,585 | (3,769 | ) | 33 | |||||||||||
| Taxes on income | (91 | ) | 393 | (239 | ) | 63 | ||||||||||
| Segment net income (loss) | 308 | 3,192 | (3,530 | ) | (30 | ) | ||||||||||
| -37- |
VIEWBIX INC.
On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into lawNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in the United States. The Tax Act, among other provisions, introduces changesthousands (except share data)
NOTE 17:SEGMENT REPOTING (Cont.)
| Search segment | Digital content segment | Adjustments (See below) | Three months ended September 30, 2022 | |||||||||||||
| Revenues from external customers | 5,702 | 17,076 | - | 22,778 | ||||||||||||
| Depreciation and amortization | - | - | 736 | 736 | ||||||||||||
| Segment operating income | 147 | 1,265 | (985 | ) | 427 | |||||||||||
| Financial expenses, net | 32 | 27 | 242 | 301 | ||||||||||||
| Segment Income (loss), before income taxes | 115 | 1,238 | (1,227 | ) | 126 | |||||||||||
| Taxes on income | 14 | 132 | (91 | ) | 55 | |||||||||||
| Segment net income (loss) | 101 | 1,106 | (1,136 | ) | 71 | |||||||||||
B.Reconciliation between segments operating results to total operating results in the U.S corporate tax rate, business related exclusions and deductions and credits, and has internationally tax consequences for companies that operate international. Most of the changes introduced in the Tax Act are effective beginning on January 1, 2018.financial statements:
SCHEDULE OF RECONCILIATION BETWEEN SEGMENTS OPERATING RESULTS
| Nine months ended September 30 | Three months ended September 30 | |||||||
| 2022 | 2022 | |||||||
| Segments total operating results | $ | 3,902 | $ | 1,412 | ||||
| Depreciation and amortization expenses not attributable to segments (*) | $ | (2,051 | ) | $ | (736 | ) | ||
| General and administrative and other costs not attributable to the segments (**) | $ | (544 | ) | $ | (308 | ) | ||
| Finance expenses net, not attributable to the segments (***) | (1,274 | ) | 242 | |||||
| Income (expenses), before income taxes | $ | 33 | $ | 126 | ||||
| (*) | Mainly consist of technology and customer relations amortization costs from business combinations (see note 7). |
The effects of Tax Act provisions are still being identified and evaluated by Management.
| (**) | Mainly consist of salary and related expenses, professional consulting expenses and other expenses in connection with the business combinations and the Reorganization Transaction. |
| (***) | Mainly consist of financial expenses from the Financing Agreement of bank loans taken for business combinations (see note 10). |
Note 8 -RestatementNOTE 18: SUBSEQUENT EVENTS
Options to Purchase Convertible Notes and Warrants
During July 2016 the Company issued Alpha Capital and Chi Squared, an option to (the "Option") to purchase an aggregate of up to $385,000 (up to $350,000 for Alpha Capital and up to $35,000 for Chi Squared) of Notes ("Option Notes") and Warrants ("Option Warrants") substantially identical to the Notes and Warrants issued pursuant to Alpha and Chi in June 2016. As part of the Settlement Agreement concluded in August 2017 (see note 3), The Option was extended through to July 15, 2018. As of the date of the Settlement Agreement, and as of September 30, 2017, the fair value of the Option is nil.
The Option, as described above do not meet the scope exception of ASC 815 ("Derivatives and Hedging") and as such, the Option should have been measured at its fair value at the effective date of the grant date and at each subsequent reporting date.
The Company erroneously did not record the fair value of the Option at the issuance date and at December 31, 2016.
The fair value of the Option at issuance date and as of December 31, 2016 was $1,049,953 and $336,272, respectively.
The following tables present the restated financial statements line items:
Emerald Medical Applications Corp.
Balance Sheet
| As of December 31, 2016 | ||||||||||||
| As Reported | Adjustments | As Restated | ||||||||||
| Liabilities | ||||||||||||
| Derivative liability | - | 336,272 | 336,272 | |||||||||
| Accumulated deficit | 14,710,241 | 336,272 | 15,046, 513 | |||||||||
| Total shareholders’ deficit | (900,627 | ) | 336,272 | (1,236,899 | ) | |||||||
Emerald Medical Applications Corp.
Statement of Operations
| For the year ended December 31, 2016 | ||||||||||||
| As Reported | Adjustments | As Restated | ||||||||||
| Total finance income (expense) | (414,190 | ) | (336,272 | ) | (750,462 | ) | ||||||
| Net Loss | (5,808,925 | ) | (336,272 | ) | (6,145,197 | ) | ||||||
Down Round Feature Included in Convertible Notes and Warrants
The Company's convertible notes and warrants issued in 2016 to Alpha and Chi Squared and Firstfire Global Opportunities Fund, LLC. containIn October 2022, Cortex distributed a down round adjustment feature which, according to US Gaap, requires such derivatives to be classified in liabilities and to be measured at their fair value at each cut of date. Such derivative liabilities, with a fair value of $567 thousand as of December 31, 2016 were erroneously not includeddividend in the Company's December 31 2016 balance sheet.
The Company early adopted ASU 2017-11, Part I (“Accounting for Certain Financial Instruments with Down Round Features”), issued in July 2017, which makes certain changes in relation to classifying certain financial instruments as either liabilities or equity such that the aforementioned derivatives are no longer precluded from being recorded in equity. The Company adopted the standard retrospectively for all prior periods presented in these interim financial statements such that December 31 2016 comparison information included in these financial statements is identicalamount of $127 to the December 31 2016 financial information included in the Company's original 2016 annual 10-K filing.non-controlling interests.
The Company intends to file an amendment to the 2016 10-K reflecting the above restatement.
Note 9. Subsequent Events.
On December 19, 2017, the Company approved, subject to a future sale by the “Sellers,” (as defined below) to sell their convertible loans, loans, and warrant to a certain third-party investors and in connection therewith, to: (i) amend the exercise price of warrants granted to Alpha Capital Anstalt, Chi Squared Capital, Firstfire Global Opportunities Fund, LLC and GoldMed Ltd (the “Sellers”) to $0.01 and (ii) to amend the conversation price of convertible notes granted to Alpha Capital Anstalt, Chi Squared Capital, Firstfire Global Opportunities Fund, LLC. While the Company believes that these transactions will occur, at the date of this report, the closing has not occurred and there is no certainly that the closing will, in fact, take place. In connection with the foregoing, the Company’s Board of Directors is considering the advisability of establishing another wholly-owned Israeli subsidiary engaging in operations that should be more readily able to generate revenues and positive cash flow from operations than the Company’s existing subsidiary.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONSBack to Table of Contents
OverviewSpecial Note Regarding Forward-Looking Statements
The following plan of operation provides information which management believes is relevant to an assessmentmanagement’s discussion and understanding of our results of operations and financial condition. The discussionanalysis section should be read alongin conjunction with ourthe Company’s unaudited financial statements as of September 30, 2022 and 2021, and the related statements of statement operation, statement of changes in shareholders’ equity and statements of cash flows for the nine and three months then ended, and the related notes thereto. thereto contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”).
Forward-Looking Statements
This management discussion and analysis section includes a number ofcontains forward-looking statements, such as statements of the Company’s plans, objectives, expectations, and intentions. Any statements that reflect our current views with respect toare not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project andtense or conditional constructions “will,” “may,” “could,” “should,” etc., or similar expressions, or words which refer to future events.identify certain of these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are based on information we have when those statements are made or our predictions.management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
| ● | the short-term and long-term implications caused by our recent cost reduction efforts, including, but not limited to, our growing inability to secure and maintain customers on the basis of insufficient capital resources; |
| ● | sustained turnover of key management; |
| ● | our history of recurring losses and negative cash flows from operating activities, significant future commitments and the uncertainty regarding the adequacy of our liquidity to pursue our complete business objectives; |
| ● | our need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult to obtain and could dilute out shareholders’ ownership interests; |
| ● | the impact of the COVID-19 pandemic on our business plan and the global economy; |
| ● | our ability to adequately protect our intellectual property; |
| ● | our ability to successfully integrate the business of Gix MediaLtd. (“Gix Media”), our wholly owned subsidiary; |
| ● | Subsidiaries’ future performance; |
| ● | entry of new competitors and products and potential technological obsolescence of our products. |
PlanThe foregoing does not represent an exhaustive list of Operationsmatters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with which may cause our actual results to differ from those anticipated in our forward-looking statements. For a discussion of these and other risks that relate to our business and investing in our common stock, you should carefully review the risks and uncertainties described in this Quarterly Report on Form 10-Q, and those contained in section captioned “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2022 (the “Annual Report”). The Company’s actual results could differ materially from those contemplated in these forward-looking statements as a result of these factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.
We are Overview and background
Viewbix Inc. (f/k/a digital health startup company engagedVirtual Crypto Technologies, Inc., f/k/a Emerald Medical Applications Corp.) (the “Registrant” or the “Company”) and its subsidiaries (the “Group”) operate in the development, salefield of digital advertising in two main areas of activity: search and servicedigital content. The Group develops and markets a variety of imagingtechnological software solutions utilizing our proprietary DermaCompare software that we developed for useautomate, optimize and monetize online campaigns. The Group, through its subsidiary, Cortex Media Group Ltd. (“Cortex”), also creates, edits and markets content in derma imaging and analytics (our “DermaCompare” or “Product”). In our development of the DermaCompare technology, we utilized the knowledge learned from advanced military image processing and data analyticsvarious languages to improve the analysis of medical imagesdifferent target audiences for the benefitpurpose of patients andgenerating advertising revenue on the medical community. We believe that our proprietary DermaCompare software represents an advancement in skin cancer screening that should enable physicians to more readily identify and monitor changes in their patients’ skin characteristics.
DermaCompare is Emerald’s first application of its technology, which we believe represents an advance in the early detection of skin cancer. DermaCompare iscontent, based on automated image analytics software using advanced algorithms for alignment, anchoring, identifying and detecting changes in the shapes, colors and sizes of skin lesions, which could potentially become Melanoma. We apply our DermaCompare technology in image capture, correction and intelligent data extraction in the market for derma imaging products.
Our DermaCompare solution allows dermatologists and other medical care professionals, using a set of 25 total body photography (“TBP”), to capture sets of skin lesion images with, among other devices, digital cameras, camera-equipped smart phones or tablets. These images are then transmitted online and are remotely analyzed by professionals using our DermaCompare software.
Our DermaCompare imaging software has two main modules:
Our future plans also contemplate the use of wearable computing and imaging devicesworld’s leading advertising platforms, such as Google, glasses or other comparable devices.Facebook, Yahoo, Apple and more. The Group’s technological tools enable advertisers and website owners to earn more from their advertising campaigns and generate additional profits from their sites.
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Our sales
The Company was incorporated in the State of Delaware on August 16, 1985, under a predecessor name, The InFerGene Company (“InFerGene Company”). On August 25, 1995, a wholly owned subsidiary of InFerGene Company merged with Zaxis International, Inc., an Ohio corporation, which following such merger, the surviving entity, InFerGene Company, changed its name to Zaxis International, Inc (“Zaxis”).
On March 16, 2015, Zaxis and marketing plan,Emerald Medical Applications Ltd., a private limited liability company (“Emerald Israel”) executed a share exchange agreement, which has already commenced, isclosed on July 14, 2015, and Emerald Israel became the Company’s wholly-owned subsidiary. Accordingly, on September 14, 2015, the Company changed its name to sell licensesEmerald Medical Applications Corp. On May 2, 2018, the District Court of Lod, Israel issued a winding-up order for our DermaCompare imaging software to: NHSs, HMOs, health insurance companies, hospitalsEmerald Israel and medical clinics through distributers, health care channel partners or directly through independent salespersons and/or web purchaseappointed an Israeli attorney as special executor for Emerald Israel.
On January 17, 2018, the Company formed a new wholly-owned subsidiary under the laws of the State of Israel, Virtual Crypto Technologies Ltd. (“VCT Israel”). On February 22, 2018, the Company’s name was changed from Emerald Medical Applications Corp. to dermatologistsVirtual Crypto Technologies, Inc. to reflect its new operations and other physicians (GPs) that we expectbusiness focus. On January 27, 2020, VCT Israel was sold to purchase licenses based ona third party for NIS 50,000 ($14,459).
On February 7, 2019, the number of potential numbers of patients.
In furtherance of our business plan, which has resulted in us becoming an operating company, we haveCompany entered into a series of agreementsshare exchange agreement (the “Recapitalization Transaction”) with unaffiliated third parties for the distribution of its DermaCompare Technology, as follows:
1. On August 12, 2013, Emerald entered intoGix Internet Ltd., an exclusive distribution with Derma Italy Sri,company organized under the laws of the ItalyState of Israel (“Derma Italy”Gix” or “parent company”), pursuant to which, Derma Italy was granted exclusive distribution rightsGix assigned, transferred and delivered 99.83% of its holdings in Italy;
2. On December 1, 2013, Emerald entered intoViewbix Ltd., a distribution agreement with S. Bokhorst - Creatiekracht,company organized under the laws of the Netherlands, pursuant to which S. Bokhorst was granted exclusive distribution in the Netherlands;
3. On February 6, 2014, Emerald entered into a distribution agreement with Medical Edge Pty Ltd, organized under the laws of Australia (“Medical Edge”), pursuant to which Medical Edge was granted exclusive distribution rights in the markets of Australia, New Zealand and Oceania;
4. On January 14, 2015, Emerald entered into a Project Agreement with Realize S.A. and Ubitech, entities engaged in IT related to medical technology in Greece, and MEDISP and MPUoP, academic and research institutes in Greece (collectively, the “Greek Partners”). Emerald and the Greek Partners anticipate imminent grants from the Office of Chief Scientist of the State of Israel (“Viewbix Israel”), to the Company in exchange for shares of restricted common stock, par value $0.0001 per share (“Common Stock”) of the Company, which resulted in Viewbix Israel becoming a subsidiary of the Company. In connection with the Recapitalization Transaction, effective as of July 26, 2019, the Company’s name was changed from Virtual Crypto Technologies, Inc. to Viewbix Inc.
On September 19, 2022, the Company consummated the Reorganization Transaction (as further described below), which resulted in Gix Media Ltd. (“Gix Media”) becoming a wholly owned subsidiary of the Company. Following the closing of the Reorganization Transaction, the Company intends to incorporate Gix Media’s technology into its operations while aiming to expand its growth potential in the search and content monetization space. Gix Media’s business operations include both (i) the General Secretariatprovision of services to the world’s leading search engines through the development, marketing and distribution of free software to many Internet users, and (ii) editing and marketing of content in different languages to different target markets, for Researchthe purpose of monetizing advertisements on digital marketing and Technologyadvertising platforms.
Recent Developments
Appointments of Greece, respectively,Executive Officers and Director
On September 19, 2022, in connection with the proceedsReorganization Transaction, the Company’s board of which will be used for developmentdirectors appointed Mr. Eliyahu Yoresh, Mr. Amitay Weiss and Mr. Liron Carmel as directors of enhanced smartphone applications for diagnosisthe Company, as representatives of early stage Melanoma.Gix Media.
On June 28, 2022, Mr. Amihay Hadad, the Company’s current chief executive officer, tendered his resignation from his position as chief financial officer, effective June 28, 2022, and concurrent therewith, the Company’s board of directors appointed Mr. Shahar Marom to serve as the Company’s new chief financial officer, effective July 1, 2022.
On June 13, 2022, the Company’s board of directors appointed Mr. Yoram Baumann as a director of the Company and as chairman of the board of directors of the Company.
Reorganization Transaction with Gix Media Ltd.
On December 5, 2021, the Company entered into a certain Agreement and Plan of Merger (the “Reorganization Transaction”) with Gix Media, an Israeli company and the majority-owned subsidiary of Gix, the parent company and Vmedia Merger Sub Ltd., an Israeli company and wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which, following the Reorganization Transaction, and upon satisfaction of additional closing conditions, Merger Sub will merge with and into Gix Media, with Gix Media being the surviving entity and a wholly-owned subsidiary of the Company. Prior to the closing of the Reorganization Transaction, Gix Media was a majority-owned subsidiary of Gix, which held approximately 58% of the Common Stock of the Company, on a fully diluted basis.
On September 19, 2022, the Reorganization Transaction, was consummated (the “Closing”) and as a result, all outstanding ordinary shares of Gix Media, having no par value (the “Gix Media Shares”) were exchanged for shares of the Company’s Common Stock. Following the Reorganization Transaction, holders of the Gix Media Shares held 90% of the Company’s Common Stock on a fully diluted basis, with Gix holding 76.67% of the Common Stock on a fully diluted basis.
The following illustrates the corporate structure of the Company prior to and following the Reorganization Transaction.
Following the Reorganization Transaction, the board of directors of the Company consists of six (6) directors, comprised of the three (3) new directors appointed by Gix Media, Eliyahu Yoresh, Amitay Weiss and Liron Carmel, who joined the Company’s three currently serving directors, Yoram Baumann, Amihay Hadad and Alon Dayan.
In connection with the Closing, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware, effective as of August 31, 2022, pursuant to which the Company, among other things, effected a reverse stock split of its Common Stock at a ratio of 1-for-28. The foregoing description of the Amended and Restated Certificate of Incorporation does not purport to be completed and is qualified in its entirety by reference to the full text of the Amended and Restated Certificate of Incorporation, of which was filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 6, 2022 and is incorporated by reference herein.
Additionally, and in connection with the Closing, the Company adopted Amended and Restated Bylaws, a copy of which was filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K and is incorporated by reference herein.
Acquisition of Cortex Media Group Ltd.
On October 13, 2021, Gix Media acquired 70% (on a fully diluted basis) of the share capital of Cortex Media Group Ltd. (“Cortex” and the “Cortex Acquisition”, respectively), a private company operating in the field of online media and advertising. In consideration for the Cortex Acquisition, Gix Media paid NIS 35 million in cash (approximately $11 million), out of which an amount of $0.5 million was deposited in trust for a period of 12 months from the closing date. The Cortex Acquisition also includes the obligation (and right) of Gix Media to acquire 30% of Cortex’s share capital in three equal stages, each at the beginning of the years 2023, 2024 and 2025 (“Remaining Balance Shares”), such that following the completion of the acquisition of all the Remaining Balance Shares, Gix Media will hold 100% of Cortex’s share capital on a fully diluted basis.
In connection with the Cortex Acquisition, at the closing date, Gix Media entered into a financing agreement with Bank Leumi Le Israel Ltd (“Leumi”), for the provision of a line of credit in the total amount of up to $3.5 million and a long-term loan totaling $6 million, which Gix Media used to finance the Cortex Acquisition (the “Financing Agreement”).
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Results of Operations
Results of Operations During the Nine Months Ended September 30, 2022 as Compared to the Nine Months Ended September 30, 2021
DuringOur revenues were $66,115 thousand for the nine months ended September 30, 2017 and the year ended December 31, 2016, we raised $1,388,832 through the issuance of equity and debt and we may be expected to require up to an additional $1.5 million in capital during the next 12 months to fully implement our business plan and fund our operations.
Results of Operations during the three months ended September 30, 2017 as2022, compared to the three months ended September 30, 2016
We have not generated any revenues during the three months ended September 30, 2017 and 2016. During the three-month period ended September 30, 2017 we incurred a net loss of $57,654 as compared to a net loss of $1,300,215 for the three-month period ended September 30, 2016.
Our research and development expenses decreased to $9,779 for the three months ended September 30, 2017 as compared to $155,338$23,874 thousand during the same period in the prior year. The decrease was due to decreased research and development expenses of Emerald Israel as a result of depleted funding.
Our general and administrative expenses decreased to $134,829reason for the threeincrease in the nine months ended September 30, 20162022, is due to the Cortex Acquisition on October 13, 2021, therefore, the financial statements of the Company for the nine months ended September 30, 2022, include Cortex’s financial statements as compared to $577,937the same period in the prior year which does not include Cortex’s financial statements.
Our traffic-acquisition and related costs buy expenses were $56,400 thousand for the nine months ended September 30, 2022, as compared to $19,582 thousand during the same period in the prior year. The significant decrease was due to increased expenses relating toreason for the merger betweenincrease in the Company and Emerald Israel. as well as share based compensation that were incurred during the threenine months ended September 30, 2016.2022, is due to the inclusion of Cortex’s financial statements.
Interest income increased to $86,954Our research and development expenses were $2,957 thousand for the threenine months ended September 30, 20172022, and $1,530 for the nine months ended September 30, 2021. The reason for the increase in the nine months ended September 30, 2022, is due to the inclusion of Cortex’s financial statements.
Our selling and marketing expenses were $1,853 thousand for the nine months ended September 30, 2022, as compared income of to interest expense of $566,940$584 thousand during the same period in the prior year. The changereason for the increase in the current period is due to a recalculation of the penalties and liquidation damages calculated in the Settlement Agreement between the Company that Alpha and Chi Squared that have been charged to general and administrative expenses.
Results of Operations during the nine months ended September 30, 2017 as compared2022 is due to the nine months ended September 30, 2016inclusion of Cortex’s financial statements.
We have not generated any revenues during the nine months ended September 30, 2017Our general and 2016. During the nine-month period ended September 30, 2017 and 2016 we incurred $11,415,989 and $4,388,419, respectively, in net losses.
Our research and developmentadministrative expenses increased to $359,600were $1,326 thousand for the nine months ended September 30, 20172022, as compared to $450,688$907 thousand during the same period in the prior year. The decrease wasreason for the increase in the nine months ended September 30, 2022, is due to discontinued researchthe inclusion of the Cortex’s financial statements.
Our depreciation and development in the third quarter as a result of depletion of funds.
Our general and administrativeamortization expenses decreasedincreased to $817,435$2,051 thousand for the nine months ended September 30, 20172022, as compared to $3,346,673$1,289 thousand during the same period in the prior year. The significant decrease was due to increased expenses relating toreason for the merger betweenincrease in the three months ended September 30, 2022, is that the Company recorded depreciation and Emerald Israel. as well as share based compensation thatamortization expenses in connection with the Cortex Acquisition on October 13, 2021.
Our other expenses were incurred$121 thousand for the nine months ended September 30, 2022, compared to $26 thousand during the nine months ended September 30, 2016.2021. The reason for the increase during the nine months ended September 30, 2022, is an increase in the expenses in connection with the Reorganization Transaction.
Interest expense increased to $238,954Our net financial expenses were $1,374 thousand for the nine months ended September 30, 2017 as2022, compared income of to $591,058$91 thousand net financial income during the same period in the prior year. The reason for the increase during the nine months ended September 30, 2022 is mainly due to: (1) financial expenses in connection with the Financing Agreement as part of the Cortex Acquisition on October 13, 2021 and (2) the increase of the USD to NIS exchange rate in the current period ended September 30, 2022.
Our tax expenses were $63 thousand for the nine months ended September 30, 2022, as compared to $41 thousand income tax during the same period in the prior year. The reason for the increase during the nine months ended September 30, 2022 is due to the penalties and liquidation damages calculatedinclusion of Cortex’s financial statements.
Results of Operations During the Three Months Ended September 30, 2022 as Compared to the Three Months Ended September 30, 2021
Our revenues were $22,778 thousand for the three months ended September 30, 2022, compared to $8,079 thousand during the same period in the Settlement Agreement betweenprior year.
Our traffic-acquisition and related costs were $19,464 thousand for the Company that Alphathree months ended September 30, 2022, as compared to $6,738 thousand during the same period in the prior year. The reason for the increase in the three months ended September 30, 2022, is due to the inclusion of the Cortex’s financial statements.
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Our research and Chi Squared that have been chargeddevelopment expenses were $987 thousand for the three months ended September 30, 2022, as compared to $471 thousand during the same period in the prior year. The reason for the increase in the three months ended September 30, 2022 is due to the inclusion of Cortex’s financial statements.
Our selling and marketing expenses increase to $628 thousand for the three months ended September 30, 2022, as compared to $215 thousand during the same period in the prior year. The reason for the increase in the three months ended September 30, 2022 is due to the inclusion of Cortex’s financial statements.
Our general and administrative expenses.expenses increased to $450 thousand for the three months ended September 30, 2022, as compared to $313 thousand during the same period in the prior year. The reason for the increase in the three months ended September 30, 2022, is due to the inclusion of Cortex’s financial statements.
Our depreciation and amortization expenses increased to $736 thousand for the three months ended September 30, 2022, as compared to $427 thousand during the same period in the prior year. The reason for the increase in the three months ended September 30, 2022, is that the Company recorded depreciation and amortization expenses in connection with the Cortex Acquisition on October 13, 2021.
Our other expenses were $86 thousand for the three months ended September 30, 2022, compared to $26 thousand during the three months ended September 30, 2021. The reason for the increase during the three months ended September 30, 2022, is the increase in the expenses in connection with the Reorganization Transaction.
Our net financial expenses were $301 thousand for the three months ended September 30, 2022, compared to $121 thousand net financial income during the same period in the prior year. The reason for the increase during the three months ended September 30, 2022, is mainly due to financial expenses in connection with the Financing Agreement as part of the Cortex Acquisition on October 13, 2021, and the increase of the USD to NIS exchange rate in the three months ended September 30, 2022.
Our tax expenses were $55 thousand for the three months ended September 30, 2022, as compared to $81 income tax thousand during the same period in the prior year. The reason for the change in the three months ended September 30, 2022, is due to the inclusion of Cortex’s financial statements.
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Liquidity and Capital Resources
Our balance sheet as
As of September 30, 2017 reflects current assets of $58,894 consisting of cash of $3,429 and other receivables of $31,230. As of December 31, 2016,2022, we had current assets of $13,842$28,140 thousand consisting of $3,609 thousand in cash of $4,486, and cash equivalents, $223 thousand restricted deposits, $16,398 thousand in accounts receivable, $814 thousand in other receivables and $7,096 thousand in loan to parent company.
As of $9,356. September 30, 2022, we had non-current assets of $34,334 thousand consisting of $73 thousand in severance pay funds, $62 thousand in deferred taxes, $505 thousand in operating lease right-of-use assets, $317 thousand in property and equipment net, $15,762 thousand in intangible assets, net and $17,615 thousand in goodwill.
As of September 30, 2022, we had $27,126 thousand in current liabilities consisting of $16,144 thousand in accounts payable, $1,862 thousand in other payables, $6,500 thousand in short term loan and current maturities of long-term loan, $93 thousand in operating lease liabilities – short term and $2,527 thousand in loan from parent company.
As of September 30, 2022, we had $5,687 thousand in non-current liabilities consisting of $176 thousand in accrued severance pay, $3,225 thousand long-term loan, $433 thousand in operating lease liabilities - long term and $1,853 thousand in deferred taxes.
As of December 31, 2021, we had current assets of $29,245 thousand consisting of $5,208 thousand in cash and cash equivalents, $16,415 thousand in accounts receivable, $1,004 thousand in other receivables and a $6,384 thousand in loan to the parent company.
As of December 31, 2021, we had non-current assets of $22,016 thousand consisting of $83 thousand in severance pay funds, $133 thousand in deferred taxes, $569 thousand in operating lease right-of-use assets, $334 thousand in property and equipment net, $8,414 thousand in intangible assets, net and $12,483 thousand in goodwill.
As of December 31, 2021, we had $26,769 thousand in current liabilities consisting of $16,676 thousand in accounts payable, $1,386 thousand in other payables, $6,500 thousand in short term loan and current maturities of long-term loan, $91 thousand in operating lease liabilities – short term and $2,116 thousand loan from parent company.
As of December 31, 2021, we had $5,975 thousand in non-current liabilities consisting of $188 thousand in accrued severance pay, $4,270 thousand in long-term loan, $491 thousand in operating lease liabilities - long term and $1,026 thousand in deferred taxes.
We had fixed assets, neta positive working capital of accumulated depreciation of $24,178,$1,014 thousand and $2,476 thousand as of September 30, 20172022 and $31,803 as of December 31, 2016.2021, respectively.
As of September 30, 2017, we had total current liabilities of $887,509 consisting of $386,235 in accounts payable and accrued liabilities, $58,944 in accounts payable to related parties, $95,840 employees payable, $29.501 accrued interest payable and $316,989 in the short-term portion of convertible notes payable.
We had negative working capital of $852,850 as of September 30, 2017 compared to negative working capital $944,355 at December 31, 2016. Our total liabilities as of September 30, 2017 were $1,493,674 compared to $958,197 at December 31, 2016.
During the nine months ended September 30, 2017,2022, we had negativepositive cash flow from operationsoperating activities of $615,719,$2,175 thousand, which was mainly the result of a $30 thousand in net loss, of $1,752,216, depreciation expense of $11,063, interest and amortization of discount on convertible notes of $360,599, Settlement agreement with Alpha and Chi of $659,960, share based compensation of $72,495, $121,939 increase in accounts payable and accrued liabilities,$2,855 thousand from positive adjustments to operating activities, offset by $64,372 decrease$650 negative changes in amounts due from related party, $3,267 decrease in in accrued interestassets and $21,875 increase in other receivables.liabilities items.
During the nine months ended September 30, 2017,2021, we had positive cash flow from investingoperating activities of $8,430,$1,564 thousand, which was mainly the result of a decrease$88 thousand in restricted cash of $11,868net income, $1,174 thousand from positive adjustments to operating activities and the acquisition of fixed$302 thousand positive changes in assets valued in the amount of $3,438.and liabilities items.
During the periodthree months ended September 30, 2017,2022, we had positive cash flow from financingoperating activities of $606,232$1,577 thousand, which was mainly the result of $526,213 proceeds$71 thousand in net income, $733 thousand from issuancepositive adjustments to operating activities, and $773 thousands from positive changes in assets and liabilities items.
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During the three months ended September 30, 2021, we had positive cash flow from operating activities of equity$522 thousand, which was mainly the result of $91 thousand in net income, $450 thousand from positive adjustments to operating activities offset by $19 negative changes in assets and $80,000 proceeds from a private placement, for which stock has not yet been issued.liabilities items.
There are no limitations in the Company’s certificateAmended and Restated Certificate of incorporationIncorporation on the Company’s ability to borrow funds or raise funds through the issuance of restrictedshares of its common stock to effectaffect a business combination. The Company’s limited resources and lack
As of having cash-generating business operations may make it difficult to borrow funds or raise capital. The Company’s limitations to borrow funds or raise funds throughSeptember 30, 2022, the issuance of restricted capital stock required to effect or facilitate a business combination may have a material adverse effect on the Company’s financial condition and future prospects, including the ability to complete a business combination. To the extent that debt financing ultimately proves to be available, any borrowing will subject us to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest, including debt of an acquired business.
The Company has only limited capital. Additional financing is necessary forprovided several liens under Gix Media’s Financing Agreement with Leumi in connection with the Cortex Acquisition, as follows: (1) a guarantee to Bank Leumi of all of Gix Media’s obligations and undertakings to Bank Leumi, unlimited in amount; (2) a subordination letter on behalf of the Company to continue asLeumi Bank; (3) a going concern. Our independent auditors have unqualified audit opinion for the year ended December 31, 2016 with an explanatory paragraph on going concern.
In view of these matters, realization of a major portionfirst ranking asset charge over all of the assets of the Company; and (4) a Deposit Account Control Agreement over the Company’s bank accounts.
.
Gix Media has provided several liens under the Financing Agreement with Leumi in connection with the Cortex Transaction, as follows: (1) a floating lien on Gix Media’s assets; (2) a lien on Gix Media’s bank account in Leumi; (3) a lien on Gix Media’s rights under the Cortex Transaction; (4) a fixed lien on Gix Media’s intellectual property; and (5) a lien on all of Gix Media’s holdings in Cortex.
According to the Financing Agreement, Gix Media undertook to meet financial covenants over the life of the loans as follows: (1) the ratio of debt to EBITDA, based on the Gix Media’s consolidated financial statements in all 4 consecutive quarters, will not exceed 2.4 in the accompanying balance sheetfirst two years and will not exceed 1.75 in the following two years. As of September 30, 2022, Gix Media is dependent upon continued operations ofin compliance with the Company. Management believes that actions presently being taken to obtain additional equity financing will providefinancial covenants in connection with the opportunity to continue as a going concern.Financing Agreement.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKBack to Table of Contents
We have not entered into, and do not expect to enter into, financial instrumentsNot required for trading or hedging purposes.smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURESBack to Table of Contents
Evaluation of Disclosure Controls and Procedures
As of September 30, 2017,2022, the Company’s chief executive officer and chief financial officer conducted an evaluation (the “Evaluation”) regarding the effectiveness of the Company’s disclosure controls and procedures (asas defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and proceduresEvaluation, as required by Rules 13a-15 or 15d-15, ourthe Company’s chief executive officer and chief financial officer concluded that ourthe Company’s disclosure controls and procedures were ineffective as of the end of September 30, 2017 under2022, and pursuant to the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). because of certain material weaknesses.
Changes in Internal Control Over Financial Reporting
There
With the inclusion of the financial information of Gix Media beginning in our interim financial statements included in Form 10-Q for the quarterly period ended September 30, 2022, we will be required to implement internal controls over financial reporting with respect to processes and procedures underlying the financial information of Gix Media. Other than the aforesaid, there were no changes in our internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended September 30, 20172022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Plan to Remediate the Material Weakness
With the oversight of senior management, we commenced the implementation of remediation steps in 2022, including the addition of a new chief financial officer and a controller with significant public company finance and accounting experience and continue to evaluate and implement procedures that will strengthen our internal controls. We have also begun to implement a SOX compliance project. While we believe these measures will remediate the material weakness identified and strengthen our internal control over financial reporting, we are required to implement and enhance controls underlying the financial information of Gix Media Ltd. as well as have these controls operate for a sufficient period of time to demonstrate that the material weakness is remediated. We are committed to continuing to improve our internal control processes and will continue to diligently review our financial reporting controls and procedures.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGSBack to Table
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of Contents
On October 25, 2017, several ex-employees of Emerald Israel appliedoperations, except as set forth below. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the Tel-Aviv Court to liquidate Emerald Israel in order to pay outstanding payroll liabilities, based upon a total claim of approximately $75,000. On November 27, 2017, the court demanded that both sides conduct negotiations for 21 days in order to resolve the outstanding liabilities. A second court date has been set for December 20, 2017, which hearing has not been finalized to date based, in part by the resultsknowledge of the transaction discussedexecutive officers of the Company, threatened against or affecting the Company, our common stock, our officers or directors in the Subsequent Event note 7 above.their capacities as such, in which an adverse decision could have a material adverse effect.
ITEM 1A. RISK FACTORSBack
As a smaller reporting company, we are not required to Table of Contentsprovide the information required by this Item.
See risk factors discussed in Part I, “Item 1. Description of Business, subheading Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSBack to Table of Contents
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIESBack to Table of Contents
None.
ITEM 4. MINE SAFETY DISCLOSUREBack to Table of Contents
None.Not applicable.
ITEM 5. OTHER INFORMATIONBack to Table of Contents
None.
ITEM 6. EXHIBITSBack to Table of Contents
(a) The following documents are filed as exhibits to this report on Form 10-QQuarterly Report or incorporated by reference herein.
| * | Filed herewith. |
| ** | Furnished herewith. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned.undersigned thereunto duly authorized.
EMERALD MEDICAL APPLICATIONS CORP.
| VIEWBIX INC. | |||
| By: | /s/ | ||
| Amihay Hadad | |||
| Title: | Chief Executive Officer | ||
| Date: November 22, 2022 | (Principal Executive Officer) | ||
| By: | /s/ Shahar Marom | ||
| Shahar Marom | |||
| Title: | |||
| Chief Financial Officer | |||
| Date: November 22, 2022 | (Principal Financial | ||