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Item 1A. Risk Factors

2024-05-20 compared with 2023-11-14 · 56 added, 83 removed, 1 unchanged (99% of the section changed)

Our business faces many risks,

a number of which are described under the caption “Risk Factors” in our Annual Report.

Other than as set forth below, there

have been no material changes from the risk factors previously disclosed in our Annual Report.

The risks described in our Annual Report

and below may not be the only risks we face.

Other risks of which we are not yet aware, or that we currently believe are not material,

may also materially and adversely impact our business operations or financial results.

If any of the events or circumstances described

in the risk factors contained in our Annual Report or described below occurs, our business, financial condition or results of operations

could be adversely impacted and the value of an investment in our securities could decline.

Investors and prospective investors should

consider the risks described in our Annual Report and below, and the information contained under the caption “Forward-Looking Statements”

and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.

Political, economic

and military conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s

war against them, may impede our ability to operate and harm our financial results.

Because all of our operations

are conducted in Israel and all members of our board of directors and management as well as all of our employees and consultants, including

employees of our service providers, are located in Israel, our business and operations are directly affected by economic, political, geopolitical

and military conditions in Israel.

Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between

Israel and its neighboring countries and terrorist organizations active in the region.

These conflicts have involved missile strikes,

hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions

In October 2023, Hamas terrorists

infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets.

also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza

Strip and in other areas within the State of Israel.

These attacks resulted in extensive deaths, injuries and kidnapping of civilians

and soldiers.

Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist

organizations commenced in parallel to their continued rocket and terror attacks.

In the weeks since the initial attack by Hamas, hostilities

along Israel’s northern border with Hezbollah located in Lebanon have accelerated, and this clash may escalate in the future into

a greater regional conflict.

The intensity and duration

of Israel’s current war against Hamas is difficult to predict, as are such war’s economic implications on the Company’s

business and operations and on Israel’s economy in general.

These events may be intertwined with wider macroeconomic indications

of a deterioration of Israel’s economic standing, which may have a material adverse effect on the Company and its ability to effectively

conduct its operations.

In connection with the Israeli

security cabinet’s declaration of war against Hamas and possible hostilities with other organizations, several hundred thousand

Israeli military reservists were drafted to perform immediate military service.

Certain of our employees and consultants in Israel, including

the Chief Executive Officer of Gix Media, in addition to employees of our service providers located in Israel, have been called, and additional

employees may be called, for service in the current or future wars or other armed conflicts with Hamas, and such persons may be absent

for an extended period of time.

As a result, our operations may be disrupted by such absences, which disruption may materially and adversely

affect our business, prospects, financial condition and results of operations.

Our commercial insurance does

not cover losses that may occur as a result of events associated with war and terrorism.

Although the Israeli government currently covers

the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government

coverage will be maintained or that it will sufficiently cover our potential damages.

Any losses or damages incurred by us could have

a material adverse effect on our business.

Any armed conflicts or political instability in the region would likely negatively affect business

conditions and could harm our results of operations.

Further, in the past, the

State of Israel and Israeli companies have been subjected to economic boycotts.

Several countries still restrict business with the State

of Israel and with Israeli companies.

These restrictive laws and policies may have an adverse impact on our operating results, financial

condition or the expansion of our business.

A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which

could also adversely impact our business.

Prior to the Hamas attack

in October 2023, the Israeli government pursued extensive changes to Israel’s judicial system.

In response to the foregoing developments,

individuals, organizations and institutions, both within and outside of Israel, have voiced concerns that the proposed changes may negatively

impact the business environment in Israel including due to reluctance of foreign investors to invest or transact business in Israel as

well as to increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in security markets,

and other changes in macroeconomic conditions.

The risk of such negative developments has increased in light of the recent Hamas attacks

and the war against Hamas declared by Israel, regardless of the proposed changes to the judicial system and the related debate.

extent that any of these negative developments do occur, they may have an adverse effect on our business, our results of operations and

our ability to raise additional funds, if deemed necessary by our management and Board of Directors.

UNREGISTERED SALES

OF EQUITY SECURITIES AND USE OF PROCEEDS

DEFAULTS UPON SENIOR

business faces many risks, a number of which are described under the caption “Risk Factors” in our Annual Report.

as set forth below, there have been no material changes from the risk factors previously disclosed in our Annual Report.

The risks described

in our Annual Report and below may not be the only risks we face.

Other risks of which we are not yet aware, or that we currently believe

are not material, may also materially and adversely impact our business operations or financial results.

If any of the events or circumstances

described in the risk factors contained in our Annual Report or described below occurs, our business, financial condition or results

of operations could be adversely impacted and the value of an investment in our securities could decline.

Investors and prospective investors

should consider the risks described in our Annual Report and below, and the information contained under the caption “Forward-Looking

Statements” and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.

may not be able to retain and attract programmatic advertisers, and the associated payments received from such programmatic advertisers’

ads on websites which have been categorized as “Made for Advertising” may be adversely affected.

recent developments relating to publishers that are categorized by a number of programmatic advertisers as “Made for Advertising”

(MFA) sites, including decisions made by leading media programmatic advertisers to prioritize different media categories and implement

publishing restrictions in connection with MFA, have negatively impacted Cortex’s business and operations.

In connection with the

foregoing, a significant customer of Cortex has decided to stop advertising on Cortex’s sites.

Additional advertising customers

of Cortex may opt to stop advertising on Cortex’s sites, which will impact Cortex’s, and as a result thereof, the Company’s

current and future revenue streams and results of operations.

The foregoing issues could lead to decreased advertiser interest in Cortex’s

sites, potentially resulting in lower bids for ad space, and as a result thereof, lower revenues from Cortex’s business, and decrease

in the Company’s results of operation.

may not be able to receive credit facility to fund our operations, on favorable terms, or at all.

generally finance our operations primarily through a combination of cash flow generated from operations and borrowings under our

credit facilities, loans, and through credit with our vendors.

Our ability to access capital through our existing credit facilities

and raise additional capital by expanding our credit facilities on economically favorable terms (including available borrowing line

and the rate of interest charged thereunder) or at all, or if we are in violation of our financial covenants in the future and do

not receive a waiver, depends on our ability to stay in compliance with the Program.

The Program poses certain limitations, as

explained elsewhere in this Quarterly Report,.

In addition, and as a result of the decrease in the Company’s revenues, our

financial performance has been negatively impacted, which may affect the terms on which we

are able to obtain credit facilities and loans.

adequate capital is not available at the time we need it, we may have to curtail future growth or change our expansion plans, which could

have a material adverse effect on us.

borrowing under our existing credit facilities is reduced, or otherwise becomes unavailable, or we are unable to arrange substitute financing

facilities or other sources of capital, our ability to fund our operations would be impaired, which would have a material adverse effect

on our results of operations.

may be unable to pay our obligations when they become due, including under the Program.

have financed our acquisitions principally through the raising of debt, credit facilities, and our operations through credit with our

Our ability to continue our operations and to pay our obligations, including under the Program (as described elsewhere

in this Quarterly Report), when they become due is contingent upon obtaining additional financing.

addition, during August, 2024, we will be required to renegotiate the terms of the Program, which may result in the credit

facilities being restricted, which may cause a delinquency in payments.

As a result of such delays, the Company’s Gix

Media’s and Cortex’s operations and revenues could be impaired.

during August 2024, the bank does not continue its approval of the Program, or if the Company, Cortex and Gix Media cannot maintain

compliance with the terms and covenant of the Program, or if we are unable to obtain sufficient amounts of additional capital, we

may be required to reduce the scope of our planned operations, and/or consider reductions in personnel costs or other operating

costs, in addition to the measures currently contemplated pursuant to the Program.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

DEFAULTS UPON SENIOR SECURITIES

MINE SAFETY DISCLOSURE

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors