Overview

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our consolidated financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which refer to future events. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.





Organizational Background

The Registrant was incorporated in the State of Ohio in 1989 under a predecessor name, Zaxis International, Inc. On August 25, 1995, Zaxis International, Inc. 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 with Emerald Medical Applications Ltd., a private limited liability company organized under the laws of the State of Israel.

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. Emerald Israel 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 January 29, 2018, the Company ceased the DermaCompare operations of Emerald Israel and on May 2, 2018, the District Court of Lod, Israel issued a winding-up order for Emerald Israel and appointed an Israeli attorney to serve as special executor for Emerald Israel.

Virtual Crypto Technologies Ltd.

On January 17, 2018, the Company formed 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.

On January 24, 2018, VCT Israel entered into a binding term sheet (the "Chiron Term Sheet") with Chiron Refineries Ltd. ("Chiron"), a public company listed on the Tel-Aviv Stock Exchange (TASE: CHR). Pursuant to the Chiron Term Sheet: (i) VCT Israel agreed to appoint a wholly-owned subsidiary of Chiron, to be organized under the laws of the Turkish Republic of Northern Cyprus (the "Distributor"), as the exclusive distributor of VCT Israel's Products in Turkey, including the territory of Turkish Republic of Northern Cyprus (collectively, the "Territory"); and (ii) the Distributor shall have the right to appoint sub-distributors within the Territory. The appointment of the Distributor was subject to the payment by the distributor to VCT Israel of $250 thousand as an appointment fee, of which $150 thousand was to be deemed an advance payment by the distributor made on account of future purchases of the Company's products.





20

VCT Israel further granted the Distributor an option, exercisable by the Distributor within 12 months from the date on which the ATM product, including the related software and hardware, was fully tested and ready for installation and operation, to be appointed as an exclusive distributor of the products for the Federal Republic of Nigeria. If the option was exercised, the Distributor was required to pay VCT Israel an appointment fee not more than $250 thousand. In November 2018, Chiron reported that it had encountered financial difficulties and as such the Company will no longer pursue the transactions contemplated by the Chiron Term Sheet.

During the year 2018, $100 thousand was paid by the Distributor to VCT Israel, which has been recognized as revenues for the year ended December 31, 2018.

On January 27, 2020, VCT Israel was sold to a third party for NIS 50,000 ($14,459).

Transaction with Gix (the "Recapitalization Transaction")

On February 7, 2019, the Registrant entered into the Share Exchange Agreement with Gix, pursuant to which on the Closing Date Gix assigned, transferred and delivered its 99.83% holdings in Viewbix Israel to the Company in exchange for shares of restricted common stock of the Company, representing 65% of the issued and outstanding share capital of the Company on a fully diluted basis 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, 2019, the Company filed a Certificate of Amendment to its Certificate of Incorporation 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 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, the Company (i) issued 20,281,085 shares of its Common Stock to Gix in exchange for consideration consisting of for its 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 Gix to purchase the Company's Common Stock, whereby (i) 3,649,318 of such warrants were issued with an exercise price of $0.48, and (ii) 3,649,318 of such warrants were issued with an exercise price of $0.80.

Following the Closing Date, and as a result of the Recapitalization Transaction, Viewbix Israel became a subsidiary of the Registrant.

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 of Common Stock prior to the Recapitalization Transaction have been retroactively adjusted based on the equivalent number of shares of Common Stock received by the accounting acquirer in the Recapitalization Transaction.

Viewbix Israel was incorporated in Israel in February 2006. Viewbix Israel developed an interactive video platform based on 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.





21

On July 25, 2019, the following changes were made to the Company's management: (i) Mr. Eyal Ben Ami resigned from the Company's board of directors; (ii) Mr. Alon Dayan resigned as the Company's chief executive officer, however remained a member of the board of directors; (iii) Mr. Gadi Levin resigned as the Company's chief financial officer, and transitioned to the role of senior accounting consultant; (iv) Mr. Noam Band was appointed to the board of directors; (v) Mr. Jonathan Stefansky was appointed as chief executive officer of the Company and elected as a member of the board of directors; (vi) Mr. Amihay Hadad was appointed as chief financial officer of the Company; and (vii) Mr. Hillel Scheinfeld was appointed as chief operating officer of the Company.

On July 25, 2019, the Company ceased the operations of VCT Israel.

Pursuant to a Tax Ruling issued by the Israeli Tax Authority, the Registrant ceased the options of VCT Israel on the Closing Date.

In connection with certain cost reduction measures that the Company is currently implementing, on January 1, 2020, Mr. Jonathan Stefansky tendered his resignation from the board of directors. On the same date, the Company and Mr. Stefansky reached a mutual understanding that Mr. Stefansky will step down as the Company's chief executive officer, which entered into effect on March 1, 2020. Similarly, on January 1, 2020, the Company and Mr. Hillel Scheinfeld reached a similar mutual understanding and agreed Mr. Scheinfeld will step down as the Company's chief operating officer, which also entered into effect on March 1, 2020.

On January 1, 2020, Mr. Amihay Hadad, the Company's current chief financial officer, was appointed to serve as a member of the board of directors, and on February 20, 2020, Mr. Hadad was appointed to serve as chief executive officer of the Company.

No new compensatory arrangements were entered into in connection with the aforementioned leadership changes.

Results of Operations during the year ended December 31, 2020 as compared to the year ended December 31, 2019

Revenues for the year ended December 31, 2020 was $96 thousand as compared to $208 thousand for the year end December 31, 2019. The reason for the decrease during the fiscal year ended December 31, 2020 is due to the Company's cost-reduction measures implemented beginning on January 1, 2020.

Cost of revenues for the year ended December 31, 2020 was $5 thousand which is a slight increase to $2 thousand for the year end December 31, 2019.

Research and development costs for the year ended December 31, 2020 was $108 thousand as compared to $233 thousand for the year end December 31, 2019. The reason for the decrease during the fiscal year ended December 31, 2020 is due to the Company's cost-reduction measures implemented beginning on January 1, 2020.

Sales and marketing expenses for the year ended December 31, 2020 was $8 thousand as compared to $257 thousand for the year end December 31, 2019. The reason for the decrease during the year ended December 31, 2020 is due to the Company's cost-reduction measures implemented beginning on January 1, 2020.

General and Administration expenses for the year ended December 31, 2020 was $437 thousand as compared to $720 thousand for the year end December 31, 2019. The reason for the decrease in 2020 is due to certain cost reduction measures initiated by the Company as of the beginning of January 2020. Additionally, during the fiscal year-ended December 31, 2020, the Company was no longer obligated to pay recapitalization expenses in connection with the Recapitalization Transaction and the Share Exchange Agreement which were paid by the Company during the fiscal year-ended December 31, 2019.





22

Our net financial income was $13 thousand for the year ended December 31, 2020, compared to net financial expenses of $98 thousand for the year end December 31, 2019. The reason for the change is due to the US dollar exchange rate difference for the fiscal year ended December 31, 2020 as compared to the fiscal year end December 31, 2019.

Our tax on income was $2 thousand for the year ended December 31, 2020, as compared to $15 thousand for the year end December 31, 2019. The reason for the decrease is due to the fact that during the fiscal year ended December 31, 2019 the Company recognized a one-time tax expense related to prior years.

Liquidity and Capital Resources

As of December 31, 2020, we had current assets of $225 thousand consisting of $148 thousand in cash and cash equivalents, $15 thousand in trade receivables, $20 thousand in other accounts receivables and, $42 thousand in prepaid expenses.

We had $2,303 thousand in current liabilities consisting of $177 in other accounts payable and accrued liabilities, $22 trade payable, and $2,054 payable to our parent company.

As of December 31, 2019, we had current assets of $225 thousand consisting of $89 thousand in cash and cash equivalents and restricted cash, $119 thousand in other receivables and $17 thousand in prepaid expenses. We had $1,923 thousand in current liabilities, which consisted of $246 in accounts payable and accrued liabilities and $66 trade payable, and $1,611 payable to our parent company.

We had a negative working capital of $2,078 thousand and $1,698 thousand as of December 31, 2020 and December 31, 2019, respectively.

Our total liabilities as of December 31, 2020 were $2,303 thousand compared to $1,923 thousand as of December 31, 2019.

During the fiscal year ended December 31, 2020, we had negative cash flow from operations of $53 thousand which was mainly the result of a net loss of $443 thousand, depreciation expense of $5 thousand, offset by gains from the sale of a subsidiary and decrease in working capital of $385 thousand.

During the fiscal year ended December 31, 2019, we had negative cash flow from operations of $135 thousand which was mainly the result of a net loss of $1,117 thousand, depreciation expense of $1 thousand, offset by decrease in working capital of $981.

During the fiscal year ended December 31, 2020, we had a positive cash flow effect from investing activities of $13 thousand as compared to a negative cash flow effect from investing activities of $1 thousand as during the year ended December 31, 2019.

During the fiscal year ended December 31, 2020, we had a positive cash flow from financing activities of $99 thousand, which related to the Loan Agreement and issuance of shares we have made during the fiscal year ended December 2020, compared to a positive cash flow from financing activities of $174 thousand during the fiscal year ended December 31, 2019, which related to the cash acquired in connection with the Recapitalization Transaction.

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.





23

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 shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common shareholders. 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.





Going Concern

The Company has incurred $443 thousand in net losses for the year ended December 31, 2020, has $2,078 thousand shareholders' deficit as of December 31, 2020 and $1,693 thousand in total shareholders' deficit as of December 31, 2019 and $53 thousand negative cash flows from operations for the year ended December 31, 2020, and $135 thousand negative cash flows from operations for the year ended December 31, 2019. 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.

Availability of Additional Capital

Our potential financing transactions may include the issuance of equity and/or debt securities including convertible debt, obtaining credit facilities, or other financing mechanisms. In the event that we seek to raise funds through additional private placements of equity or convertible debt, the trading price of our common stock could be adversely affected. Further, any adverse conditions in the financial markets could make it more difficult to obtain future financing through the issuance of equity or debt securities when and if needed. Even if we are able to raise a sufficient amount of funds that may be required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek additional and/or alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we may have to curtail our plan of operations.

The Company has only limited capital. Additional financing is necessary for the Company to continue as a going concern. Our independent auditors have issued an unqualified audit opinion for the year ended December 31, 2020 with an explanatory paragraph on going concern.

In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Company. Management believes that actions presently being taken to obtain additional equity financing will provide the opportunity to continue as a going concern.





24

Off-Balance Sheet Arrangements

As of December 31, 2020, and 2019, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.

Contractual Obligations and Commitments

As of December 31, 2020, and 2019, we did not have any contractual obligations.





Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. The preparation of our consolidated financial statements and disclosures requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported revenue and expenses during the reporting periods. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions.

Our significant accounting policies are described in more detail in the notes to our audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

© Edgar Online, source Glimpses