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
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
-20- Overview and background
Recent Developments Merger withGix Media Ltd.
On
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 four (4) new directors to
be appointed by Gix Media, who will join the Company's two currently-serving
directors,
On
In connection with Gix Merger, on
Results of Operations
Results of Operations During the Three Months Ended
Our revenues were
-21-
Our research and development expenses were
Our selling and marketing expenses were
Our general and administrative expenses were
Our other expenses were
Our net financial expenses were
Liquidity and Capital Resources
As of
As of
As of
We had a negative working capital of
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.
-22- Going Concern
The Company has incurred
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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