What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-15 compared with 2022-11-21 · 198 added, 214 removed, 60 unchanged (87% of the section changed)

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Note Regarding Forward-Looking Statements

following management’s discussion and analysis section should be read in conjunction with the Company’s unaudited

financial statements as of September 30, 2022 and 2021, and the related statements of statement operation, statement of changes in

shareholders’ equity and statements of cash flows for the nine and three months then ended, and the related notes thereto

contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”).

following management’s discussion and analysis section should be read in conjunction with the Company’s unaudited financial

statements as of March 31, 2023 and 2022, and the related statements of statement operation, statement of changes in shareholders’

equity and statements of cash flows for the nine and three months then ended, and the related notes thereto contained in this Quarterly

Report on Form 10-Q (this “Quarterly Report”).

Forward-Looking

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factors that could cause such differences include, but are not limited to:

the short-term and long-term implications caused by

our recent cost reduction efforts, including, but not limited to, our growing inability to secure and maintain customers on the basis

of insufficient capital resources;

sustained turnover of key management;

our history of recurring losses and negative cash flows

from operating activities, significant future commitments and the uncertainty regarding the adequacy of our liquidity to pursue our

complete business objectives;

our need to raise additional capital to meet our business

requirements in the future and such capital raising may be costly or difficult to obtain and could dilute out shareholders’

ownership interests;

the impact of the COVID-19 pandemic on our business

plan and the global economy;

our ability to adequately protect our intellectual

our ability to successfully

integrate the business of Gix Media Ltd.

(“Gix Media”), our wholly owned subsidiary;

continued demand of digital advertising as an integral part of corporate marketing and internal communications plans and the continued

growth and acceptance of digital advertising as effective alternatives to traditional offline marketing products and service;

ability to generate enough cash flow to meet our debt obligations or fund our other liquidity needs;

need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult

to obtain and could dilute out shareholders’ ownership interests;

ability to adequately protect our intellectual property;

ability to successfully integrate the business of Gix Media Ltd.

(“Gix Media”), our wholly owned subsidiary, and Cortex

Media Group Ltd.

(“Cortex”), our majority owned subsidiary;

subsidiaries’ future performance;

entry of new competitors and products and potential

technological obsolescence of our products.

of new competitors and products, the impact of large and established internet and technology companies and potential technological

obsolescence of our offered platforms.

foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or

9 unchanged sentences

and background

(f/k/a Virtual Crypto Technologies, Inc., f/k/a Emerald Medical Applications Corp.) (the “Registrant” or the “Company”)

and its subsidiaries (the “Group”) operate in the field of digital advertising in two main areas of activity:

digital content.

The Group develops and markets a variety of technological software solutions that automate, optimize and monetize online

The Group, through its subsidiary, Cortex Media Group Ltd.

(“Cortex”), also creates, edits and markets content

in various languages to different target audiences for the purpose of generating advertising revenue on the content, based on the world’s

leading advertising platforms, such as Google, Facebook, Yahoo, Apple and more.

The Group’s technological tools enable advertisers

and website owners to earn more from their advertising campaigns and generate additional profits from their sites.

Company was incorporated in the State of Delaware on August 16, 1985, under a predecessor name, The InFerGene Company (“InFerGene

On August 25, 1995, a wholly owned subsidiary of InFerGene Company merged with Zaxis International, Inc., an Ohio corporation,

which following such merger, the surviving entity, InFerGene Company, changed its name to Zaxis International, Inc (“Zaxis”).

March 16, 2015, Zaxis and Emerald Medical Applications Ltd., a private limited liability company (“Emerald Israel”)

executed a share exchange agreement, which closed on July 14, 2015, and Emerald Israel became the Company’s wholly-owned

Accordingly, on September 14, 2015, the Company changed its name to Emerald Medical Applications Corp.

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.

(the “Registrant”, “Viewbix” or the “Company”) is a digital advertising platform that

develops and markets a variety of technological platforms that automate, optimize and monetize digital online campaigns.

Viewbix’s operations were previously focused on analysis of the video marketing performance of its clients as well as the

effectiveness of their messaging (“Video Advertising Platform”).

With the Video Advertising Platform, Viewbix allowed

its clients with digital video properties the ability to use its platforms in a way that allows viewers to engage and interact with

The Video Advertising Platform measures when a viewer performs a specific action while watching a video and collects and

reports the results to the client.

However, due to the Company’s failure to meet predetermined sales targets which were set

pursuant to the Recapitalization Transaction (as defined below), in January 2020, the Company determined to reduce its operations and the size of its

sales and R&D team in the Digital Advertising Platform.

Company, through its subsidiaries Gix Media and Cortex, expanded its digital advertising operations across two additional main sectors:

ad search and digital content (the “Search Platform” and the “Content Platform”, respectively”).

and Cortex develop and market a variety of technological software solutions that automate, optimize and monetize online campaigns.

also creates, edits and markets content in various languages to different target audiences in order to generate revenues from advertisements

displayed together with the content, which are posted on digital content, marketing and advertising platforms.

These technological tools

enable advertisers and website owners to earn more from their advertising campaigns and generate additional profits from their sites.

was incorporated in the State of Delaware on August 16, 1985, under a predecessor name, The InFerGene Company (“InFerGene Company”).

On August 25, 1995, a wholly owned subsidiary of InFerGene Company merged with Zaxis International, Inc., an Ohio corporation, which

following such merger, the surviving entity, InFerGene Company, changed its name to Zaxis International, Inc.

March 16, 2015, Zaxis and Emerald Medical Applications Ltd., a private limited liability company organized under the laws of the State

of Israel (“Emerald Israel”) executed a share exchange agreement, which closed on July 14, 2015, and Emerald Israel became

the Company’s wholly-owned subsidiary.

Accordingly, on September 14, 2015, the Company changed its name to Emerald Medical Applications

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

On January 29, 2018, the Company ceased the DermaCompare operations of its former subsidiary.

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.

January 17, 2018, the Company formed a new wholly-owned subsidiary under the laws of the State of Israel, Virtual Crypto Technologies

(“VCT Israel”).

On February 22, 2018, the Company’s name was changed from Emerald Medical Applications Corp.

Virtual Crypto Technologies, Inc.

(the “VCT Israel”), to develop and market software and hardware products facilitating and supporting the purchase and/or

sale of cryptocurrencies through ATMs, tablets, personal computers (“PCs”) and/or mobile devices.

February 22, 2018, the Company’s name was changed from Emerald Medical Applications Corp.

to Virtual Crypto Technologies, Inc.

to reflect its new operations and business focus.

On January 27, 2020, VCT Israel was sold to a third

party for NIS 50,000 ($14,459).

February 7, 2019, the Company entered into a share exchange agreement (the “Recapitalization Transaction”) with Gix

Internet Ltd., an company organized under the laws of the State of Israel (“Gix” or “parent company”),

pursuant to which, Gix assigned, transferred and delivered 99.83% of its 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, par

value $0.0001 per share (“Common Stock”) of the Company, which resulted in Viewbix Israel becoming a subsidiary of the

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

February 7, 2019, the Company entered into a share exchange agreement (the “Recapitalization Transaction”) with Gix Internet

(formerly known as Algomizer Ltd.), a company organized under the laws of the State of Israel (“Gix Internet” or “Parent

Company”), pursuant to which Gix Internet assigned, transferred and delivered 99.83% of its 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, par value $0.0001 per share (“Common Stock”) of the Company, which resulted in Viewbix Israel becoming a subsidiary

of the Company.

In connection with the Recapitalization Transaction, effective as of July 26, 2019, the Company’s name was changed

1 unchanged sentence

to Viewbix Inc.

September 19, 2022, the Company consummated the Reorganization Transaction (as further described below), which resulted in Gix Media

(“Gix Media”) becoming a wholly owned subsidiary of the Company.

Following the

closing of the Reorganization Transaction, the Company intends to incorporate Gix Media’s technology into its operations

while aiming to expand its growth potential in the search and content monetization space.

Gix Media’s business operations include

both (i) the provision of services to the world’s leading search engines through the development, marketing and distribution of

free software to many Internet users, and (ii) editing and marketing of content in different languages to different target markets, for

the purpose of monetizing advertisements on digital marketing and advertising platforms.

of Executive Officers and Director

September 19, 2022, in connection with the Reorganization Transaction, the Company’s board of directors appointed Mr.

Amitay Weiss and Mr.

Liron Carmel as directors of the Company, as representatives of Gix Media.

June 28, 2022, Mr.

Amihay Hadad, the Company’s current chief executive officer, tendered his resignation from his position as chief

financial officer, effective June 28, 2022, and concurrent therewith, the Company’s board of directors appointed Mr.

to serve as the Company’s new chief financial officer, effective July 1, 2022.

June 13, 2022, the Company’s board of directors appointed Mr.

Yoram Baumann as a director of the Company and as chairman of the

board of directors of the Company.

Reorganization

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December 5, 2021, the Company entered into a certain Agreement and Plan of Merger (the “Reorganization Transaction”) with

Gix Media, an Israeli company and the majority-owned subsidiary of Gix, the parent company and Vmedia Merger Sub Ltd., an Israeli company

and wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which, following the Reorganization Transaction, and

upon satisfaction of additional closing conditions, Merger Sub will merge with and into Gix Media, with Gix Media being the surviving

entity and a wholly-owned subsidiary of the Company.

Prior to the closing of the Reorganization Transaction, Gix Media was a majority-owned

subsidiary of Gix, which held approximately 58% of the Common Stock of the Company, on a fully diluted basis.

Gix Media., an Israeli company and the majority-owned subsidiary of Gix Internet, in the field of MarTech (Marketing Technology) solutions,

primarily search and content monetization and Vmedia Merger Sub Ltd., an Israeli company and wholly-owned subsidiary of the Company (“Merger

Sub”), pursuant to which, following the Reorganization Transaction , and upon satisfaction

of additional closing conditions, Merger Sub will merge with and into Gix Media, with Gix Media being the surviving entity and wholly-owned

subsidiary of the Company.

Prior to the closing of the Reorganization Transaction, Gix Media was

a majority-owned subsidiary of Gix Internet, which held approximately 58% of the Common Stock of the Company, on a fully diluted basis.

September 19, 2022, the Reorganization Transaction, was consummated (the “Closing”) and, as a result, all outstanding ordinary

shares of Gix Media, having no par value (the “Gix Media Shares”) were exchanged for shares of the Company’s Common

Following the Reorganization Transaction, holders of the Gix Media Shares held 90% of the Company’s Common Stock on a fully

diluted basis, with Gix holding 76.67% of the Common Stock on a fully diluted basis.

following illustrates the corporate structure of the Company prior to and following the Reorganization Transaction.

the Reorganization Transaction, the board of directors of the Company consists of six (6) directors, comprised of the three (3) new

directors appointed by Gix Media, Eliyahu Yoresh, Amitay Weiss and Liron Carmel, who joined the Company’s three currently

serving directors, Yoram Baumann, Amihay Hadad and Alon Dayan.

connection with the Closing, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware,

effective as of August 31, 2022, pursuant to which the Company, among other things, effected a reverse stock split of its Common Stock

at a ratio of 1-for-28.

The foregoing description of the Amended and Restated Certificate of Incorporation does not purport to be completed

and is qualified in its entirety by reference to the full text of the Amended and Restated Certificate of Incorporation, of which was

filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 6, 2022 and is incorporated by

reference herein.

Additionally,

and in connection with the Closing, the Company adopted Amended and Restated Bylaws, a copy of which was filed as Exhibit 3.2 to the

Company’s Current Report on Form 8-K and is incorporated by reference herein.

Stock such that Gix Media became a wholly owned subsidiary of the Company.

Following the Reorganization Transaction, holders of the Gix

Media Shares held 90% of the Company’s Common Stock on a fully diluted basis, with Gix Internet holding 76.67% of the Common Stock

on a fully diluted basis.

following diagram illustrates the associated corporate structure of the Company prior to and following the Reorganization Transaction.

the closing of the Reorganization Transaction, the Company

began to integrate Gix Media’s technology into its operations aiming to expand its growth potential in the search and content monetization

Gix Media’s business operations include both (i) the provision of services to the world’s leading search engines through

the development, marketing and distribution of free software to many Internet users, and (ii) editing and marketing of content in different

languages to different target markets, for the purpose of monetizing advertisements on digital marketing and advertising platforms.

connection with the Closing, effective as of August 31, 2022, the Company adopted an Amended and Restated Certificate of

Incorporation (“Certificate of Incorporation”), pursuant to which the Company, among other things, effected a reverse

stock split of its Common Stock at a ratio of 1-for-28 (the “Reverse Split”) and an Amended and Restated Bylaws

All descriptions of our capital stock, including share amounts and per

share amounts in this Quarterly Report, are presented after giving effect to the Reverse Split.

of Cortex Media Group Ltd.

October 13, 2021, Gix Media acquired 70% (on a fully diluted basis) of the share capital of Cortex Media Group Ltd.

and the “Cortex Acquisition”, respectively), a private company operating in the field of online media and advertising.

consideration for the Cortex Acquisition, Gix Media paid NIS 35 million in cash (approximately $11 million), out of which an amount of

$0.5 million was deposited in trust for a period of 12 months from the closing date.

The Cortex Acquisition also includes the obligation (and right)

of Gix Media to acquire 30% of Cortex’s share capital in three equal stages, each at the beginning of the years 2023, 2024 and

2025 (“Remaining Balance Shares”), such that following the completion of the acquisition of all the Remaining Balance

Shares, Gix Media will hold 100% of Cortex’s share capital on a fully diluted basis.

connection with the Cortex Acquisition, at the closing date, Gix Media entered into a financing agreement with Bank Leumi Le Israel Ltd

October 13, 2021, Gix Media acquired 70% (on a fully diluted basis) of the share capital of Cortex (the “Cortex Acquisition”),

an Israeli private company operating in the field of online media and advertising.

In consideration for the Cortex Acquisition, Gix Media

paid NIS 35 million in cash (approximately $11 million), out of which an amount of $0.5 million was deposited in trust for a period of

12 months from the closing date.

The Cortex Acquisition also includes the obligation and right of Gix Media to acquire 30% of Cortex’s

share capital in three equal tranches, each at the beginning of 2023, 2024 and 2025 (“Remaining Balance Shares”), such that

following the acquisition of all of the Remaining Balance Shares, Gix Media will hold 100% of Cortex’s share capital on a fully

diluted basis.

On January 23, 2023, Gix Media purchased an additional 10% of Cortex’s share capital.

connection with the Cortex Acquisition, on October 13, 2021, Gix Media entered into a financing agreement with Bank Leumi Le Israel Ltd

(“Leumi”), for the provision of a line of credit in the total amount of up to $3.5 million and a long-term loan totaling

$6 million, which Gix Media used to finance the Cortex Acquisition (the “Financing Agreement”).

On July 25, 2022, Gix Media

and Leumi entered into an addendum to the Financing Agreement according to which Leumi will provide Gix Media with a loan of up to $1,500,000

to be withdrawn at the discretion of Gix Media by no later than January 31, 2023 (the “Additional Loan”).

The Additional

Loan was withdrawn in connection with the purchase of the additional 10% of Cortex’s share capital on January 17, 2023.

of Operations

of Operations During the Nine Months Ended September 30, 2022 as Compared to the Nine Months Ended September 30, 2021

revenues were $66,115 thousand for the nine months ended September 30, 2022, compared to $23,874 thousand during the same period in the

The reason for the increase in the nine months ended September 30, 2022, is due to the Cortex Acquisition on October 13, 2021,

therefore, the financial statements of the Company for the nine months ended September 30, 2022, include Cortex’s financial statements

as compared to the same period in the prior year which does not include Cortex’s financial statements.

traffic-acquisition and related costs buy expenses were $56,400 thousand for the nine months ended September 30, 2022, as compared to

$19,582 thousand during the same period in the prior year.

The reason for the increase in the nine months ended September 30, 2022, is

due to the inclusion of Cortex’s financial statements.

research and development expenses were $2,957 thousand for the nine months ended September 30, 2022, and $1,530 for the nine months ended

September 30, 2021.

The reason for the increase in the nine months ended September 30, 2022, is due to the inclusion of Cortex’s

financial statements.

selling and marketing expenses were $1,853 thousand for the nine months ended September 30, 2022, as compared to $584 thousand during

the same period in the prior year.

The reason for the increase in the nine months ended September 30, 2022 is due to the inclusion of

Cortex’s financial statements.

general and administrative expenses were $1,326 thousand for the nine months ended September 30, 2022, as compared to $907 thousand during

the same period in the prior year.

The reason for the increase in the nine months ended September 30, 2022, is due to the inclusion of

the Cortex’s financial statements.

depreciation and amortization expenses increased to $2,051 thousand for the nine months ended September 30, 2022, as compared to $1,289

thousand during the same period in the prior year.

The reason for the increase in the three months ended September 30, 2022, is that

the Company recorded depreciation and amortization expenses in connection with the Cortex Acquisition on October 13, 2021.

other expenses were $121 thousand for the nine months ended September 30, 2022, compared to $26 thousand during the nine months ended

September 30, 2021.

The reason for the increase during the nine months ended September 30, 2022, is an increase in the expenses in connection

with the Reorganization Transaction.

net financial expenses were $1,374 thousand for the nine months ended September 30, 2022, compared to $91 thousand net financial income

during the same period in the prior year.

The reason for the increase during the nine months ended September 30, 2022 is mainly due to:

(1) financial expenses in connection with the Financing Agreement as part of the Cortex Acquisition on October 13, 2021 and (2) the increase

of the USD to NIS exchange rate in the period ended September 30, 2022.

tax expenses were $63 thousand for the nine months ended September 30, 2022, as compared to $41 thousand income tax during the

of Operations During the Three Months Ended March 31, 2023 as Compared to the Three Months Ended March 31, 2022

revenues were $20,862 thousand for the three months ended March 31, 2023, compared to $20,435 thousand during the same period in the

revenues from Cortex’s Content Platform were $15,752 thousand for the three months ended March 31, 2023, an increase of $1,353

as compared to $14,399 thousand during the same period in the prior year.

The reasons for the increase during the three months ended

March 31, 2023 are due to:

(1) operational growth of the advertising platforms used by Cortex for its reader traffic acquisition

(2) an increase in the amount of readers exposed to Cortex’s digital content websites (the “Cortex

Websites”) as result of the increase in the content displayed on the Cortex Websites;

and (3) the successful increase of

digital content published in Spanish, and launch of digital content published in new languages such as Portuguese and German y.

revenues from Gix Media’s Search Platform were $5,110 thousand for the three months ended March 31, 2023, a decrease of $926

as compared to $6,036 thousand during the same period in the prior year.

The reasons for the decrease during the three months ended

March 31, 2023 are due to the decrease in the amount of search referrals conducted by users, provided by Gix Media

to search engines, caused primarily by a decrease in the amount of searches received from Gix Media’s third party strategic

partners, including a significant strategic partner of Gix Media.

In response to this decrease, Gix Media expanded its user traffic resources

during the three months ended March 31, 2023, by engaging with new strategic partners, which in turn mitigated the scope of the

traffic-acquisition and related costs were $17,981 thousand for the three months ended March 31, 2023, a slight increase as compared

to $17,615 thousand during the same period in the prior year.

The reason for the increase in the three months ended March 31, 2023, is

due to the increase in the Content Platform’s revenues.

research and development expenses were $796 thousand for the three months ended March 31, 2023, as compared to $848 thousand during the

same period in the prior year.

The reason for the increase during the nine months ended September 30, 2022 is due to the inclusion of

Cortex’s financial statements.

of Operations During the Three Months Ended September 30, 2022 as Compared to the Three Months Ended September 30, 2021

revenues were $22,778 thousand for the three months ended September 30, 2022, compared to $8,079 thousand during the same period in the

traffic-acquisition and related costs were $19,464 thousand for the three months ended September 30, 2022, as compared to

$6,738 thousand during the same period in the prior year.

The reason for the increase in the three months ended September 30, 2022, is due to the inclusion of the Cortex’s financial statements.

research and development expenses were $987 thousand for the three months ended September 30, 2022, as compared to $474 thousand during

the same period in the prior year.

The reason for the increase in the three months ended September 30, 2022 is due to the inclusion of Cortex’s financial statements.

selling and marketing expenses increase to $628 thousand for the three months ended September 30, 2022, as compared to $215 thousand during

The reason for the decrease in the three months ended March 31, 2023, is due to the reduction of expenses

in the Search Platform, primarily in salaries, technological services, and overheads.

selling and marketing expenses increased to $723 thousand for the three months ended March 31, 2023, as compared to $620 thousand during

the same period in the prior year.

The reason for the increase in the three months ended September 30, 2022 is due to the inclusion of Cortex’s financial statements.

general and administrative expenses increased to $450 thousand for the three months ended September 30, 2022, as compared to $313 thousand

The reason for the increase in the three months ended March 31, 2023, is due to the increase of the

costs incurred in connection with the increase in the content displayed on the Cortex Websites.

general and administrative expenses increased to $704 thousand for the three months ended March 31, 2023, as compared to $547 thousand

during the same period in the prior year.

The reason for the increase in the three months ended September 30, 2022, is due to the inclusion of Cortex’s financial statements.

depreciation and amortization expenses increased to $736 thousand for the three months ended September 30, 2022, as compared to $427

thousand during the same period in the prior year.

The reason for the increase in the three months ended September 30, 2022, is that

the Company recorded depreciation and amortization expenses in connection with the Cortex Acquisition on October 13,

other expenses were $86 thousand for the three months ended September 30, 2022, compared to $26 thousand during the three months

ended September 30, 2021.

The reason for the increase during the three months ended September 30, 2022, is the increase in the

expenses in connection with the Reorganization Transaction.

net financial expenses were $301 thousand for the three months ended September 30, 2022, compared to $121 thousand net financial income

The reason for the increase in the three months ended March 31, 2023, is due to the increase

in salary and related costs following the Reorganization Transaction with Gix Media on September 19, 2022, which led to the expansion

of the Company’s management team, which included, among other things, the appointment of a chairman in June 2022 and a chief financial

officer in July 2022.

In addition, during the three months ended March 31, 2023, there was an increase in professional services and consultant

costs following the Reorganization Transaction, as compared to the three months ended March 31, 2022.

depreciation and amortization expenses increased to $734 thousand for the three months ended March 31, 2023, as compared to $586 thousand

during the same period in the prior year.

The reason for the increase during the three months ended September 30, 2022, is mainly due

to financial expenses in connection with the Financing Agreement as part of the Cortex Acquisition on October 13, 2021, and

the increase of the USD to NIS exchange rate in the three months ended September 30, 2022.

tax expenses were $55 thousand for the three months ended September 30, 2022, as compared to $81 income tax thousand during the same

period in the prior year.

The reason for the change in the three months ended September 30, 2022, is due to the inclusion of Cortex’s

financial statements.

The reason for the increase in the three months ended March 31, 2023, is due to reflection

of the historical cost and depreciation expenses of all intangible assets as reflected in the consolidated financial statements of Medigus

Ltd., due to the Reorganization Transaction on September 19, 2022.

As the Company and Gix Media were Interim Condensed Consolidated both

by Gix Internet and Medigus Ltd., the ultimate parent, before and after the Reorganization Transaction, the Reorganization Transaction

was accounted for as a transaction between entities under common control (see Note 1b of our consolidated financial statements appearing elsewhere

in this Quarterly Report on Form 10-Q).

net financial expenses were $185 thousand for the three months ended March 31, 2023, compared to $337 thousand net financial expenses

during the same period in the prior year.

The reason for the decrease during the three months ended March 31, 2023, is mainly due to

the decrease in the financial expenses relating to the USD to NIS exchange rate, as compared to the three months ended March 31, 2022.

In the three months ended March 31, 2023, the net financial expenses were related to the increased interest on the Company’s bank

loans due to the increases in the market’s interest rates.

tax expenses were $84 thousand for the three months ended March 31, 2023, as compared to $31 income tax thousand during the same period

in the prior year.

The reason for the increase during the three months ended March 31, 2023, is due to the increase in Cortex’s

income before tax.

and Capital Resources

of September 30, 2022, we had current assets of $28,140 thousand consisting of $3,609 thousand in cash and cash equivalents, $223

thousand restricted deposit, $16,398 thousand in accounts receivable, $814 thousand in other accounts receivable and $7,096

thousand in loan to parent company.

of September 30, 2022, we had non-current assets of $34,334 thousand consisting of $73 thousand in severance pay funds, $62 thousand

in deferred taxes, $505 thousand in operating lease right-of-use assets, $317 thousand in property and

equipment net, $15,762 thousand in intangible assets, net and $17,615 thousand in goodwill.

of September 30, 2022, we had $27,126 thousand in current liabilities consisting of $16,144 thousand in accounts payable, $1,862 thousand

in other payables, $6,569 thousand in short term loan and current maturities of long-term loan, $93 thousand in operating lease

liabilities – short term and $ 2,527 thousand in loan from parent

of September 30, 2022, we had $5,687 thousand in non-current liabilities consisting of $176 thousand in accrued severance pay, $3,225

thousand long-term loan, $433 thousand in operating lease liabilities - long term and $1,853 thousand in deferred taxes.

of March 31, 2023, we had current assets of $21,971 thousand consisting of $1,771 thousand in cash and cash equivalents, $184

thousand restricted deposits, $15,559 thousand in accounts receivable, $822 thousand in other current assets and $3,635 thousand in

loan to our Parent Company.

of March 31, 2023, we had non-current assets of $33,016 thousand consisting of $51 thousand in severance pay funds, $257 thousand in

deferred taxes, $464 thousand in operating lease right-of-use asset, $284 thousand in property and equipment net, $14,599 thousand in

intangible assets, net and $17,361 thousand in goodwill.

of March 31, 2023, we had $22,223 thousand in current liabilities consisting of $14,056 thousand in accounts payable, $1,381 thousand

in other payables, $6,701 thousand in short term loans and current maturities of long-term loans, $85 thousand in operating lease liabilities

– short term.

of March 31, 2023, we had $5,805 thousand in non-current liabilities consisting of $148 thousand in accrued severance pay, $3,585 thousand

long-term loans, $360 thousand in operating lease liabilities - long term and $1,712 thousand in deferred taxes.

of December 31, 2022, we had current assets of $29,841 thousand consisting of $4,196 thousand in cash and cash equivalents, $185

thousand in accounts receivable, $1,004 thousand in other accounts receivable and a $6,384 thousand in loan to the parent

thousand restricted deposits, $20,945 thousand in accounts receivable, $973 thousand in other current assets and a $3,542 thousand in

loan to our Parent Company.

of December 31, 2022, we had non-current assets of $33,854 thousand consisting of $52 thousand in severance pay funds, $340 thousand

in deferred taxes, $569 thousand in operating lease right-of-use assets, $334 thousand in property and

equipment net, $8,414 thousand in intangible assets, net and $12,483 thousand in goodwill.

of December 31, 2021, we had $26,769 thousand in current liabilities consisting of $16,676 thousand in accounts payable, $1,317

thousand in other payables, $6,569 thousand in short term loan and current maturities of long-term loan, $91 thousand in operating

lease liabilities – short term and $2,116 thousand loan from parent company.

in deferred taxes, $486 thousand in operating lease right-of-use asset, $302 thousand in property and equipment net, $15,313 thousand

in intangible assets, net and $17,361 thousand in goodwill.

of December 31, 2022, we had $28,522 thousand in current liabilities consisting of $19,782 thousand in accounts payable, $2,084 thousand

in other payables, $6,569 thousand in short term loans and current maturities of long-term loan, $87 thousand in operating lease liabilities

– short term.

of December 31, 2022, we had $5,274 thousand in non-current liabilities consisting of $152 thousand in accrued severance pay, $2,881

thousand in long-term loan, $388 thousand in operating lease liabilities - long term and $1,853 thousand in deferred taxes.

had a positive working capital of $1,014 thousand and $2,476 thousand as of September 30, 2022 and December 31, 2021, respectively.

the nine months ended September 30, 2022, we had positive cash flow from operating activities of $2,175 thousand, which was mainly the

result of a $30 thousand in net loss, $2,855 thousand from positive adjustments to operating activities, offset by $650 negative changes

in assets and liabilities items.

the nine months ended September 30, 2021, we had positive cash flow from operating activities of $1,564 thousand, which was mainly the

result of $88 thousand in net income, $1,174 thousand from positive adjustments to operating activities and $302 thousand positive changes

in assets and liabilities items.

the three months ended September 30, 2022, we had positive cash flow from operating activities of $1,577 thousand, which

was mainly the result of $71 thousand in net income, $733 thousand from positive adjustments to operating

activities, and $773 thousands from positive changes in assets and liabilities items.

the three months ended September 30, 2021, we had positive cash flow from operating activities of $522 thousand, which was mainly the

result of $91 thousand in net income, $450 thousand from positive adjustments to operating activities offset by $19 negative changes

had a negative working capital of $252 thousand compared to positive working capital of $1,319 thousand as of March 31, 2023 and December

31, 2022, respectively.

the three months ended March 31, 2023, we had positive cash flow from operating activities of $12 thousand, which was mainly the result

of $345 thousand in net loss, $679 thousand from positive adjustments to operating activities, and $322 thousands from negative changes

in assets and liabilities items.

the three months ended March 31, 2022, we had negative cash flow from operating activities of $1,950 thousand, which was mainly the result

of $149 thousand in net loss, $694 thousand from positive adjustments to operating activities offset by $2,495 negative changes in assets

and liabilities items.

are no limitations in the Company’s Amended and Restated 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.

of September 30, 2022, the Company has provided several liens under Gix Media’s Financing Agreement with Leumi in connection

with the Cortex Acquisition, as follows:

(1) a guarantee to Bank Leumi of all of Gix Media’s obligations and undertakings to

Bank Leumi, unlimited in amount;

(2) a subordination letter on behalf of the Company to Leumi Bank;

(3) a first ranking asset charge

over all of the assets of the Company;

and (4) a Deposit Account Control Agreement over the Company’s bank

Media has provided several liens under the Financing Agreement with Leumi in connection with the Cortex Transaction, as follows:

December 18, 2020, we entered into a Loan Agreement (the “Loan Agreement”) with certain investors pursuant to which the investors

lent us an aggregate of $69,000 (the “Principal Amount”).

In accordance with the terms of the Loan Agreement, we repaid the

interest on the Principal Amount (8% compounded annually) to the investors by issuing 19,715 shares of Common Stock, at a price per share

The shares of Common Stock were issued to the investors pursuant to Regulation S of the Securities Act of 1933, as amended.

In January 2023 we agreed to repay the outstanding Principal Amount to the investors in three equal monthly payments.

As of the date

of this Quarterly Report, we have fully repaid the outstanding Principal Amount.

Media has provided several liens under the Financing Agreement with Leumi in connection with the Cortex Transaction, including:

(1) a floating lien on Gix Media’s assets;

(2) a lien on Gix Media’s bank account in Leumi;

(3) a lien on Gix Media’s rights

under the Cortex Transaction;

(3) a lien on Gix

Media’s rights under the Cortex Transaction;

(4) a fixed lien on Gix Media’s intellectual property;

and (5) a lien on all of Gix Media’s

holdings in Cortex.

According to the Financing Agreement, Gix Media undertook to meet financial

covenants over the life of the loans as follows:

(1) the ratio of debt to EBITDA, based on the Gix Media’s consolidated financial

statements in all 4 consecutive quarters, will not exceed 2.4 in the first two years and will not exceed 1.75 in the following two years.

As of September 30, 2022, Gix Media is in compliance with the financial covenants in connection with the Financing Agreement.

and (5) a lien on

all of Gix Media’s holdings in Cortex.

of March 31, 2023, the Company has also provided several liens under Financing Agreement with Leumi in connection with the Cortex Acquisition,

(1) a guarantee to Bank Leumi of all of Gix Media’s obligations and undertakings to Bank Leumi, unlimited in amount;

(2) a subordination letter on behalf of the Company to Leumi Bank;

(3) a first ranking asset charge over all of the assets of the Company;

and (4) a Deposit Account Control Agreement over the Company’s bank accounts.

to the Financing Agreement, Gix Media undertook to meet financial covenants over the life of the loans as follows:

the ratio of debt

to EBITDA, based on the Gix Media’s consolidated financial statements in all 4 consecutive quarters, will not exceed 2.4 in the

first two years and will not exceed 1.75 in the following two years.

As of March 31, 2023, Gix Media is in compliance with the financial

covenants in connection with the Financing Agreement.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-Q

Item 2. Management’s Discussion and Analysis