NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S.
dollars in thousands (except share data)
NOTE
1: GENERAL
Organizational
Background
Viewbix
Inc. (formerly known as Virtual Crypto Technologies, Inc.) (the “Company”) was incorporated in the State of Ohio in 1989
under a predecessor name, Zaxis International, Inc. (“Zaxis”). On August 25, 1995, Zaxis 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 Israel”).
On
June 6, 2020, Algomizer changed its name to Gix Internet Ltd., or Gix.
On
February 7, 2019, the Company entered into a share exchange agreement (the “Share Exchange On February 7, 2019, the Company entered
into a share exchange agreement (the “Share Exchange Agreement”) with Gix Internet Ltd. (TASE:ALMO), a company organized
under the laws of the State of Israel (“Gix”), pursuant to which on July 25, 2019 (the “Closing Date”), Gix assigned,
transferred and delivered its 99.83% holdings in Viewbix Ltd. (“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 consideration
for its 99.83% holdings in Viewbix Israel, and (ii) 3,434,889 shares of its common stock to holders of convertible notes, which were
issued by the Company prior to the Reverse Recapitalization, and which were converted upon the Closing Date. 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.
As
a result of the Recapitalization Transaction, Viewbix Israel became a subsidiary of the Company. 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 prior to the reverse recapitalization have been retroactively adjusted based on the
equivalent number of shares received by the accounting acquirer in the Recapitalization Transaction.
VIEWBIX
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S.
dollars in thousands (except share data)
Organizational
Background (Cont.)
The
Company and its subsidiaries are collectively referred to as the “Company”. Viewbix Israel was incorporated on February 2006
in Israel. The Company has developed an interactive video platform based on Software as a Service (“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.
On
January 1, 2020, the Company announced certain cost reduction measures due the Company not achieving certain revenues goals.
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
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.
Virtual
Crypto Technologies Ltd.
On
January 17, 2018, the Company formed a new wholly-owned subsidiary under the laws of the State of Israel, Virtual Crypto Technologies
Ltd. (the “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.
VCT
Israel ceased its business operation prior to consummation of the Recapitalization Transaction. On January 27, 2020, Virtual Crypto Israel
was sold to a third party for NIS 50,000 ($14,459).
Stock
Subscription Agreement and Loan Agreement
On
December 18, 2020, the Company entered into a Stock Subscription Agreement (the “Subscription”) with certain investors
(the “Investors”) in connection with the sale and issuance of an aggregate of 3,000,000
shares of Common Stock, at a purchase price of
$0.01
per share, and for an aggregate purchase price
of $30,000.
In addition, and on the same date, the Company entered into a Loan Agreement (the “Loan”) with the Investors, pursuant
to which the Investors lent an aggregate of $69,000
(the “Principal Amount”). In accordance
with the terms of the Loan, the Company repaid the interest on the Principal Amount (8%
compounded annually) to the Investors in the
form of an issuance of an aggregate of 552,000
shares of Common Stock, at a price per share
of $0.01.
The shares of Common Stock were issued to the Investors pursuant to Regulation S of the Securities Act of 1933, as amended.
VIEWBIX
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S.
dollars in thousands (except share data)
Going
Concern
The
Company has incurred $159 in
net loss for the six months ended June 30 2021 has $2,237 stockholders’
deficit as of June 30, 2021 and $2,078 in
total stockholders’ deficit as of December 31, 2020. 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.
NOTE
2: SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation and Principles of Consolidation:
The
accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary
and were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
All
intercompany accounts and transactions have been eliminated in consolidation.
Unaudited
Interim Financial Information
The
Company’s unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and pursuant to the
rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted
by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the
audited financial statements as of and for the year ended December 31, 2020 and the notes thereto included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 16, 2021 (the “2020 Annual Report”).
The results for any interim period are not necessarily indicative of results for any future period.
The
unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. In the
opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments
that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented
.The results for the three months ended June 30, 2021 are not necessarily indicative of the results for the year ending December 31,
2021, or for any future period.
As
of June 30, 2021, there have been no material changes in the Company’s significant accounting policies from those that were disclosed
in the 2020 Annual Report.
VIEWBIX
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S.
dollars in thousands (except share data)
NOTE
3: OTHER ACCOUNTS RECEIVABLES
Composition:
SCHEDULE OF OTHER ACCOUNTS RECEIVABLES COMPOSITION
|
|
As
of
June
30
|
|
|
As
of
December
31
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Government
authorities
|
|
$
|
15
|
|
|
$
|
20
|
|
Total
|
|
|
15
|
|
|
|
20
|
|
NOTE
4: OTHER ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Composition:
SCHEDULE OF OTHER ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
As
of
June
30
|
|
|
As
of
December
31
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Other
payables
|
|
$
|
47
|
|
|
$
|
47
|
|
Accrued
liabilities
|
|
|
152
|
|
|
|
130
|
|
Total
other accounts payables
|
|
$
|
199
|
|
|
$
|
177
|
|
NOTE
5: PAYABLE TO PARENT COMPANY
Balances:
SCHEDULE OF PAYABLE TO PARENT COMPANY
|
|
As
of
June
30
|
|
|
As
of
December 31
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Gix
– Parent Company Payable
|
|
$
|
2,171
|
|
|
$
|
2,054
|
|
As
part of the agreement with Gix, the parties agreed to have the Company’s operations outsourced to Gix from the agreement date and
until the acquisition is consummated. The following terms were included in the agreement pursuant to the above:
|
(a)
|
From
May 2018 all of the Company’s employees will become employees of Gix.
|
|
(b)
|
Between
the periods of May 2018 to October 2018, Gix will pay the full expenses of the employees as well as other related expenses.
|
|
(c)
|
From
November 2018 until to the Closing Date, the employees transferred from the Company to Gix will dedicate half of their time to the
Company’s operations and correspondingly 50% of the costs to be incurred by Gix in respect of these employees are to be charged
to the Company.
|
From
the closing date, the actual expenses incurred by Gix related to the Company will be charged to the Company. No amounts were
paid by the Company to Gix during 2021 and 2020.
VIEWBIX
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S.
dollars in thousands (except share data)
NOTE
6: SHORT TERM LOAN
On
December 18, 2020, the Company entered into the Loan and Subscription with certain Investors as described in note 1e, pursuant
to which the Investors lent the Principal Amount. In accordance with the terms of the Loan, the Company prepaid the interest on
the Principal Amount of 8%
compounded annually to the Investors as an issuance
of 552,000
shares of Common Stock, at a price per share
of $0.01.
Under the Stock Subscription Agreement, the Investors transferred an amount of $ 30,587
to the Company as consideration for the
issued shares.
The
Company allocated the total proceeds in respect of the shares issued and the Loan extended based on its relative fair values. As a result
of the allocation, a discount of $19 was recorded on the loan. The discount is amortized over the term of the loan as finance expense.
The
allocation of the proceeds to the fair value distribution of the liability and equity components on the transactions date was as follows:
SCHEDULE OF FAIR VALUE DISTRIBUTION OF LIABILITY AND EQUITY COMPONENTS
Instrument
|
|
Fair
Value
|
|
|
%
of total
fair
|
|
|
Allocated
amount
|
|
Short
term loan and prepaid interest
|
|
|
55,200
|
|
|
|
49.45
|
|
|
|
49,246
|
|
Investment
in the company’s shares
|
|
|
54,000
|
|
|
|
50.55
|
|
|
|
50,340
|
|
Total
|
|
|
109,200
|
|
|
|
100
|
|
|
|
99,586
|
|
The
composition of short term loan balance as of the transaction is as follows:
SCHEDULE OF COMPOSITION OF SHORT TERM LOAN
|
|
As
of
June
30
2021
|
|
|
As
of
December
31
2020
|
|
Short
term loan
|
|
$
|
69
|
|
|
$
|
69
|
|
Discount
on Short term loan
|
|
|
(10
|
)
|
|
|
(19
|
)
|
Short
term loan, Net
|
|
$
|
59
|
|
|
$
|
50
|
|
VIEWBIX
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S.
dollars in thousands (except share data)
NOTE
7: STOCKHOLDERS’ DEFICIT
Stockholders’
deficit.
Composition:
SCHEDULE
OF COMMON STOCK COMPOSITION
|
|
As
of June 30
|
|
|
As
of December 31
|
|
|
|
2021
|
|
|
2020
|
|
|
|
Authorized
|
|
|
Issued
and outstanding
|
|
|
Authorized
|
|
|
Issued
and outstanding
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
Number
of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
490,000,000
|
|
|
|
34,753,669
|
|
|
|
490,000,000
|
|
|
|
34,753,669
|
|
Common
Stock:
Common
stock confers
the right to participate in the general meetings, to one vote per share for any purpose, to an equal part, on share basis, in distribution
of dividends and to equally participate, on share basis, in distribution of excess of assets and funds from the Company and they shall
not confer other privileges unless otherwise provided by law. Some investors have standard anti-dilutive rights, registration
rights, and information and representation rights.
On
December 18, 2020, the Company entered into the Subscription with the Investors in connection with the sale and
issuance of an aggregate of 3,000,000
shares of Common Stock, at a purchase price of
$0.01
per share, and for an aggregate purchase price
of $30,000.
In addition, and on the same date, the Company entered into the Loan with the Investors, pursuant to which the Investors lent
the Principal Amount. In accordance with the terms of the Loan, the Company repaid the interest on the Principal Amount,
8%
compounded annually to the Investors,
in the form of an issuance of an aggregate of 552,000
shares of Common Stock, at a price per share
of $0.01.
The shares of Common Stock were issued to the Investors pursuant to Regulation S of the Securities Act of 1933, as amended.
VIEWBIX
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S.
dollars in thousands (except share data)
NOTE
7:
|
STOCKHOLDERS’
DEFICT (Cont.)
|
Share
Exchange
As
detailed in Note 1, as part of the Recapitalization Transaction in July 2019, the Company issued 30,928,620
common shares in exchange for 99.83%
of the issued and outstanding common stock
and all the preferred shares of Viewbix Israel. The number of shares prior to the reverse capitalization have been retroactively
adjusted based on the equivalent number of shares received by the accounting acquirer in the Recapitalization Transaction.
Warrants
The
following table summarizes information of outstanding warrants as of June 30, 2021:
SUMMARY OF OUTSTANDING WARRANTS
|
|
Warrants
|
|
|
Warrant
Term
|
|
Exercise
Price
|
|
|
Exercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class
J Warrants
|
|
|
3,649,318
|
|
|
July
2029
|
|
|
0.48
|
|
|
|
3,649,318
|
|
Class
K Warrants
|
|
|
3,649,318
|
|
|
July
2029
|
|
|
0.80
|
|
|
|
3,649,318
|
|
Additionally,
in connection with the Share Exchange Agreement, 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. All
of the Company’s warrants meet the US GAAP criteria for equity classification. During January and March 2020, 50,000 class H warrants
expired. During January 2020, 38,095 class I warrants expired. During April 2020, 142,857 Class G warrants expired.
VIEWBIX
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S.
dollars in thousands (except share data)
NOTE 8: COMMITMENTS AND CONTINGENCIES –
In
June 2017, a lawsuit was filed by a former CEO of the Company with the Tel Aviv District Court (the “Tel Aviv Court”) against
the Company claiming certain damages in the total amount of $225,
under the assertion of wrongful termination by the Company and Emerald Israel. The
Company filed its response with the Tel Aviv Court in October of 2017. The dispute was initially heard by the Tel Aviv Court on February
13, 2020. In a supplemental hearing on February 11, 2021 the former CEO provided data regarding his claims. On March 11, 2021 the former
CEO filed his summaries. The Company’s summaries filed on May, 2021. On June 3, 2021, and after the summaries were filed,
the lawsuit against Emerald Israel was dismissed by the Tel Aviv Court.
NOTE 9: FINANCIAL (EXPENSES) INCOME, NET
Composition:
SCHEDULE
OF FINANCIAL (INCOME) EXPENSES, NET
|
|
For
the six months ended June 30
|
|
|
|
2021
|
|
|
2020
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
Bank
fees
|
|
|
(1
|
)
|
|
|
(4
|
)
|
Exchange
rate differences
|
|
|
(2
|
)
|
|
|
(4
|
)
|
Other
|
|
|
(8
|
)
|
|
|
4
|
|
|
|
|
(11
|
)
|
|
|
(4
|
)
|
|
|
For
the three months ended June 30
|
|
|
|
2021
|
|
|
2020
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
Bank
fees
|
|
|
(1
|
)
|
|
|
(2
|
)
|
Exchange
rate differences
|
|
|
(3
|
)
|
|
|
(44
|
)
|
Other
|
|
|
-
|
|
|
|
14
|
|
|
|
|
(4
|
)
|
|
|
(32
|
)
|
NOTE 10: TAXES ON INCOME
|
A.
|
Tax
rates applicable to the income of the Company:
|
Viewbix
Israel are taxed according to Israeli tax laws. The Israeli corporate tax rate is 23% in the years 2019 and onwards.
Viewbix
Inc. is taxed according to U.S. tax laws. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which
among other provisions, reduced the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018.
VIEWBIX
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S.
dollars in thousands (except share data)
NOTE
10:
|
TAXES
ON INCOME (Cont.)
|
|
B.
|
Deferred
income taxes:
|
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are
as follows:
SCHEDULE OF DEFERRED INCOME TAXES
|
|
As
of
June
30
|
|
|
As
of
December
31
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Deferred
R&D expenses
|
|
$
|
16
|
|
|
$
|
114
|
|
Operating
loss carryforward
|
|
|
32,295
|
|
|
|
32,256
|
|
Total
|
|
$
|
32,311
|
|
|
$
|
32,370
|
|
|
|
|
|
|
|
|
|
|
Net
deferred tax asset before valuation allowance
|
|
$
|
7,062
|
|
|
$
|
7,076
|
|
Valuation
allowance
|
|
|
(7,062
|
)
|
|
|
(7,076
|
)
|
Net
deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
As
of June 30, 2020, the Company has provided valuation allowances of $7,062 in respect of deferred tax assets resulting from tax loss carryforward
and other temporary differences. Management currently believes that because the Company has a history of losses, it is more likely than
not that the deferred tax regarding the loss carryforward and other temporary differences will not be realized in the foreseeable future.
|
C.
|
Available
carryforward tax losses:
|
As
of June 30, 2021, Viewbix Israel incurred operating losses in Israel of approximately $13,801
which may be carried forward and offset against
taxable income in the future for an indefinite period.
As
of June 30, 2021, the Company generated net operating losses in the U.S. of approximately $18,494.
Net
operating losses in the U.S. are available through 2035.
Utilization of U.S. net operating losses may be subject to substantial annual limitation due to the “change in ownership”
provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net
operating losses before utilization.
VIEWBIX
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S.
dollars in thousands (except share data)
NOTE
10:
|
TAXES
ON INCOME (Cont.)
|
|
D.
|
Loss
(income) from continuing operations, before taxes on income, consists of the following:
|
SCHEDULE OF LOSS (INCOME) FROM CONTINUING OPERATIONS, BEFORE TAXES ON INCOME
|
|
|
2021
|
|
|
|
2020
|
|
|
|
2021
|
|
|
|
2020
|
|
|
|
For
the six months ended June 30
|
|
|
For
the three months ended June 30
|
|
|
|
|
2021
|
|
|
|
2020
|
|
|
|
2021
|
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USA
|
|
$
|
42
|
|
|
$
|
10
|
|
|
$
|
15
|
|
|
$
|
5
|
|
Israel
|
|
|
114
|
|
|
|
255
|
|
|
|
61
|
|
|
|
88
|
|
Total loss before taxes on income
|
|
$
|
156
|
|
|
$
|
265
|
|
|
$
|
76
|
|
|
$
|
93
|
|
NOTE 11: LOSS PER SHARE-BASIC AND DILUTED
Composition:
SCHEDULE OF LOSS PER SHARE-BASIC AND DILUTED
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
For
the six months
ended
June 30
|
|
|
For
the three months
ended
June 30
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Basic
and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to ordinary stockholders
|
|
|
159
|
|
|
|
267
|
|
|
|
79
|
|
|
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common stock
|
|
|
34,753,669
|
|
|
|
31,201,669
|
|
|
|
34,753,669
|
|
|
|
31,201,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share-basic and diluted
|
|
|
0.005
|
|
|
|
0.009
|
|
|
|
0.002
|
|
|
|
0.003
|
|
VIEWBIX
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
U.S.
dollars in thousands (except share data)
NOTE 12: COVID-19 PANDEMIC IMPLICATIONS
The
COVID-19 pandemic, which originated in China in late 2019, has since spread across the globe and affected the economic condition of most,
if not all, countries, including the United States, Israel and many countries in Europe. On March 11, 2020, the World Health Organization
declared the outbreak a pandemic. While COVID-19 is still spreading and the final implications of the pandemic are difficult to estimate
at this stage, it is clear that it has affected the lives of a large portion of the global population. As of June 30, 2021, the pandemic
has caused repeated states of emergency to be declared in various countries, ongoing and extended travel restrictions have been imposed
for several months, strict quarantines rules have been established and maintained for an extended period of time in a plethora of jurisdictions
and various institutions and companies have been closed and rendered bankrupt. The Company is actively monitoring the pandemic and is
taking any necessary measures to respond to the situation in cooperation with the various stakeholders. Due to the uncertainty surrounding
the COVID-19 pandemic, the Company will continue to assess the situation, including government-imposed restrictions, market by market.
It is not possible at this time to estimate the full impact that the COVID-19 pandemic could have on the Company’s business, the
continued spread of COVID-19, and any additional measures taken by governments, health officials or by the Company in response to such
spread, could have on the Company’s business, results of operations and financial condition. The COVID-19 pandemic and mitigation
measures have also negatively impacted global economic conditions, which, in turn, could adversely affect the Company’s business,
results of operations and financial condition. The extent to which the COVID-19 outbreak continues to impact the Company’s financial
condition will depend on future developments that are highly uncertain and cannot be predicted, including new government actions or restrictions,
new information that may emerge concerning the severity, longevity and impact of the COVID-19 pandemic on economic activity.