UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31,June 30, 2019

or

[  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to _______________________

Commission file number: 000-15746

VIRTUAL CRYPTO TECHNOLOGIES,VIEWBIX INC.
(Exact Name Of Registrant As Specified In Its Charter)

Registrant’s Telephone Number, Including Area Code:+972 3-600-33759-774-1505

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act) or a smaller reporting company.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

On May 15,August 13, 2019, the registrant had 112,249,64331,201,669 shares of common stock issued and outstanding.

VIRTUAL CRYPTO TECHNOLOGIES,VIEWBIX INC. (Formerly known as Virtual Crypto Technologies, Inc.)

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Viewbix Inc. (Formerly known as Virtual Crypto Technologies, Inc.)

Condensed Consolidated Balance Sheets

The accompanying notes are an integral part of these interim financial statements.

Viewbix Inc. (Formerly known as Virtual Crypto Technologies, Inc.)

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the Three Months ended March 31, 2019 and 2018

(Unaudited)

The accompanying notes are an integral part of these interim financial statements.

Viewbix Inc. (Formerly known as Virtual Crypto Technologies, Inc.)

Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

For the ThreeSix Months Ended March 31,June 30, 2019 and the Year Ended December 31, 2018

(Unaudited)

The accompanying notes are an integral part of these interim financial statements.

Viewbix Inc. (Formerly known as Virtual Crypto Technologies, IncInc.)

Condensed Consolidated Statements of Cash Flows

For the ThreeSix Months Ended March 31,June 30, 2019 and 2018

(Unaudited)

The accompanying notes are an integral part of these financial statements.

Viewbix Inc. (Formerly known as Virtual Crypto Technologies, Inc.)

For the Three and Six Months Ended March 31,June 30, 2019 and 2018

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. The Company and Significant Accounting Policies.

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 March 16, 2015, Zaxis and Emerald Israel executed the Share Exchange Agreement,a share exchange agreement, which closed on July 14, 2015, (the “Share Exchange Agreement”) 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 17, 2018, the Company formed a new wholly ownedwholly-owned subsidiary under the laws of the State of Israel, Virtual Crypto Technologies Ltd. (the “Subsidiary”), 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.

On February 7, 2019, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Algomizer Ltd. (TASE:ALMO), a company organized under the laws of the State of Israel (“Algomizer”), pursuant to which on the Closing Date, as defined below, Algomizer 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 convertible notes of the Company into shares of the Company’s restricted common stock, and which excludes warrants to purchase shares of the Company’s common stock expiring in 2020, with an exercise price representing a valuation of the Company equal to at least $30,000,000 (“Fully Diluted Share Capital”), and additional warrants as further described below. 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 Algomizer 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 February 26, 2019, stockholders holding a majority of our outstanding shares of common stock approved to effect a reverse stock split of the of Company’s common stock on a 1-for-15 basis (“Reverse Stock Split”). The Reverse Stock Split became effective on May 20, 2019, upon which each fifteen (15) shares of company’s common stock were automatically converted, without any further action by stockholders, into one share of common stock. No fractional shares were issued as the result of the reverse stock split. Instead, each stockholder was entitled to receive one share of common stock in lieu of the fractional share that would have resulted from the reverse stock split. All stock information in this Quarterly Report have been restated retroactively to reflect the effect of the Reverse Stock Split.

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 July 25, 2019 (the “Closing Date”), the Company issued 20,281,085 shares of its common stock to Algomizer in consideration for 99.83% holdings in Viewbix Israel, and 3,434,889 shares of its common stock to holders of convertible notes of 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 Algomizer to purchase the Company’s common stock, whereby (i) 3,649,318 of such warrants have an exercise price of $0.48, and (ii) 3,649,318 of such warrants have an exercise price of $0.80.

Going Concern:

The Company has incurred significant operating losses and negative cash flows from operating activities in relation to its operations, since inception. While the Company raised approximately $1.9 million in the year ended December 31, 2018 to fund the operations, of its New Subsidiary, the Company will require additional capital resources in order to support the commercialization of the New Subsidiary’s technologyits products and operations and maintain its research and development activities related to the New Subsidiary’s technology.activities. The Company is addressing its liquidity needs by seeking additional funding from public and/or private sources. There are no assurances, however, that the Company will be able to obtain an adequate level of financial resources that are required for the Company’s short and long-term requirements, or at all these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty

Basis of Presentation and Significant Accounting Policies:

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, the Subsidiary, prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q. The financial statements presented herein have not been audited by an independent registered public accounting firm but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations and cash flows for the period. However, these results are not necessarily indicative of results for any other interim period or for the full fiscal year. The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.

Certain information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the Securities and Exchange Commission (“SEC”). The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on March 28, 2019 (the “Annual Report”).

Recent Accounting Standards announced

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments apply to reporting entities that are required to make disclosures about recurring or nonrecurring fair value measurements and should improve the cost, benefit, and effectiveness of the disclosures. ASU 2018-13 categorized the changes into those disclosures that were removed, those that were modified, and those that were added. The primary disclosures that were removed related to transfers between Level 1 and Level 2 investments, along with the policy for timing of transfers between levels. In addition, disclosing the valuation processes for Level 3 fair value measurements was removed. The amendments are effective for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company notes that this guidance will impact its disclosures beginning January 1, 2020.

Note 2. Convertible Notes.

The following convertible promissory notes bear interest at 1% per annually, are convertible at a price of $0.01$0.15 per share and are repayable through January 1, 2020.

As noted above, subsequent to the balance sheet date, on July 26, 2019, all the convertible notes were converted into 3,434,889 shares of the Company.

Note 3. Stockholders’ Equity.

On May 2, 2019, the Company issued 50,000 restricted shares to the Company’s CEO and 50,000 restricted shares to the Company’s CFO in the lieu of payment for services provided to the Company. The fair value of the 100,000 restricted shares was $51,300.

There were no issuances of warrants or options during the six month ended June 30, 2019.

The following table summarizes information of outstanding warrants issued to investors and consultants in exchange for their services as of March 31,June 30, 2019:

(*) Subsequent to the balance sheet date, these warrants expired.

Note 4. Related Party Transactions.

Other than transactions and balances related to cash and share based compensation to officers and directors and other than the issuances of convertible debt to certain investors, and payments in respect of consulting fees to certain shareholders with beneficial holdings of greater that 5% of $75,000$150,000 and $ nil during the threesix months ended March 31,June 30, 2019 and 2018, respectively, the Company did not have any transactions and balances with related parties and executive officers during these periods.

As a result of the issuance of the convertible notes in the prior years, certain may hold convertible notes allowing them to convert the notes in excess of 5% of the Company’s issued and outstanding shares of common stock. Accordingly, such investors may be deemed to be related parties under Item 404(a) of Regulation S-K. In addition, certain investors receive fees for consulting services provided to the Company, as noted above.

Note 5. Subsequent Events.

On May 2, 2019, the company issued 750,000 restricted shares to the Company’s CEO and 750,000 restricted shares to the Company’s CFO in the lieu of services provided to the Company. The fair value of the 1,500,000 restricted shares was $51,300.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS

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 March 31,June 30, 2019 and 2018, and the relatedstatements of comprehensiveloss, statement of changes in stockholders’ equity (deficit) and statements of cash flows for the three and six months periods then ended, and the related notes thereto contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”). This management’s 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. These factors include those contained in section captioned “Risk Factors” of the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2019 (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.

Overview and background

On January 17, 2018, Viewbix Inc. (formerly known as Virtual Crypto Technologies, Inc. (the) (“we”, “us”, “our”, the “Registrant” or the “Company”) formed Virtual Crypto Technologies LtdLtd. as a new wholly-owned subsidiary under the laws of the State of Israel (“Virtual Crypto Israel”) and appointed Mr. Alon Dayan, who has served as the Registrant’s Chief Executive Officer since June 30, 2018 and has been a member of the Company’s Board of Directors since March 14, 2018, as CEO of Virtual Crypto Israel. Virtual Crypto Israel was formed to develop and market software and hardware products facilitating, allowing and supporting purchase and/or sale of cryptocurrencies through ATMs, tablets, PCs and/or mobile devices (the “Products”).

On January 29,During the year ended December 31, 2018pursuant to resolution and through the Closing Date of the Registrant’s Board of Directors,Share Exchange Agreement (as defined below), the Registrant transferred the management sharesCompany continued its development of the Registrant’s former Israeli subsidiary, Emerald Medical Applications Ltd. (“Emerald IL”) to Attorney Eviatar Knoller, Esq., with offices inTel Aviv-Jaffa, Israel, as trustee (the “Trustee”) for the purpose of enabling the Trustee to liquidate the management shares and/or the assets of Emerald IL to satisfy its debts.Products.

Recent Developments

Share Exchange Agreement

The operations of Virtual Crypto Israel only generated revenues of $100,000 during the year end December 31, 2018 from one customer, Chiron, who has encountered financial difficulties. During 2018, we spent $790,413 in order to develop our systems in an industry that has experienced significant difficulties over the last 18 months. We believe that this has led to a decrease in the anticipated demand for Virtual Crypto Israel’s products and services. Therefore, onOn February 7, 2019, we filed a Form 8-K reporting that the Registrant entered into a share exchange agreement (the “Share Exchange Agreement”) with Algomizer Ltd., an Israeli Corporation (“Algomizer”), pursuant to which on the Closing Date, as defined below, Algomizer will assign, transferassigned, transferred and deliverdelivered its 99.83% holdings in Viewbix Ltd., an Israeli corporation (“Viewbix Israel”), to us in exchange for shares of restricted common stock of representing 65% of the issued and outstanding share capital of the Company on a fully diluted basis, on the closing date, excluding certain warrants to purchase shares of common stock, which will expire in 2020 and with an exercise price representing a valuation equal to $30,000,000 (“Fully Diluted Share Capital”). In addition, upon the earlier of: (a) the launch of a live video product to an American consumer in the U.S by Viewbix Ltd.,Israel, or (b) the launch of an interactive television product to an American consumer in the U.S., by Viewbix Ltd.,Israel, we will issue to Algomizer additional shares of restricted common stock of the Company representing 5% of the Fully Diluted Share Capital.

Furthermore, on the closing date,Closing Date, we will issueissued to Algomizer: (i) warrants to purchase shares of restricted common stock with an exercise price representing a valuation for the Company of $15,000,000 on Fully Diluted Share Capital basis, which will representrepresenting 10% of the Fully Diluted Share Capital immediately following the closing,Closing Date, which warrants will be exercisable for a period of ten (10) years, and (ii) warrants to purchase shares of restricted common stock with an exercise price representing a valuation for the Company of $25,000,000 on Fully Diluted Share Capital basis, which will representrepresenting 10% of the Fully Diluted Share Capital immediately following the closing,Closing Date, which latter warrants will be exercisable for a period of ten (10) years.

The closing of the Share Exchange Agreement iswas conditioned upon us filing an amendment to our certificate of incorporation to change the Company’s name to ViewBixViewbix Inc. (the “Name Change”), effecting a reverse split of our shares of common stock at a ratio of 1:15 which we intend to effect whether or not the transactions under the Share Exchange Agreement will consummate, conversion of(the “Reverse Stock Split”), converting our outstanding convertible notes into shares of restricted common stock, and Algomizer obtaining a tax pre-ruling from the Israeli Tax Authority relating to the Share Exchange Agreement.Agreement (“Israeli Tax Ruling”).

ViewBix Ltd.On February 26, 2019, stockholders holding a majority of our outstanding shares of common stock approved an amendment to our certificate of incorporation in order to effect the Reverse Stock Split. The Reverse Stock Split became effective on May 20, 2019, upon which each fifteen (15) shares of our common stock were automatically converted, without any further action by our stockholders, into one share of common stock. No fractional shares were issued as the result of the reverse stock split. Instead, each stockholder was entitled to receive one share of common stock in lieu of the fractional share that would have resulted from the reverse stock split. All stock information in this Quarterly Report have been restated retroactively to reflect the effect of the Reverse Stock Split.

On July 24, 2019, the Registrant filed a separate Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of Delaware to effect the Name Change, thereby reflecting our 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 July 25, 2019 (the “Closing Date”), the Company completed the transaction and issued 20,281,085 shares of its common stock to Algomizer in consideration for 99.83% holdings in Viewbix Israel, and 3,434,889 shares of its common stock to holders of convertible notes of 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 Algomizer to purchase the Company’s common stock, whereby (i) 3,649,318 of such warrants have an exercise price of $0.48, and (ii) 3,649,318 of such warrants have an exercise price of $0.80.

ViewbixIsrael, through its ViewBix Studio, provides its clients with a video engagement platform designed to add enhanced branding and interactive elements – from call-to-action buttons to email captures – to digital videos. ViewBix Studio is simple, intuitive and requires no coding experience, thereby enabling clients to enhance videos and publish them across any platform, for any device in just minutes. Videos enhanced by Viewbix Israel are compatible with existing ad serving, measurement and analytics platforms and easily work within existing agency or client processes for launching advertising campaigns. Beyond adding interactions to video, Viewbix Israel uses second-by-second measurement of engagements to uncover contextual insights as to what, when and how users are engaging or responding to brand messaging.

On July 25, 2019, Mr. Eyal Ben Ami notified the Company that he resigns from the Company’s board of directors effective immediately prior to and contingent upon the Closing. Mr. Ben Ami’s resignation was not a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

On July 25, 2019, Mr. Alon Dayan, the Company’s currently serving chief executive officer, and Mr. Gadi Levin, the Company’s currently serving chief financial officer, each tendered their resignations from their respective positions effective immediately prior to and contingent upon the Closing. Mr. Dayan will continue to serve the Company as a member of the Company’s board of directors and Mr. Levin will transition to the role of senior accounting consultant.

On July 25, 2019, Mr. Noam Band, 48, was appointed to the Company’s board of directors, where he will assume the role of chairman of the board of directors. Since 2013, Mr. Band has served as Algomizer’s chief executive officer and chairman of its board of directors. Mr. Band holds both a B.A. in economics and an MBA from the Hebrew University in Jerusalem.

On July 25, 2019, Mr. Jonathan Stefansky, 47, was elected to the Company’s board of directors and appointed as the Company’s chief executive officer. Mr. Stefansky previously co-founded Viewbix Israel and currently serves as its chief executive officer. Mr. Stefansky holds a B.A. in management information systems from Yeshiva University, New York, and an MBA from Baruch College’s Zicklin School of Business, New York.

Reverse Stock SplitOn July 25, 2019, Mr. Amihay Hadad, 42, was appointed by the Company’s board of directors to serve as the Company’s chief financial officer. From 2011 until 2018, Mr. Hadad served as the chief financial officer of Yedioth Internet and thereafter was appointed as chief financial officer of Algomizer. Mr. Hadad holds both a B.A. and an MBA from the College of Management Academic Studies in Rishon LeZion, Israel, and an M.A. in law from Bar-Ilan University, Israel. Mr. Hadad is also a certified public accountant in Israel.

On February 26,July 25, 2019, stockholders holdingMr. Hillel Scheinfeld, 48, was appointed by the Company’s board of directors to serve as the Company’s chief operating officer. Mr. Scheinfeld co-founded Viewbix Israel in 2007, and thereafter served as its chief operating officer. Mr. Scheinfeld holds a majorityB.S. in finance from Yeshiva University, New York.

There are no arrangements or understandings between Mr. Band, Mr. Stefansky, Mr. Hadad or Mr. Scheinfeld, respectively, and any other persons, pursuant to which each of our outstanding shares of common stock approved an amendment to our certificate of incorporation in order to affectthem was selected as a reverse stock splitdirector or officer of the Company. There are no additional current or proposed transactions between the Company and Mr. Band, Mr. Stefansky, Mr. Hadad or Mr. Scheinfeld, respectively, or any of our common stock on a 1-for-15 basis. We intend to affect such reverse stock split once all approvals for such actions are obtained.their immediate family members that would require disclosure under Item 404(a) of Regulation S-K.

Pursuant to the Reverse stock split, each fifteen (15) sharesIsraeli Tax Ruling, the Registrant ceased the options of our common stock will be automatically converted, without any further action by our stockholders, into one share of common stock. No fractional shares will be issued asVirtual Crypto Israel upon the resultClosing Date of the reverse stock split. Instead, each stockholder will be entitled to receive one share of common stockShare Exchange Agreement.

No new compensatory arrangements were entered into in lieuconnection with the aforementioned leadership changes.

The appointment of the fractional share that would have resulted fromnew directors came into effect ten (10) days subsequent to the reverse stock split.Closing Date.

Results of Operations

Results of Operations During the Three Months Ended March 31,June 30, 2019 as Compared to the Three Months Ended March 31,June 30, 2018

Our research and development expenses were $9,413$16,039 for the three months ended March 31,June 30, 2019, as compared to $54,011$266,954 during the same period in the prior year. The decrease was due to downsizing of the research and development team expenses and slowdown in the development for our virtual crypto products.

Our general and administrative expenses decreased to $191,210$249,303 for the three months ended March 31,June 30, 2019 as compared to $1,064,283$356,515 during the same period in the prior year. The significant decrease in 2019 was due to non-cash consulting expenses in 2018 paid by way of issuances of the Company’s shares and warrants to certain consultants who assisted in the establishment of the newvirtual crypto business.

Our marketing expensesInterest expense decreased to $ nil$3,830 for the three months ended March 31, 2019 as compared to $310,000 during the same period in the prior year. The significant decrease was due to the reduction in operations.

Interest income increased to $115,965 for the three months ended March 31,June 30, 2019, as compared to interest expenses of $19,374,082$2,615,760 during the same period in the prior year. The income during the period in 2019 was primarily as a result of the changes of the terms of certain convertible notes that occurred during the three months ended March 31,June 30, 2019. The significant expenses in 2018 is as a result of the changes of the terms of certain convertible notes that occurred during the three months ended March 31,June 30, 2018, primarily, the decrease in the conversion price per share from $2.1 to $0.15 per share.

Results of operations during the six months ended June 30, 2019, as compared to the six months ended June 30, 2018

Our research and development expenses were $25,452 for the six months ended June 30, 2019, as compared to $630,965 during the same period in the prior year. The increase was due to research and development expenses incurred as a result of the development for our virtual crypto products.

Our general and administrative expenses decreased to $440,513 for the six months ended June 30, 2019, as compared to $1,420,798 during the same period in the prior year. The decrease in 2019 was due to non-cash consulting expenses paid via the issuances of the Company’s shares of common stock and warrants in 2018 to certain consultants who assisted in the establishment of our virtual crypto operations.

Interest income increased to $112,135 for the six months ended June 30, 2019, as compared to an expense of $21,989,842 during the same period in the prior year. The income during the period in 2019 was primarily as a result of the changes of the terms of certain convertible notes that occurred during the six months ended June 30, 2019. The significant expenses in 2018 is as a result of the changes of the terms of certain convertible notes that occurred during the six months ended June 30, 2018, primarily, the decrease in the conversion price per share from $0.14 to $0.01 per share.

Liquidity and Capital Resources

Our balance sheet as of March 31,June 30, 2019 reflects current assets of $460,809$252,243 consisting of cash of $447,967$233,299 cash and other receivables of $12,842.$18,944. We also have $1,079,840$1,089,146 in current liabilities consisting of $98,871$105,848 in accounts payable and accrued liabilities, $8,227$10,556 in accrued interest payable, short-term portion of convertible notes of $503,217 and liabilities held for sale of $469,525. As of December 31, 2018, we had current assets of $558,677 consisting of $499,919 in cash and other receivables of $41,516 and marketable securitiesshort-term investment of $17,242. As of December 31, 2018, we had $975,153 in current liabilities consisting of $13,115 in accounts payable and accrued liabilities, $7,064 employee payable, and short-term portion of convertible notes of $485,449 and liabilities held of sale in respect of our discontinued operations of $469,525.

We had negative working capital of $619,031$836,903 as of March 31,June 30, 2019, as compared to negative working capital of $416,476 at December 31, 2018. Our total liabilities as of March 31,June 30, 2019 were $1,079,840,$1,089,146, as compared to $975,153 at December 31, 2018.

During the period ended March 31,June 30, 2019, we had negative cash flow from operations of $66,559,$281,497, which was the result of a net loss of $84,658,$353,830, decrease in provision for settlements of convertible loan of $145,932, increase in accrued interest and amortization of discount on convertible notes of $17,768 loss from marketable securities $2,635 and $28,035$79,335 shares and warrants issued for services, offset by net changes in working capital of $36,901.$118,797.

During the period ended March 31,June 30, 2018, we had negative cash flow from continuing operations of $345,449,$935,193, which was the result of a net loss of $20,802,376,$24,041,605, depreciation expense of $14,290, increase in accrued interest and amortization of discount on convertible notes of $20,165,406 and $892,300shares$523,481, increase in provision for settlements of convertible loan of $21,472,897, $1,044,144 worth of shares and warrants issued for services, $50,000 in proceeds from deferred revenues, and gain from marketable securities of $8,323, offset by net changes in working capital of $600,799.$9,923.

During the three months ended March 31,June 30, 2019, we had positive cash flow from investing activities of $14,607 which was the result of selling marketable securities, as compared to nil at December 31,June 30, 2018.

During the period ended March 31,June 30, 2019, we had no cash flow effect from financing activities.

During the period ended March 31,June 30, 2018,we had positive cash flow from financing activities of $1,792,285,$2,041,013, which was the result of $1,575,072 proceeds$1,940,950 received from sale of common stock and related warrants (net of issuance of equity, $117,150 of receipt on account of shares,expenses), $100,000 received from the issuance of short-term convertible notes, and $63 forfrom the eserviceexercise of options.

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.

Going Concern:

The Company has incurred significant operating losses and negative cash flows from operating activities in relation to its operations, since inception. While the Company raised approximately $1.9 million in the year ended December 31, 2018 to fund the operations, of its New Subsidiary, the Company will require additional capital resources in order to support the commercialization of the New Subsidiary’s technology and operationsits products and maintain its research and development activities related to the New Subsidiary’s technology.activities. The Company is addressing its liquidity needs by seeking additional funding from public and/or private sources. There are no assurances, however, that the Company will be able to obtain an adequate level of financial resources that are required for the Company’s short and long-term requirements, or at all these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of March 31,June 30, 2019, the Company’s Chief Executive Officer and Chief Financial Officer conducted an evaluation (the “Evaluation”) regarding the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures required by Rules 13a-15 or 15d-15, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of March 31,June 30, 2019 under the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013) because of certain material weaknesses.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended March 31,June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls and Procedures

The Company’s management, including our Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or its internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The Company’s control systems are designed to provide such reasonable assurance of achieving their objectives. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations, except as set forth below. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company, threatened against or affecting our company, our common stock, our officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect, other than as set forth below.

On August 7, 2019, Viewbix Israel was named as a co-defendant in a civil lawsuit filed with the Jerusalem District Court by three shareholders of Viewbix Israel (the “Shareholders”), alleging that they were entitled to receive certain preferred shares in Viewbix Israel, pursuant to a certain 2007 loan agreement by and between Viewbix Israel and the petitioning shareholders, following the sale of Viewbix Israel shares to Algomizer (the “Conversion”). The Shareholders have sought declaratory recourse from the Court, through which the Shareholders demand,inter alia, shares in Algomizer on a post-Conversion basis or a form of alternative compensation.

In April 2017, a lawsuit was filed with the Tel Aviv court by Mr. Wayn claiming certain damages to the total amount of $100,000, under the assertion of wrongful dismissal by the Registrant and Emerald IL. The Registrant believes these claims to be unsubstantiated and wholly without merit and intends to defend itself against these claims. The Company believes that he will not be successful in his claim. Nevertheless, the outcome of the proceeding will not materially affect the Registrant.

In December 2017, a liquidation request was filed with the Tel Aviv District Court by a group of former employees of Emerald IL, under the assertion of delay of pay and insolvency. On December 20, 2017, at a hearing before the court, it was ordered that the Emerald IL shall settle its pension debts to the former employees under applicable Israeli law within 21 days and settle its other debts to them in 60 days, the failure of which would result in a winding-up order (the equivalent of a liquidation) could be given. Based on the collaboration of Emerald IL and its former employees and the fact that the Company was in negotiation with third-parties for the infusion of equity capital and has started negotiating the sale of certain assets, the Company’s legal advisors believe that the liquidation claim will be dismissed by the court. The amounts being claimed by the former employees was less than $96,000 and are included in current liabilities at December 31, 2018.

On January 29, 2018, the “Registrant”)Registrant transferred the ordinary shares of the Registrant’s former Israeli subsidiary, Emerald IL to Attorney Eviatar Knoller, Esq., with offices at20 Lincoln, Tel Aviv-Jaffa 6713412, as trustee (the “Trustee”). The purpose of the transfer of the management shares to the Trustee, pursuant to resolution of the Registrant’s Board of Directors, was to enable the Trustee to liquidate the management shares and/or the assets of Emerald IL to satisfy its debtsand satisfy its financial obligations to former employees. As a result, the former employees of Emerald IL commenced an action in a court of competent jurisdiction in Israel to liquidate Emerald IL and use any assets to satisfy the debts owed to the former employees.

ITEM 1A. RISK FACTORS

See risk factors discussed in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report filed on Form 10-K with the SEC March 29, 2019.Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

On May 2, 2019 the Company issued 750,00050,000 shares of its common stock to the Chief Executive Officer and 750,00050,000 shares of its common stock to the Chief Financial Officer in consideration for services provided to the Company during the first quarter of 2019.

On July 25, 2019, the Closing Date of the Share Exchange Agreement, the Company issued 20,281,085 shares of its common stock to Algomizer in consideration for 99.83% holdings in Viewbix Israel, and 3,434,889 shares of its common stock to holders of convertible notes of 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 Algomizer to purchase the Company’s common stock, whereby (i) 3,649,318 of such warrants have an exercise price of $0.48, and (ii) 3,649,318 of such warrants have an exercise price of $0.80.

ITEM 6. EXHIBITS

(a) The following documents are filed as exhibits to this Quarterly Report or incorporated by reference herein.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.