UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20212022
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: 000-15746
VIEWBIX INC.
(Exact Name Of Registrant As Specified In Its Charter)
Delaware | 68-0080601 | |
(State of | (I.R.S. Employer | |
Incorporation) | Identification No.) |
(Address of Principal Executive Offices) | (ZIP Code) |
Registrant’s Telephone Number, Including Area Code: +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 | ||
Common Stock, Par Value $0.0001 | VBIX | OTCQB |
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 has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] ☒ No [ ]☐
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 [X] ☒
On March 31, 2021,2022, the Registrant had shares of common stock issued and outstanding.
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VIEWBIX INC.
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 | 19 | ||
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 22 | ||
ITEM 4. | CONTROLS AND PROCEDURES | 22 | ||
PART II - OTHER INFORMATION | ||||
ITEM 1. | LEGAL PROCEEDINGS | |||
23 | ||||
ITEM 1A. | RISK FACTORS | 23 | ||
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 23 | ||
ITEM 3. | DEFAULT UPON SENIOR SECURITIES | 23 | ||
ITEM 4. | MINE SAFETY DISCLOSURE | 23 | ||
ITEM 5. | OTHER INFORMATION | 23 | ||
ITEM 6. | EXHIBITS | 23 | ||
SIGNATURES | 24 | |||
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PART I - FINANCIAL INFORMATION
VIEWBIX INC. (Formerly known as Virtual Crypto Technologies, Inc.)INC
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 20212022
CONTENTS
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VIEWBIX INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
U.S. dollars in thousands (except share data)
As of March 31 | As of December 31 | As of March 31 | As of December 31 | |||||||||||||||||||
Note | 2021 | 2020 | Note | 2022 | 2021 | |||||||||||||||||
ASSETS | ||||||||||||||||||||||
CURRENT ASSETS | ||||||||||||||||||||||
Cash and cash equivalents | 134 | 148 | 57 | 74 | ||||||||||||||||||
Trade receivables | 21 | 15 | 9 | 8 | ||||||||||||||||||
Other accounts receivable | 3 | 14 | 20 | 21 | 30 | |||||||||||||||||
Prepaid expenses | 27 | 42 | 28 | 44 | ||||||||||||||||||
Total current assets | 196 | 225 | 115 | 156 | ||||||||||||||||||
Total assets | 196 | 225 | 115 | 156 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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VIEWBIX INC.
CONSOLIDATED BALANCE SHEETS (Unaudited) (Cont.)
U.S. dollars in thousands (except share data)
As of March 31 | As of December 31 | As of March 31 | As of December 31 | |||||||||||||||||||
Note | 2021 | 2020 | Note | 2022 | 2021 | |||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||||||||
Trade payables | 10 | 22 | 16 | 9 | ||||||||||||||||||
Other accounts payables and accrued liabilities | 4 | 186 | 177 | 3 | 239 | 242 | ||||||||||||||||
Payable to parent company | 5 | 2,104 | 2,054 | |||||||||||||||||||
Parent company loan | 4 | 2,240 | 2,116 | |||||||||||||||||||
Short term loan | 6 | 54 | 50 | 5 | 69 | 69 | ||||||||||||||||
Total current liabilities | 2,354 | 2,303 | 2,564 | 2,436 | ||||||||||||||||||
Commitments and contingencies | - | |||||||||||||||||||||
STOCKHOLDERS’ DEFICIT | 7 | 6 | ||||||||||||||||||||
Share Capital | ||||||||||||||||||||||
Ordinary shares of $0.0001 par value - Authorized: 490,000,000 shares; Issued and outstanding: 34,753,669 shares as of December 31, 2020; and March 31, 2021 | 3 | 3 | ||||||||||||||||||||
Ordinary shares of $ | par value - Authorized: shares; Issued and outstanding: shares as of March 31, 2022; and December 31, 20213 | 3 | ||||||||||||||||||||
Additional paid-in capital | 13,073 | 13,073 | 13,257 | 13,257 | ||||||||||||||||||
Accumulated deficit | (15,234 | ) | (15,154 | ) | (15,709 | ) | (15,540 | ) | ||||||||||||||
Total stockholders’ deficit | (2,158 | ) | (2,078 | ) | (2,449 | ) | (2,280 | ) | ||||||||||||||
Total liabilities and stockholders’ deficit | 196 | 225 | 115 | 156 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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VIEWBIX INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)
U.S. dollars in thousands (except share data)
Note | 2022 | 2021 | ||||||||||||||||||||
For the three months ended March 31 | For the three months ended March 31 | |||||||||||||||||||||
Note | 2021 | 2020 | Note | 2022 | 2021 | |||||||||||||||||
Revenues | 8 | 37 | 1 | 8 | ||||||||||||||||||
Cost of revenues | - | 4 | - | - | ||||||||||||||||||
Gross profit | 8 | 33 | 1 | 8 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Research and development | 16 | 59 | 14 | 16 | ||||||||||||||||||
Selling and marketing | 2 | 7 | - | 2 | ||||||||||||||||||
General and administrative | 63 | 175 | 68 | 63 | ||||||||||||||||||
Gain from sale of a subsidiary | 1 | - | (8 | ) | ||||||||||||||||||
Other expenses | 13 | - | ||||||||||||||||||||
Operating loss | 73 | 200 | 94 | 73 | ||||||||||||||||||
Financial income (expenses), net | 9 | (7 | ) | 28 | ||||||||||||||||||
Financial expenses, net | 7 | (75 | ) | (7 | ) | |||||||||||||||||
Loss before tax | 80 | 172 | 169 | 80 | ||||||||||||||||||
Taxes on income | 10 | - | 2 | 8 | - | - | ||||||||||||||||
Net loss | 80 | 174 | 169 | 80 | ||||||||||||||||||
Loss per share - basic and diluted | 11 | 0.002 | 0.006 | 9 | 0.005 | 0.002 | ||||||||||||||||
Weighted average number of ordinary shares outstanding used in the computations of loss per share (in thousands) (*) | 34,753,669 | 31,201,669 | ||||||||||||||||||||
Weighted average number of ordinary shares outstanding used in the computations of loss per share (in thousands) | 34,753,669 | 34,753,669 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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VIEWBIX INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (Unaudited)
U.S. dollars in thousands (except share data)
Ordinary shares | Additional paid-in | Accumulated | Total shareholders’ | |||||||||||||||||
Number | Amount | capital | deficit | deficit | ||||||||||||||||
Balance as of January 1, 2021 | 34,753,669 | 3 | 13,073 | (15,154 | ) | (2,078 | ) | |||||||||||||
Net loss for the period | (80 | ) | (80 | ) | ||||||||||||||||
Balance as of March 31, 2021 | 34,753,669 | 3 | 13,073 | (15,234 | ) | (2,158 | ) |
Number | Amount | capital | deficit | deficit | ||||||||||||||||
Ordinary shares | Additional paid-in | Accumulated | Total stockholders’ | |||||||||||||||||
Number | Amount | capital | deficit | deficit | ||||||||||||||||
Balance as of January 1, 2022 | 34,753,669 | 3 | 13,257 | (15,540 | ) | (2,280 | ) | |||||||||||||
Net loss for the period | - | - | - | (169 | ) | (169 | ) | |||||||||||||
Balance as of March 31, 2022 | 34,753,669 | 3 | 13,257 | (15,709 | ) | (2,449 | ) |
Ordinary shares | Additional paid-in | Accumulated | Total shareholders’ | |||||||||||||||||
Number | Amount | capital | deficit | deficit | ||||||||||||||||
Balance as of January 1, 2020 | 31,201,669 | 3 | 13,015 | (14,711 | ) | (1,693 | ) | |||||||||||||
Net loss for the period | (174 | ) | (174 | ) | ||||||||||||||||
Balance as of March 31, 2020 | 31,201,669 | 3 | 13,015 | (14,885 | ) | (1,867 | ) |
Ordinary shares | Additional paid-in | Accumulated | Total stockholders’ | |||||||||||||||||
Number | Amount | capital | deficit | deficit | ||||||||||||||||
Balance as of January 1, 2021 | 34,753,669 | 3 | 13,073 | (15,154 | ) | (2,078 | ) | |||||||||||||
Net loss for the period | - | - | - | (80 | ) | (80 | ) | |||||||||||||
Balance as of March 31, 2021 | 34,753,669 | 3 | 13,073 | (15,234 | ) | (2,158 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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VIEWBIX INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
U.S. dollars in thousands (except share data)
For the three months ended March 31 | ||||||||
2021 | 2020 | |||||||
Cash flows from operating activities | ||||||||
Net loss for the period | (80 | ) | (174 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Gain from sale of a subsidiary | - | (8 | ) | |||||
Depreciation | - | 5 | ||||||
Changes in current assets and liabilities: | ||||||||
Decrease in trade receivables and prepaid expenses | 10 | 6 | ||||||
Decrease in other receivables | 6 | 82 | ||||||
Increase in trade payables | (4 | ) | (71 | ) | ||||
Financing expenses from short-term loans | 4 | |||||||
decrease in other accounts payables and accrued liabilities | - | (16 | ) | |||||
Increase in payable to parent company | 50 | 186 | ||||||
Net cash provided by (used in) operating activities | (14 | ) | 10 | |||||
Cash flows from investing activities | ||||||||
Cash received from sale of a subsidiary | - | 13 | ||||||
Net cash provided by Investing activities | - | 13 | ||||||
Increase (decrease) in cash and cash equivalents and restricted cash | (14 | ) | 23 | |||||
Cash and cash equivalents and restricted cash at the beginning of the year | 148 | 87 | ||||||
Cash and cash equivalents and restricted cash at the end of the year | 134 | 110 |
2022 | 2021 | |||||||
For the three months ended March 31 | ||||||||
2022 | 2021 | |||||||
Cash flows from operating activities | ||||||||
Net loss for the period | (169 | ) | (80 | ) | ||||
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||||||||
Finance expense | 69 | 4 | ||||||
Changes in current assets and liabilities: | ||||||||
Increase in trade receivables | (1 | ) | (6 | ) | ||||
Decrease prepaid expenses | 16 | 16 | ||||||
Decrease in other receivables | 9 | 6 | ||||||
Increase (decrease) in trade payables | 7 | (4 | ) | |||||
Decrease in other accounts payables and accrued liabilities | (3 | ) | - | |||||
Increase in loan from parent company | 55 | 50 | ||||||
Net cash used in operating activities | (17 | ) | (14 | ) | ||||
Cash flows from investing activities | ||||||||
Net cash provided by Investing activities | - | - | ||||||
Decrease in cash and cash equivalents | (17 | ) | (14 | ) | ||||
Cash and cash equivalents at the beginning of the year | 74 | 148 | ||||||
Cash and cash equivalents and restricted cash at the end of the year | 57 | 134 |
Supplemental Cash Flow Information:
The accompanying notes are an integral part of these condensed consolidated financial statements.
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VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 1: | GENERAL |
A. | Organizational Background |
Organizational Background
Viewbix Inc. (formerly known as Virtual Crypto Technologies, Inc.) (the “Company”) was incorporated in the State of Ohio in 1989 under a predecessor name, Zaxis International, Inc. (“Zaxis”). On August 25, 1995, Zaxis merged with a subsidiary of The InFerGene Company, a Delaware corporation, which entity changed its name to Zaxis International, Inc. and the Company was reincorporated in Delaware under the name of Zaxis International, Inc. On December 30, 2014, Zaxis entered into an agreement withIn 2015 the Company changes its name to Emerald Medical Applications Ltd.,Corp.
On January 17, 2018, the Company formed a private limited liability company organizednew 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.
VCT Israel ceased its business operation prior to consummation of the Recapitalization Transaction. On January 27, 2020, VCT Israel was sold to a third party for NIS 50,000 ($14,459).
On June 6, 2020, Algomizer changed its name to Gix Internet Ltd., or Gix.
On February 7, 2019, the Company entered into a share exchange agreement (the “Share Exchange On February 7, 2019, the Company entered into a share exchange agreement (the “Share Exchange Agreement” or the “Recapitalization Transaction”) with Gix Internet Ltd. (TASE:ALMO), aan company organized under the laws of the State of Israel (“Gix”), pursuant to which, on July 25, 2019 (the “Closing Date”), Gix assigned, transferred and delivered its 99.83% % holdings in Viewbix Ltd., a company organized under the laws of the State of Israel (“Viewbix Israel”), to the Company in exchange for shares of restricted common stock of the Company, representing 65%which resulted in Viewbix Israel becoming a subsidiary of the issued and outstanding share capital ofCompany. In connection with the Company on a fully diluted basisShare Exchange Agreement, effective as of the Closing Date following the conversion of certain convertible notes of the Company and excluding certain warrants to purchase shares of the Common Stock expiring in 2020 and additional warrants as further described below (the “Fully Diluted Share Capital”). In addition, upon the earlier of: (a) the launch of a live video product to an American consumer in the United States by Viewbix Israel, or (b) the launch of an interactive television product to an American consumer in the United States by Viewbix Israel, the Company will issue to Gix an additional 1,642,193 shares of restricted common stock of the Company representing 5% of the Fully Diluted Share Capital immediately following the Closing Date.
On July 24,August 7, 2019, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of Delaware reflecting itsCompany’s name changewas changed from Virtual Crypto Technologies, Inc. to Viewbix Inc. to reflect its new operations and business focus and, effective on August 7, 2019, FINRA approved the Registrant’s name change and its trading symbol was changed from “VRCP” to “VBIX” on the OTCQB.
On the Closing Date,January 1, 2020, the Company (i) issued 20,281,085 shares of its common stock to Gix in exchange for consideration consisting of consideration for its 99.83% holdings in Viewbix Israel, and (ii) 3,434,889 shares of its common stock to holders of convertible notes, which were issued byannounced certain cost reduction measures due the fact the Company prior tonot achieved certain revenues goals.
On December 5, 2021, the Reverse Recapitalization,Company entered into a certain Agreement and which were converted uponPlan of Merger (the “Merger Agreement” or the Closing Date. The shares“Gix Merger”) with Gix Media Ltd., an Israeli company and the majority-owned subsidiary of common stock were issued under Regulation S. The Company also issued a total of 7,298,636 warrants to Gix to purchase the Company’s common stock, whereby (i) 3,649,318 of such warrants were issued with(“Gix Media”) and Vmedia Merger Sub Ltd., an exercise price of $0.48,Israeli company and (ii) 3,649,318 of such warrants were issued with an exercise price of $0.80.
As a result of the Recapitalization Transaction, Viewbix Israel became awholly-owned subsidiary of the Company. As the shareholders of Viewbix Israel received the largest ownership interest in the Company Viewbix Israel was determined to be the “accounting acquirer” in the Recapitalization Transaction. As a result, the historical financial statements of the Company were replaced with the historical financial statements of Viewbix Israel. The number of shares prior to the reverse recapitalization have been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the Recapitalization Transaction.(“Merger Sub”) (see also note 1.D).
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
Organizational Background (Cont.)
The Company and its subsidiaries are collectively referred to as the “Company”. Viewbix Israel was incorporated on February 2006 in Israel. The Company has developed an interactive video platform based on Software as a Service (“SaaS”) business model with interactive elements, and the ability to collect and analyze information about each interactive action performed during the viewing of the video clip. The interactive elements and information gathered, allowing the advertiser to analyze user viewing habits and optimize real-time throughout the campaign while increasing the effectiveness of online and live video advertising.
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On January 1, 2020, the Company announced certain cost reduction measures due the Company not achieving certain revenues goals.
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE. 1 | GENERAL (Cont.): |
B. | Emerald Medical Applications Ltd. |
Emerald Medical Applications Ltd.
On March 16, 2015, Zaxis and Emerald Israel executed a share exchange agreement, which closed on July 14, 2015, and Emerald Israel became, the Company’s wholly-owned subsidiary. subsidiary (“Emerald IsraelIsrael”) was engaged in the business of developing Emerald Israel’s DermaCompare technology and the development, sale and service of imaging solutions utilizing its DermaCompare software for use in derma imaging and analytics for the detection of skin cancer. On January 29, 2018, the Company ceased the DermaCompare operations of its former subsidiary.
On `May 2, 2018, the District Court of Lod, Israel issued a winding-up order for Emerald Israel and appointed an Israeli attorney as special executor for Emerald Israel.
C. | Stock Subscription Agreement and Loan Agreement |
Virtual Crypto Technologies Ltd.
On January 17, 2018, the Company formed a new wholly-owned subsidiary under the laws of the State of Israel, Virtual Crypto Technologies Ltd. (the “VCT Israel”), to develop and market software and hardware products facilitating, allowing and supporting purchase and/or sale of cryptocurrencies through ATMs, tablets, personal computers (“PCs”) and/or mobile devices.
VCT Israel ceased its business operation prior to consummation of the Recapitalization Transaction. On January 27, 2020, Virtual Crypto Israel was sold to a third party for NIS 50,000 ($14,459).
Stock Subscription Agreement and Loan Agreement
On December 18, 2020, the companyCompany entered into a Stock Subscription Agreement (the “Subscription”) with certain investors (the “Investors”) in connection with the sale and issuance of an aggregate of shares of Common Stock, at a purchase price of $0.01$ per share, and for an aggregate purchase price of $30,000.$30,000. In addition, and on the same date, the company entered into a Loan Agreement (the “Loan”) with the Investors, pursuant to which the Investors lent an aggregate of $69,000$69,000 (the “Principal Amount”). In accordance with the terms of the Loan, the company repaid the interest on the Principal Amount (8%(8% compounded annually) to the Investors in the form of an issuance of an aggregate of shares of Common Stock, at a price per share of $0.01.$ . The shares of Common Stock were issued to the Investors pursuant to Regulation S of the Securities Act of 1933, as amended.
D. | Merger with Gix Media Ltd. |
On December 5, 2021, the Company entered into the Merger Agreement with Gix Media and Merger Sub, pursuant to which, following the Gix Merger, and upon satisfaction of additional closing conditions, Merger Sub will merge with and into Gix Media, with Gix Media being the surviving entity and wholly-owned subsidiary of the Company. As of the March 31, 2022 (“Reporting Date”), the closing conditions of the Merger Agreement have not been fulfilled yet (see note 11).
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VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
GENERAL (Cont.): |
E. | Going Concern |
Going Concern
The Company has incurred $80 $169in net loss for the three months ended March 31, 20212022 and $80 in net loss for the three months ended March 31, 2021. The Company has $2,158$2,449stockholders’ deficit as of March 31, 2022 and $2,158in stockholders’ deficit as of March 31, 2021 and $2,078 $17 in total stockholders’ deficit asnegative cash flows from operations for the three months ended March 31, 2022 and $14 in negative cash flows from operations for the three months ended March 31, 2021. Since January 2020, the Company has significantly reduced its operations and expenses of December 31, 2020 .ManagementViewbix Israel. Management expects the Company to continue to generate substantial operating losses and to continue to fund its operations primarily through utilization of its current financial resources and through additional raises of capital.
Such conditions raise substantial doubts about the Company’s ability to continue as a going concern. Management’s plan includes raising funds from outside potential investors. However, there is no assurance such funding will be available to the Company or that it will be obtained on terms favorable to the Company or will provide the Company with sufficient funds to meet its objectives. These financial statements do not include any adjustments relating to the recoverability and classification of assets, carrying amounts or the amount and classification of liabilities that may be required should the Company be unable to continue as a going concern.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The significant accounting policies used in the preparation of the financial statements are as follows:
Basis of Presentation and Principles of Consolidation:
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary and were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
All intercompany accounts and transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 20202021 and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20202021 filed with the SEC on March 16,17, 2021 (the “2020“2021 Annual Report”). The results for any interim period are not necessarily indicative of results for any future period.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. 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 .Thepresented. The results for the three months ended March 31, 20212022 are not necessarily indicative of the results for the year ending December 31, 2021, or for any future period.
As of March 31, 2021,2022, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 20202021 Annual Report.
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VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
Composition:
As of March 31 | As of December 31 | |||||||
2021 | 2020 | |||||||
Government authorities | 14 | 20 | ||||||
14 | 20 |
NOTE | OTHER ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
Composition:
SCHEDULE OF OTHER ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As of March 31 | As of December 31 | |||||||
2022 | 2021 | |||||||
Other payables | 47 | 47 | ||||||
Accrued liabilities | 192 | 195 | ||||||
Total other accounts payables | 239 | 242 |
As of March 31 | As of December 31 | |||||||
2021 | 2020 | |||||||
Other payables | 48 | 47 | ||||||
Accrued liabilities | 138 | 130 | ||||||
186 | 177 |
NOTE |
Balances:
Balances:SCHEDULE OF PAYABLE TO PARENT COMPANY
As of March 31 | As of December 31 | |||||||
2022 | 2021 | |||||||
Gix – Company Loan | $ | 2,240 | $ | 2,116 |
As of March 31 | As of December 31 | |||||||
2021 | 2020 | |||||||
Gix – Parent Company Payable | $ | 2,104 | $ | 2,054 |
As part of the agreement with Gix, the parties agreed to have the Company’s operations outsourced to Gix from the agreement date and until the acquisition is consummated. The following term were included in the agreement pursuant to the above:
(a) | From May 2018 all of the Company’s employees will become employees of Gix. | |
(b) | Between the periods of May 2018 to October 2018, Gix will pay the full expenses of the employees as well as other related expenses. | |
(c) | From November 2018 until to the Closing Date, the employees transferred from the Company to Gix will dedicate half of their time to the Company’s operations and correspondingly |
From the closing date, the actual of the expenses incurred by Gix that related to the Company will be charged to the Company.
NoNaN amounts were paid by the Company to Gix during 2020 to the Reporting Date.
The Company entered into an agreement with Gix, its parent company, pursuant to which, effective as of December 31, 2021, the parent company payable was modified into a loan, which may be increased from time to time, upon the written mutual consent of the Company and 2020.Gix (the “Gix Loan”).
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VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE | PARENT COMPANY LOAN (Cont.): |
The Gix Loan bears interest at a rate (see also note 7) equivalent to the minimal interest rate recognized and attributed by the Israel Tax Authority and will be repaid, together with the accrued interest, in one payment until December 31, 2022, unless extended upon mutual consent of the Company and Gix Internet.
The Company accounted for the modification as an extinguishment of the parent company payable and the issuance of a new debt. At the Reporting Date, the loan was recorded at its fair value of $2,172. At the December 31, 2021 at a fair value of $2,116 as of the modification date, with the difference of $184 between the fair value of the loan and the carrying value of the payable to the Parent Company recorded in the Company’s Consolidated Statement of Changes in Stockholders’ Deficit , as of the signing of the Gix Loan, as a deemed contribution to the Company by the Parent Company, with a corresponding discount on the loan, to be amortized as finance expense in the Company’s Consolidated Statements of Comprehensive Loss over the term of the loan.
NOTE 5: | SHORT TERM LOAN |
On December 18, 2020, the company entered into a Loan Agreement (the “Loan”) and Stock Subscription Agreement with certain Investors as described in note 1e,1c, pursuant to which the Investors lent an aggregate amount of $69,000 (the$69 (the “Principal Amount”). In accordance with the terms of the Loan, the company prepaid the interest on the Principal Amount of 8%8% compounded annually to the Investors as an issuance of shares of Common Stock, at a price per share of $0.01.$. Under the Stock Subscription Agreement, the Investors transferred an amount of $ 30,587 31 to the company as consideration for the issued shares. In January 2022, the Investors under the Loan Agreement expressed their intention to convert the Principal Amount to the Company’s shares of Common Stock, and accordingly, the Company agreed to extend the repayment date.
The Company allocated the total proceeds in respect of the shares issued and the Loan was extended based on its relativetheir_relative fair values. As a result of the allocation, a discount of $19 $19 was recorded on the loan. The discount is amortized over the term of the loan as finance expense.
The allocation of the proceeds to the fair value distribution of the liability and equity components on the transactions date was as follows:
Instrument |
Fair Value | % of total fair | Allocated amount | |||||||||
Short term loan and prepaid interest | 55,200 | 49.45 | 49,246 | |||||||||
Investment in the company’s shares | 54,000 | 50.55 | 50,340 | |||||||||
Total | 109,200 | 100 | 99,586 |
SCHEDULE OF FAIR VALUE DISTRIBUTION OF LIABILITY AND EQUITY COMPONENTS
Instrument | Fair Value | % of total fair | Allocated amount | |||||||||
Loan | 55,200 | 49.45 | 49,246 | |||||||||
Shares | 54,000 | 50,340 | ||||||||||
Total | 109,200 | 100 | 99,586 |
The composition of short term loan balance as of the transaction is as follows:
SCHEDULE OF COMPOSITION OF SHORT TERM LOAN
As of March 31 2021 | As of December 31 2020 | |||||||
Short term loan | 69 | 69 | ||||||
Discount on Short term loan | (15 | ) | (19 | ) | ||||
Short term loan, Net | 54 | 50 |
Principal amount | 69 | |||
Discount on Short term loan | (19 | ) | ||
Short term loan, Net | 50 |
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VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE | STOCKHOLDERS’ DEFICIT |
Stockholders’ deficit.
Composition:
As of March 31 | As of December 31 | |||||||||||||||
2021 | 2020 | |||||||||||||||
Authorized | Issued and outstanding | Authorized | Issued and outstanding | |||||||||||||
Unaudited | ||||||||||||||||
Number of shares | ||||||||||||||||
Ordinary shares | 490,000,000 | 34,753,669 | 490,000,000 | 34,753,669 |
Ordinary Shares:
Ordinary shares confer the right toto: (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 they shall 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.
On December 18, 2020, the company entered into a Stock Subscription Agreement (the “Subscription”) with certain investors (the “Investors”) in connection with the sale and issuance of an aggregate of $0.01$ per share, and for an aggregate purchase price of $30,000. In addition, and on the same date, the company entered into a Loan Agreement (the “Loan”) with the Investors, pursuant to which the Investors lent an aggregate of $69,000 (the “Principal Amount”)$30,000. In accordance with the terms of the Loan, the company repaid the interest on the Principal Amount 8%8% compounded annually to the Investors in the form of an issuance of an aggregate of shares of Common Stock, at a price per share of $0.01.$ . The shares of Common Stock were issued to the Investors pursuant to Regulation S of the Securities Act of 1933, as amended. For more details, please see note 1c. shares of Common Stock, at a purchase price of
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
Redemption
The Company’s AOA do not provide redemption rights to the holders of the preferred shares. In the event of a liquidation event, all the funds and assets of the Company available for distribution among all the stockholders shall be distributed based on a certain mechanism as described in the Company’s AOA. Although the preferred shares are not redeemable, in the event of certain “deemed liquidation events” that are not solely within the Company’s control (including merger, acquisition, or sale of all or substantially all of the Company’s assets), the holders of the preferred shares would be entitled to preference amounts paid before distribution to other stockholders (as explained in the previous paragraph) and hence effectively redeeming the preference amount. In accordance with ASR 268 and ASC 480 “Distinguishing Liabilities from Equity”, the Company’s preferred shares are classified outside of stockholders’ deficit as a result of these in-substance contingent redemption rights.
Share Exchange
As detailed in Note 1, as part of the Recapitalization Transaction in July 2019, the Company issued 30,928,620 common shares in exchange for 99.83% of the issued and outstanding ordinary shares and all the preferred shares of Viewbix Israel. The number of shares prior to the reverse capitalization have been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the Recapitalization Transaction.
Warrants
The following table summarizes information of outstanding warrants as of MarchDecember 31, 2021:
SUMMARY OF OUTSTANDING WARRANTS
Warrants | Warrant Term | Exercise Price | Exercisable | |||||||||||
Class J Warrants | 3,649,318 | July 2029 | 0.48 | 3,649,318 | ||||||||||
Class K Warrants | 3,649,318 | July 2029 | 0.80 | 3,649,318 |
Additionally, in connection with the Share Exchange Agreement, upon the earlier of: (a) the launch of a live video product to an American consumer in the United States by Viewbix Israel, or (b) the launch of an interactive television product to an American consumer in the United States by Viewbix Israel, the Company will issue to Gix an additional January and March 2020, class H warrants, expired. During January 2020, class I warrants expired. During April 2020, and Class G warrants expired. shares of restricted common stock of the Company. All of the Company’s warrants meet the US GAAP criteria for equity classification. During
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VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE |
In June 2017, a lawsuit was filed by a former CEO of the Company with the Tel Aviv District Court (the “Tel Aviv Court”) against the Company claiming certain damages in the total amount of $225, under the assertion of wrongful termination by the Company and Emerald Israel. The Company believes these claims to be unsubstantiated and wholly without merit and accordingly filed its response with the Tel Aviv Court in October of 2017. The dispute was initially heard by the Tel Aviv Court on February 13, 2020. In a supplemental hearing on February 11, 2021 the former CEO provided data regarding his claims. On March 11, 2021 the former CEO filed his summaries. The Company’s summaries will be filed until May 20, 2021. As of March 31, 2021, the company’s management, in consultation with its legal advisors, believes that the former CEO’s claims will not be Successful.Composition:
SCHEDULE OF FINANCIAL EXPENSES, NET
For the three months ended March 31 | ||||||||
2022 | 2021 | |||||||
Unaudited | ||||||||
Exchange rate differences | 6 | (1 | ) | |||||
Interests on loans | 69 | 4 | ||||||
Other | - | 4 | ||||||
75 | 7 |
NOTE |
Composition:
For the three months ended March 31 | ||||||||
2021 | 2020 | |||||||
Unaudited | ||||||||
Bank fees | - | (2 | ) | |||||
Exchange rate differences | 1 | 49 | ||||||
Other | (8 | ) | (19 | ) | ||||
(7 | ) | 28 |
VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
TAXES ON INCOME |
Viewbix Israel are taxed accordingThe Company is subject to income taxes under the Israeli and U.S. tax laws. The Israeli corporate tax rate is 23% inlaws
Tax rates applicable to the years 2019 and onwards.income of the Company:
Viewbix Inc. is taxed according to U.S. tax laws. On 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 rate from 35% to 21%, effective January 1, 2018.2018.Viewbix Israel and Israeli subsidiaries are taxed according to Israeli tax laws. The Israeli corporate tax rate is 23% in the years 2022, 2021, 2020 and onwards.
Deferred income taxes:
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. Significant components of the Company’s deferred tax assets are as follows:
SCHEDULE OF DEFERRED INCOME TAXES
As of March 31 | As of December 31 | As of March 31 | As of December 31 | |||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Deferred R&D expenses | 16 | 114 | $ | 164 | $ | 167 | ||||||||||
Operating loss carryforward | 31,945 | 32,256 | 32,968 | 33,055 | ||||||||||||
31,961 | 32,370 | |||||||||||||||
Differences between tax basis and carrying values of loans (see note 4) | $ | (184 | ) | $ | (184 | ) | ||||||||||
Total | $ | 32,948 | $ | 33,038 | ||||||||||||
Net deferred tax asset before valuation allowance | 6,981 | 7,076 | $ | 7,208 | $ | 7,230 | ||||||||||
Valuation allowance | (6,981 | ) | (7,076 | ) | (7,208 | ) | (7,230 | ) | ||||||||
Net deferred tax asset | - | - | $ | - | $ | - |
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VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
NOTE 8: | TAXES ON INCOME (Cont.) |
As of March 31, 2020,2022, the Company has provided valuation allowances of $6,981$7,208 in respect of deferred tax assets resulting from tax loss carryforward and other temporary differences. Management currently believes that because the Company has a history of losses, it is more likely than not that the deferred tax regarding the loss carryforward and other temporary differences will not be realized in the foreseeable future.
Available carryforward tax losses:
As of March 31, 20212022, Viewbix Israel incurred operating losses in Israel of approximately $13,466$14,263 which may be carried forward and offset against taxable income in the future for an indefinite period.
As of March 31, 20212022 the Company generated net operating losses in the U.S. of approximately $18,479 $18,705Net operating losses in the U.S. are available through 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.
Loss from continuing operations, before taxes on income, consists of the following:
SCHEDULE OF LOSS (INCOME) FROM CONTINUING OPERATIONS, BEFORE TAXES ON INCOME
For the three months | ||||||||
ended March 31 | ||||||||
2021 | 2022 | |||||||
USA | $ | 93 | $ | 27 | ||||
Israel | 76 | 53 | ||||||
$ | 169 | $ | 80 |
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VIEWBIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S. dollars in thousands (except share data)
For the three months ended March 31 | ||||||||
2021 | 2020 | |||||||
USA | 27 | 10 | ||||||
Israel | 53 | 162 | ||||||
80 | 172 |
NOTE | LOSS PER SHARE-BASIC AND DILUTED |
Composition:
2022 | 2021 | |||||||||||||||
For the three months ended March 31 | For the three months ended March 31 | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Unaudited | Unaudited | |||||||||||||||
Basic and diluted: | ||||||||||||||||
Net loss attributable to ordinary stockholders | 80 | 174 | 169 | 80 | ||||||||||||
Weighted-average ordinary shares | 34,753,669 | 31,201,669 | 34,753,669 | 34,753,669 | ||||||||||||
Loss per share-basic and diluted | 0.002 | 0.006 | 0.005 | 0.002 |
NOTE | COVID-19 PANDEMIC IMPLICATIONS |
The COVID-19 pandemic which originated in China in late 2019, has since spread acrossresulted in a widespread health crisis that has adversely affected businesses, economies and financial markets worldwide, placed constraints on the globeoperations of businesses, decreased consumer mobility and affected theactivity, and caused significant economic condition of most, if not all, countries, includingvolatility in the United States, Israel and many countries in Europe. On March 11, 2020, the World Health Organization declared the outbreak a pandemic. Whileinternational capital markets. The COVID-19 is still spreading and the final implications of the pandemic are difficult to estimate at this stage, it is clear that it has affected the lives of a large portion of the global population. As of March 31, 2021, the pandemic has caused repeated statesan economic recession, high unemployment rates and other disruptions, both in the United States, Israel and the rest of emergency to be declared in various countries, ongoing and extended travel restrictions have been imposed for several months, strict quarantines rules have been established and maintained for an extended period of time in a plethora of jurisdictions and various institutions and companies have been closed and rendered bankrupt.the world. The Company is actively monitoring the pandemic and is taking any necessary measures to respond to the situation in cooperation with the various stakeholders. Due to the uncertainty surrounding the COVID-19 pandemic, the Company will continue to assess the situation, including government-imposed restrictions, market by market. ItThe COVID-19 pandemic has not yet currently adversely affected our business, however, it is not possible at this time to estimate the full impact that the COVID-19 pandemic, could have on the Company’s business, the continued spread of COVID-19, and any additional measures taken by governments, health officials or by the Company in response to such spread, could have on the Company’s business, results of operations and financial condition. The COVID-19 pandemic
NOTE 11: | SUBSEQUENT EVENTS |
Gix Merger
On December 5, 2021, the Company entered into the Merger Agreement with Gix Media and mitigation measuresMerger Sub, pursuant to which, following the Gix Merger, and upon satisfaction of additional closing conditions, Merger Sub will merge with and into Gix Media, with Gix Media being the surviving entity and wholly-owned subsidiary of the Company. As of the March 31, 2022 (“Reporting Date”), the closing conditions of the Merger Agreement have also negatively impacted global economicnot been fulfilled yet.
Subject to the terms and conditions which,of the Merger Agreement, at the Merger Effective Date (as defined in turn, could adversely affectthe Merger Agreement) all outstanding ordinary shares of Gix Media, having no par value (the “Gix Media Shares”) will be converted into shares of Common Stock, such that immediately following the Gix Merger, holders of Gix Media Shares will hold 90% of the Company’s business, resultscapital stock on a fully diluted basis. The Merger Agreement contains customary representations, warranties and covenants made by each of operationsthe Company, Gix Media and financial condition. The extentMerger Sub.
On December 21, 2021, the shareholders of each of Gix Media and Merger Sub approved the Merger Agreement. Consummation of the Gix Merger is subject to whichcertain additional closing conditions, including, among other things, (i) the COVID-19 outbreak continuesCompany filing an amendment to impactits certificate of incorporation to change the Company’s financial condition will depend on future developments that are highly uncertain and cannot be predicted,name to “Gix Media, Inc.”, (ii) obtaining approval from certain third parties, including new government actions or restrictions, new information that may emerge concerning the severity, longevity and impactapproval of Bank Leumi due to certain liens registered in its favor against ordinary shares of Gix Media; (iii) conversion of the COVID-19 pandemic on economic activity.Company’s outstanding convertible instruments into restricted shares of Common Stock and (iv) obtaining a tax pre-ruling from the Israeli Tax Authority relating to the Agreement.
Reverse Stock Split
In connection with the Gix Merger, on February 13, 2022, the requisite majority of the Company’s stockholders approved certain amendments to the Company’s certificate of incorporation, including, but not limited to (i) a name change from “Viewbix Inc.” to “Gix Media, Inc.”, (ii) a reverse stock split of the Company’s common Stock at a ratio of 1-for-28 (the “Planned Reverse Split”), (iii) a staggered board structure, and (iv) certain other provisions therein. Pursuant to the Planned Reverse Stock Split, each twenty-eight (28) shares of the Company’s common stock will be automatically converted, without any further action by the stockholders, into one share of the Company’s common stock. No fractional shares will be issued as the result of the reverse stock split. Instead, each stockholder will be entitled to receive one share of common stock in lieu of the fractional share that would have resulted from the reverse stock split.
The Company intends to effect the foregoing amended and restated certificate of incorporation upon the closing of the Gix Merger, thus, as of the Reporting Date the Planned Reverse Stock Split has not been effected.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking Statements
The following management’s discussion and analysis section should be read in conjunction with the Company’s unaudited financial statements as of March 31, 20212022 and 2020,2021, and the related statements of comprehensive loss, statement of changes in stockholders’ equity (deficit) and statements of cash flows for the three months then ended, and the related notes thereto contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”).
Forward-Looking Statements
This management discussion and analysis section contains forward-looking statements, such as statements of the Company’s plans, objectives, expectations and intentions. Any statements that are 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 tense or conditional constructions “will,” “may,” “could,” “should,” etc., or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to 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 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, and substantial doubt regarding our ability to continue as a going concern; | |
● | 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 stockholders’ 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; and | |
● | entry of new competitors and products and potential technological obsolescence of our products. |
The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with 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 16, 202117, 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.
-20- |
Overview and background
Viewbix Inc. (f/k/a Virtual Crypto Technologies, Inc., f/k/a Emerald Medical Applications Corp.) (the “Registrant” or the “Company”) is an interactive video technology and data platform that provides its clients with deep insights into their video marketing performance as well as the effectiveness of its messaging.
Recent Developments
Share Exchange AgreementMerger with Gix Media Ltd.
On February 7, 2019,December 5, 2021, the Company entered into a share exchange agreementcertain Agreement and Plan of Merger (the “Share Exchange“Merger Agreement”) with Gix Media Ltd., an Israeli company and the majority-owned subsidiary of Gix Internet Ltd. (f/k/a Algomizer(“Parent Company”), in the field of MarTech (Marketing Technology) solutions, primarily search and content monetization (“Gix Media”) and Vmedia Merger Sub Ltd.) (TASE:GIX), aan Israeli company organized under the lawsand wholly-owned subsidiary of the State of IsraelCompany (“Gix”Merger Sub”), pursuant to which, on July 25, 2019 (the “Closing Date”)following the Merger (as defined herein), and upon satisfaction of additional closing conditions, Merger Sub will merge with and into Gix assigned, transferredMedia, with Gix Media being the surviving entity and delivered its 99.83% holdings in Viewbix Ltd. (“Viewbix Israel”) to the Company in exchange for shares of restricted common stock, par value $0.0001 per sharewholly-owned subsidiary of the Company (the “Common Stock”“Gix Merger”), representing 65%.
Subject to the terms and conditions of the issued andMerger Agreement, at the Merger Effective Date (as defined in the Merger Agreement) all outstanding share capitalordinary shares of Gix Media, having no par value (the “Gix Media Shares”) will be converted into shares of Common Stock, such that immediately following the Gix Merger, holders of Gix Media Shares will hold 90% of the CompanyCompany’s capital stock on a fully diluted basis as of the Closing Date, following the conversion of certain convertible notesbasis. The Merger Agreement also contains customary representations, warranties and covenants made by each of the Company, Gix Media and excludingMerger Sub.
Following the Gix Merger, the board of directors of the Company is expected to consist of six (6) directors and will be comprised of four (4) new directors to be appointed by Gix Media, who will join the Company’s two currently-serving directors, Amihay Hadad and Alon Dayan.
On December 21, 2021, the shareholders of each of Gix Media and Merger Sub approved the Merger Agreement. Consummation of the Gix Merger is subject to certain warrantsadditional closing conditions, including, among other things, (i) the Company filing an amendment to purchaseits certificate of incorporation to change the Company’s name to “Gix Media, Inc.”, (ii) obtaining approval from certain third parties, including the approval of Bank Leumi due to certain liens registered in its favor against ordinary shares of Gix Media; (iii) conversion of the Company’s outstanding convertible instruments into restricted shares of Common Stock expiring in 2020 and additional warrants as further described below(iv) obtaining a tax pre-ruling from the Israeli Tax Authority relating to the Agreement.
In connection with Gix Merger, on February 13, 2022, the requisite majority of the Company’s stockholders approved certain amendments to the Company’s certificate of incorporation, including, but not limited to (i) a name change from “Viewbix Inc.” to “Gix Media, Inc.”, (ii) a reverse stock split of the Company’s common Stock at a ratio of 1-for-28 (the “Fully Diluted Share Capital”“Planned Reverse Split”). In addition,, (iii) a staggered board structure, and (iv) certain other provisions therein. The Company intends to effect the foregoing amended and restated certificate of incorporation upon the earlier of: (a) the launch of a live video product to an American consumer in the United States by Viewbix Israel, or (b) the launch of an interactive television product to an American consumer in the United States by Viewbix Israel, the Company agreed to issue to Gix an additional 1,642,193 shares of restricted Common Stock representing 5%closing of the Fully Diluted Share Capital immediately following the Closing Date.
On July 24, 2019, and in connection with the Share Exchange Agreement,Gix Merger. Additionally, on February 25, 2022, the Company filed a Certificate of Amendment to its Certificate of IncorporationSchedule 14C Information Statement with the Secretary of State of Delaware reflecting its name change from Virtual Crypto Technologies, Inc. to Viewbix Inc. to reflect its new operations and business focus. On August 7, 2019, FINRA approvedSEC, whereby it reported the Registrant’s name change and its trading symbol was changed from “VRCP” to “VBIX” onforegoing approvals by the OTCQB.
On the Closing Date, (i) the Company issued 20,281,085 shares of Common Stock to Gix in exchange for consideration consisting of 99.83% holdings in Viewbix Israel, and (ii) convertible notes representing 3,434,889 shares of Common Stock then currently issued to holders were converted. The shares of Common Stock were issued under Regulation S. The Company also issued a total of 7,298,636 warrants to purchase shares of Common Stock to Gix, whereby (i) 3,649,318 of such warrants to purchase shares of Common Stock were issued with an exercise price of $0.48, and (ii) 3,649,318 of such warrants to purchase shares of Common Stock were issued with an exercise price of $0.80.
Following the Closing Date, Viewbix Israel became a subsidiary of the Registrant. Viewbix Israel was incorporated in February 2006 in Israel.
On June 6, 2020, Algomizer Ltd. changed its name to Gix Internet Ltd., or Gix
On January 1, 2020, the Company announced certain cost reduction measures due to the Company not achieving certain revenue goals. In connection with these cost reduction measures, on January 1, 2020, Mr. Jonathan Stefansky, the Company’s then chief executive officer and memberrequisite majority of the Company’s board of directors, tendered his resignation from the Board, and on the same date, the sides reached a mutual understanding whereby Mr. Stefansky would step down as chief executive officer, effective March 1, 2020. On the same date, the Company and Mr. Hillel Scheinfeld, the Company’s then chief operating officer, reached a similar mutual understanding and agreed he would step down, also effective March 1, 2020. Mr. Amihay Hadad, the Company’s chief financial officer, was appointed to the Company’s board of directors on January 1, 2020, and, effective as of March 1, 2020, he was also appointed as the Company’s chief executive officer.stockholders.
On January 27, 2020, the Company entered into an agreement with a third-party to sell Virtual Crypto Technologies Ltd. for NIS 50,000 ($14, 459), which transaction was consummated on February 12, 2020.
Results of Operations
Results of Operations During the Three Months Ended March 31, 20212022 as Compared to the Three Months Ended March 31, 20202021
Our revenues were $8$1 thousand for the three months ended March 31, 2021,2022, compared to $37$8 thousand during the same period in the prior year. The reason for the decrease in the three months ended March 31, 20212021. The reason for the decrease during the three months ended March 31, 2022 is due to the factCompany’s cost-reduction measures that were initially implemented beginning on January 1, 2020,2021.
-21- |
Our research and development expenses were $14 thousand for the Company announcedthree months ended March 31, 2022, which is a slight decrease as compared to $16 thousand during the three months ended March 31, 2021.
Our selling and began implementing certain cost reduction measures.
Our cost of revenuesmarketing expenses were $0 thousand for the three months ended March 31, 2021, with2022, which is a slight decrease as comparecompared to $4$2 thousand during the same period in the prior year.three months ended March 31, 2021.
Our researchgeneral and developmentadministrative expenses were $16$68 thousand for the three months ended March 31, 2021,2022, slight increase as compared to $59 thousand during the same period in the prior year. The reason for the decrease in the three months ended March 31, 2021 is due to the fact that beginning on January 1, 2020, the Company announced and began implementing certain cost reduction measures.
Our selling and marketing expenses were $2 thousand for the three months ended March 31, 2021, as compared to $7 thousand during the same period in the prior year. The reason for the decrease in the three months ended March 31, 2021 is due to the fact that on January 1, 2020, the Company announced and begin implementing certain cost reduction measures.
Our general and administrative expenses decreased to $63 thousand for the three months ended March 31, 2021 as compared to $175 thousand during the same period in the prior year. Beginning on January 1, 2020, we announced and began implementing certain cost reduction measures.2021.
Our net financialother expenses was $7were $13 thousand for the three months ended March 31, 2021,2022, compared to net financial income of $28$0 thousand during the same period in the prior year. The reason for the change is due to the US dollar exchange rate difference during the three months ended March 31, 2021 as compared2021. Our other expenses are due to expenses in connection with the same period in the prior year. In addition during December 2020 the company entered into a Loan Agreement with certain investors which bearing an annually interest of 8%.Merger Agreement.
Our tax on income was $0net financial expenses were $75 thousand for the three months ended March 31, 2021, which is a slight decrease2022, compared to $2net financial income of $7 thousand during the same periodthree months ended March 31, 2021. The reason for the increase during the three months ended March 31, 2022 is due to certain financial expenses in connection with the prior year.loan to the Parent Company, which was signed during the quarter ended December 31, 2021.
Liquidity and Capital Resources
As of March 31, 2022, we had current assets of $115 thousand consisting of $57 thousand in cash and cash equivalents, $9 thousand in trade receivables, $21 thousand in other accounts receivables and $28 thousand in prepaid expenses.
As of March 31, 2022, we had $2,564 thousand in current liabilities consisting of $16 in trade payables, $239 in other accounts payable and accrued liabilities, $69 in short term loans and a loan to the Parent Company in the amount of $2,240.
As of December 31, 2021, we had current assets of $196$156 thousand consisting of $134$74 thousand in cash and cash equivalents, $21$8 thousand in trade receivables, $14$30 thousand in other accounts receivables and $27$44 thousand in prepaid expenses.
We As of December 31, 2021, we had $2,354$2,436 thousand in current liabilities consisting of $186$9 in trade payables, $242 in other accounts payable and accrued liabilities, $54 Short$69 in short term loans, and a loan $10 trade payable, and $2,104 payable to our parent company.the Parent Company in the amount of $2,116.
As of December 31, 2020, we had current assets of $225 thousand consisting of $148 thousand in cash and cash equivalents, $20 thousand in other receivables, $15 thousand in trade receivables and $42 thousand in prepaid expenses. We had $2,303 thousand in current liabilities, which consisted of $177 in accounts payable and accrued liabilities, $22 trade payable, $2,054 payable to our parent company and $50 in Short term loan.
We had a negative working capital of $2,158$2,449 thousand and $2,078$2,280 thousand as of March 31, 20212022 and December 31, 2020,2021, respectively.
Our Current liabilities as of March 31, 2021 were $2,354 thousand compared to $2,303 thousand as of December 31, 2020.
During the three months ended March 31, 2021, we had negative cash flow from operations of $14 thousand which was mainly the result of a net loss of $80 thousand, offset by decrease in working capital of $66 thousand.
During the three months ended March 31, 2020, we had positive cash flow from operations of $10 thousand which was mainly the result of a net loss of $174 thousand, offset by gains from the sale of a subsidiary and decrease in working capital of $187.
During the three months ended March 31, 2021, we had none cash flow effect from investing activities as compared to a positive cash flow effect from investing activities of $13 thousand as during the three mounts ended March 31, 2020.
There are no limitations in the Company’s Certificate of Incorporation on the Company’s ability to borrow funds or raise funds through the issuance of shares of its common stock to affect a business combination. The Company’s limited resources and lack 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 through 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.
Until such time as the Company can generate substantial revenues, the Company expects to finance its cash needs through a combination of the sale of its equity and/or convertible debt securities, debt financing and strategic alliances and collaborations. The Company does not have any committed external source of funds. To the extent that the Company raises additional capital through the sale of its equity and/or convertible debt securities, the ownership interest of its stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. 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. If the Company raises funds through additional collaborations or strategic alliances with third parties, we may have to relinquish valuable rights to our future revenue streams and/or distribution arrangements. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. If the Company is unable to raise additional funds through equity and/or debt financings when needed or on attractive terms, the Company may be required to delay, limit, reduce or terminate the operations of some or all of its business segments.
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Going Concern:Concern
The Company has incurred $80$169 in net losses for the three months ended March 31, 2021,2022, and $80 in net loss for the three months ended March 31, 2021. The Company has $2,158$2,449 stockholders’ deficit as of March 31, 20212022 and $2,078$2,158 in total stockholders’ deficit as of DecemberMarch 31, 2020.2021. Management expects the Company to continue to generate substantial operating losses and to continue to fund its operations primarily through utilization of its current financial resources and through additional raises of capital.
Such conditions raise substantial doubts about the Company’s ability to continue as a going concern. Management’s plan includes raising funds from outside potential investors. However, there is no assurance such funding will be available to the Company or that it will be obtained on terms favorable to the Company or will provide the Company with sufficient funds to meet its objectives. These financial statements do not include any adjustments relating to the recoverability and classification of assets, carrying amounts or the amount and classification of liabilities that may be required should the Company be unable to continue as a going concern.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, including our principalAs of March 31, 2022, the Company’s chief executive officer and principalchief financial officer, evaluatedwhich is currently the same individual, conducted an evaluation (the “Evaluation”) regarding the effectiveness of ourthe Company’s disclosure controls and procedures pursuant to(as defined in Rules 13a-15(e) andor 15d-15(e) under the Exchange ActAct. Based upon the Evaluation, as of March 31, 2021,required by Rules 13a-15 or 15d-15, the end of the period covered by this Report on Form 10-Q.` Based on such evaluation, due to the material weakness discussed below, our principalCompany’s chief executive officer and principalchief financial officer concluded that ourthe Company’s disclosure controls and procedures were not effective at a reasonable assurance levelineffective as of the end of March 31, 2021.2022, 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
In connection with the preparation of our consolidated financial statements as of and for the period ended March 31, 2021, we have identified a material weakness in our internal control over financial reporting. The material weakness was identified in the period-end financial reporting process, and is associated with our history as a private company and a material weakness is a deficiency or combination of deficienciesThere were no changes in our internal control over financial reporting suchor in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that there is a reasonable possibilityoccurred during the quarter ended March 31, 2022 that a material misstatement ofhave materially affected, or are reasonably likely to materially affect, our consolidatedinternal control over financial statements would not be prevented or detected on a timely basis. This deficiency could result in additional misstatements to our consolidated financial statements that would be material and would not be prevented or detected on a timely basis.reporting.
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PART II - OTHER INFORMATION
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations, 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 knowledge of the executive officers of the Company, threatened against or affecting the Company, our Common Stock,common stock, our officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect, other than as set forth below.effect.
In June 2017, a lawsuit was filed with the Regional Labor Court in Tel Aviv (the “Tel Aviv Court”) against Emerald Israel, and other defendants, claiming certain damages in the total amount of approximately $225,000, under the assertion of wrongful termination by Emerald Israel. We believe these claims to be unsubstantiated and wholly without merit and accordingly filed our response with the Tel Aviv Court in October of 2017. The dispute was initially heard by the Tel Aviv Court on February 13, 2020. In a supplemental hearing on February 11, 2021, the plaintiff provided a certified confirmation of payment of approximately $14,668 by the National Insurance Institute of Israel for one month’s prior notice of termination, redemption of 16.8 days of vacation and severance pay. The plaintiff’s summaries were filed on March 11, 2021, and the defendant’s summaries will be filed until May 20, 2021.
ITEM 1A. RISK FACTORS
There have been no material changes from the information set forth in “Item 1A. Risk Factors” in the Form 10-K filed with the SEC on March 16, 202117, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
None.
(a) The following documents are filed as exhibits to this Quarterly Report or incorporated by reference herein.
Exhibit Number | Description | |
31.1* | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act | |
32.1** | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
Inline XBRL Taxonomy Extension Schema Document | ||
Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||
Inline XBRL Taxonomy Extension Definition Linkbase Document | ||
Inline XBRL Taxonomy Extension Label Linkbase Document | ||
Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||
* | Filed herewith. | |
** | Furnished herewith. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
VIEWBIX INC. | ||
By: | /s/ Amihay Hadad | |
Name: | Amihay Hadad | |
Title: | Chief Executive Officer and Chief Financial Officer | |
Date: May | (Principal Executive Officer and Principal Financial Officer) |