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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
2022
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
filed with the
(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
Applications Corp.
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
Appointments of Executive Officers and Director
On
officer, tendered his resignation from his position as chief financial officer,
effective
directors appointed Mr.
financial officer, effective
On
Company.
Merger withGix Media Ltd.
On
Merger (the “Merger Agreement”) with
majority-owned subsidiary of Gix Internet Ltd. (“Parent Company”), in the field
of
monetization (“Gix Media”) and
wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which,
following the Merger (as defined herein), 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 (the
“Gix Merger”).
Subject to the terms and conditions of the Merger Agreement, at the Merger
Effective Date (as defined in the 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 capital stock
on a fully diluted basis. The Merger Agreement also contains customary
representations, warranties and covenants made by each of the Company, Gix Media
and Merger 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 three (3) new directors to
be appointed by Gix Media, who will join the Company’s three currently-serving
directors,
On
approved the Merger Agreement. Consummation of the Gix Merger is subject to
certain additional closing conditions, including, among other things, (i) the
Company filing an amendment to its certificate of incorporation to change the
Company’s name to “
parties, including the approval of
its favor against ordinary shares of Gix Media; (iii) conversion of the
Company’s outstanding convertible instruments into restricted shares of Common
Stock and (iv) obtaining a tax pre-ruling from the
“ITA”) relating to the Agreement.
On
effectively satisfied the foregoing condition to closing. As of
the remaining closing conditions of the Merger Agreement have not been fulfilled
yet.
In connection with Gix Merger, on
the Company’s stockholders approved certain amendments to the Company’s
certificate of incorporation, including, but not limited to (i) a name change
from “
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.
The Company intends to effect the foregoing amended and restated certificate of
incorporation upon the closing of the Gix Merger. Additionally, on
2022
whereby it reported the foregoing approvals by the requisite majority of the
Company’s stockholders.
-21-
On
in the best interest of the Company to effect the name change from “
Inc.
change from the contemplated amended and restated articles of incorporation to
be effected in connection with the Gix Merger.
Results of Operations
Results of Operations During the Three Months Ended
the Three Months Ended
Our revenues were
to
decrease in the three months ended
beginning on
certain cost reduction measures.
Our research and development expenses were
ended
during the same period in the prior year.
Our general and administrative expenses decreased to
months ended
the prior year. The reason for the decrease in the three months ended
2022
Our other expenses were
compared to
expenses are due to expenses in connection with the Gix Merger.
Our net financial expenses were
2022
reason for the increase during the three months ended
due to certain financial expenses in connection with a loan from the Parent
Company, which was signed during the quarter ended
Our tax on income was
representing a slight decrease as compared to
in the prior year.
Results of Operations During the Six Months Ended
the Six Months Ended
Our revenues were
to
decrease in the six months ended
on
reduction measures.
Our research and development expenses were
Our selling and marketing expenses were
same period in the prior year.
Our general and administrative expenses were
ended
during the same period in the prior year.
Our other expenses were
compared to
expenses are due to expenses in connection with the Gix Merger.
-22-
Our net financial expenses were
2022
reason for the increase during the six months ended
to certain financial expenses in connection with a loan from the Parent Company,
which was signed during the quarter ended
Our tax on income was
representing a slight decrease as compared to
in the prior year.
Liquidity and Capital Resources
As of
thousand
thousand
As of
liabilities,
Parent Company.
As of
receivables,
expenses. We had
in accounts payable and accrued liabilities,
form of a loan from the Parent Company and
We had a negative working capital of
During the three months ended
operations of
thousand
During the six months ended
operations of
thousand
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.
-23- Going Concern:
The Company has incurred
2022
total stockholders’ deficit as of
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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