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YoY shift: Lean +
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.27pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.51pp
Lean +
Net-tone change vs last year's 10-K.
MD&A
+0.03pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+27
adverse+16
failure+16
claims+15
against+14
Positive rising
advantage+19
able+14
effective+14
success+14
successful+9
Risk Factors (Item 1A)
21,774 words
ITEM 1A. RISK FACTORS
The shares of our common stock are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose their entire amount invested in the common stock. Accordingly, prospective investors should carefully consider, along with other matters referred to herein, the following risk factors in evaluating our business before purchasing any shares of common stock. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all or part of your investment. You should carefully consider the risks described below and the other information in this Annual Report before investing in our common stock.
Summary Risk Factors
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this summary. These risks include, among others, the following:
Risks Associated with Our Business and Industry
Our success depends, in part, upon the continued demand of digital advertising as an integral part of corporate marketing and internal communications plans and the continued growth and acceptance of digital advertising as alternatives to traditional offline marketing products and services.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
closing+17
discontinued+9
closed+6
discontinuing+6
insolvency+4
Positive rising
effective+9
positive+2
leading+2
achievement+2
enable+1
MD&A (Item 7)
6,909 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Overview
The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our consolidated financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which refer to future events. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
Overview
Viewbix is a digital advertising platform that develops and markets a variety of technological platforms that automate, optimize and monetize digital online campaigns. Viewbix’s operations were previously focused on analysis of the video marketing performance of its clients as well as the effectiveness of their. With the Video Advertising Platform, Viewbix allowed its clients with digital video properties the ability to use its platforms in a way that allows viewers to engage and interact with the video. The Video Advertising Platform measures when a viewer performs a specific action while watching a video and collects and reports the results to the client. However, due to the Company’s failure to meet predetermined sales targets which were set pursuant to the recapitalization transaction with Gix Internet Ltd. in January 2020, the Company determined to reduce its operations and the size of its sales and R&D team in the Digital Advertising Platform.
Online platform updates, including operating systems, search engines, browsers and social media might affect our ability to generate revenues, temporarily or permanently.
Should the providers of internet browsers, advertisement platforms and Search Engines further regulate, constrain or limit our ability to offer digital advertising platforms, or materially change their guidelines, technology or the way they operate, our ability to generate revenue from advertising could be significantly reduced.
We depend on supply sources to provide us with advertising inventory in order for us to deliver advertising campaigns in a cost-effective manner.
A significant portion of our revenue is concentrated with one customer.
Our Search Platform depends heavily upon revenue generated from the material agreement with our Gix Major Customer, and any adverse change in that agreement could adversely affect our business, financial condition and results of operations.
Reliance upon material suppliers may adversely affect our revenue and operating results.
We may not be able to generate enough cash flow to meet our debt obligations or fund our other liquidity needs.
Our success is dependent on the preferences of consumers, internet users and advertisers.
The report of our independent registered public accounting firm contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable terms or at all.
Risks Related to our Competition
Large and established internet and technology companies, such as Google and Facebook, play a substantial role in the digital advertising market and may significantly impair our ability to operate in this industry.
The digital advertising market is highly competitive. If we cannot compete effectively in this market, our revenues are likely to decline.
Our implementation and use of artificial intelligence technologies may not be successful, which may impair our ability to compete effectively, result in reputational harm and have an adverse effect on our business.
Risks Related to our Intellectual Property
If we cannot enforce and protect our intellectual property rights, our business could be adversely affected.
We may in the future be subject to claims of intellectual property infringement that could adversely affect our business.
Risks Related to Data Protection Regulation
We may not be able to protect our systems, technology and infrastructure from cyberattacks.
A failure in our technology infrastructure may adversely affect our business and financial condition and disrupt our customers’ businesses.
Our business depends on our ability to collect and use data, and any limitation on the collection and use of this data could significantly diminish the value of our platforms and cause us to lose customers and revenue.
Regulations, legislation, or self-regulation developments relating to privacy, data collection and protection, e-commerce, and internet advertising, privacy and data collection and protection, and uncertainties regarding the application or interpretation of existing or newly adopted laws and regulations, could harm our business and subject us to significant legal liability for non-compliance.
We rely on third-party Internet, mobile, and other products and services to deliver our mobile and web applications our customers, and any disruption of, or interference with, our use of those services could adversely affect our business, financial condition, results of operations, and customers; and
As the regulatory framework for artificial intelligence evolves, including with respect to unintentional bias and discrimination, our business, financial condition, and results of operations may be adversely affected.
Risks Related to Our Investment in Quantum Computing
Quantum X Labs is an early-stage company and has a limited operating history, which makes it difficult to forecast its future results of operations.
Quantum X Labs may not be able to scale its business quickly enough to meet customer and market demand, which could adversely affect its financial condition and results of operations or cause us to fail to execute on its business strategies.
Quantum X Labs’ estimates of market opportunity and forecasts of market growth may prove to be inaccurate.
Even if the market in which Quantum X Labs competes achieves the forecasted growth, its business could fail to grow at similar rates, if at all.
The quantum computing and networking industry is in its early stages and volatile
Quantum X Labs is highly dependent on its key employees who have specialized knowledge, and its ability to attract and retain senior management and other key employees is critical to its success.
If Quantum X Labs is unable to obtain and maintain effective intellectual property rights for its products, Quantum X Labs may not be able to compete effectively in its markets.
Risks Related to Our Common Stock
Raising additional capital or the issuance of additional equity securities would cause dilution to our existing shareholders and may affect the rights of existing shareholders or the market price of our ordinary shares.
The availability of a large number of authorized but unissued shares of common stock may, upon their issuance and sale, lead to dilution of existing stockholders or adversely affect the market.
If we fail to maintain compliance with the Nasdaq minimum listing requirements, our common stock will be subject to delisting. Our ability to publicly or privately sell equity securities and the liquidity of our common stock could be adversely affected if our common stock delisted.
Our share price has fluctuated significantly and could continue to fluctuate significantly.
Delaware law contains provisions that could discourage, delay or prevent a change in control of our Company, prevent attempts to replace or remove current management and reduce the market price of our stock.
Risks Related to our Operations in Israel
Conditions in Israel, including Israel’s conflicts with Hamas and other parties in the region, as well as political and economic instability, may impede our ability to operate and harm our financial results.
Exchange rate fluctuations between foreign currencies and the U.S. Dollar may negatively affect our earnings.
It may be difficult to enforce a judgment of a U.S. court against us, our officers and directors or the Israeli experts named in our reports filed with the SEC in Israel or the United States, to assert U.S. securities laws claims in Israel or to serve process on our officers and directors and these experts.
Risks Associated with Our Business and Industry
Our success depends, in part, upon the continued demand of digital advertising as an integral part of corporate marketing and internal communications plans and the continued growth and acceptance of digital content as effective alternatives to traditional offline marketing products and services.
We provide digital advertising platforms. Our revenues are derived from the sale of our platforms. If the demand for digital advertising does not continue to grow or customers do not embrace our platforms, this could have a material adverse effect on our business and financial condition.
Our success also depends, in part, on our ability to compete for a share of available advertising/marketing expenditures as more traditional offline and emerging media companies continue to enter the digital advertising market, as well as on the continued growth and acceptance of digital advertising generally. If for any reason digital advertising is not perceived as effective (relative to traditional advertising), web browsers, software programs and/or other applications that limit or prevent advertising from being displayed become commonplace and/or the industry fails to effectively manage click fraud, the market for digital advertising will be negatively impacted. Any lack of growth in the market for digital advertising could adversely affect our business, financial condition and results of operations.
Online platform updates, including operating systems, search engines, browsers and social media might affect our ability to generate revenues, temporarily or permanently.
We comply with certain guidelines promulgated by online platforms for the use of the respective brands and services. Online platforms may unilaterally update their policies and guidelines, which could, in turn, require modifications to, or prohibit and/or render obsolete certain of our advertising solutions, products, services and practices, which could be costly to address or otherwise have an adverse effect on our business, our financial condition and results of operations. Noncompliance with platforms’ guidelines, whether by us or by third parties we work with, if not cured, could result in such online platforms’ suspension of some or all of their services to us, or to the websites of third parties we work with, or the reimbursement of funds paid to us, or the imposition of additional restrictions on our advertising abilities or the termination of certain advertising agreements with our customers.
Should the providers of internet browsers, advertisement platforms and Search Engines further regulate, constrain or limit our ability to offer advertising services, or materially change their guidelines, technology or the way they operate, our ability to generate revenue from advertising could be significantly reduced.
As we provide our services through the internet, we are reliant on our ability to work with the different internet browsers, search engines and advertisement platforms. If Microsoft, Google, Apple, Facebook or other companies that provide internet browsers, advertisement platforms and search engines, effectively further restrict, discourage or otherwise hamper companies, like us, from offering or advertising services, this would continue to cause a material adverse effect on our revenue and our financial results.
Large and established internet and technology companies, such as Google, Facebook and Amazon, play a substantial role in the digital advertising market and may significantly harm our ability to operate in this industry.
Google, Facebook and Amazon are substantial players in the digital advertising market and account for a large portion of the digital advertising budgets, along with other smaller players. Such high concentration causes us to be subject to any unilateral changes they may make with respect to advertising on their respective platforms, which may be more lucrative than alternative methods of advertising or partnerships with other publishers that are not subject to such changes. Furthermore, we could have limited ability to respond to, and adjust for, changes implemented by such players.
These companies, along with other large and established internet and technology companies, may also leverage their power to make changes to their web browsers, operating systems, platforms, networks or other products or services in a way that impacts the entire digital advertising marketplace. Such changes could affect our revenues as it will be required to make technological changes and business adjustments, which might cause the retirement of certain products and services or changes in their profitability.
This, together with other advertisement-blocking technologies incorporated in or compatible with leading internet browsers and operating systems, could impact our advertising business (as well as those of our competitors). These changes could materially impact the way we do business, and if we or our advertisers and third parties we work with are unable to quickly and effectively adjust and provide solutions to those changes, there could be an adverse effect on our revenue and performance.
The use of third-party software solutions for the purpose of blocking ads and / or alerts may cause our business to suffer.
Digital advertising may be blocked by third-party providers. As a result, we may lose both existing and potential new customers and our ability to generate revenue will be negatively impacted.
We depend on supply sources to provide us with advertising inventory in order for us to deliver advertising campaigns in a cost-effective manner.
We rely on a diverse set of publishers including direct publishers, advertising exchange platforms, social networks and other platforms, that aggregate advertising inventory, to provide us with high-quality digital advertising inventory on which we deliver ads, collectively referred to as “supply sources”. The future growth of our advertising business will depend, in part, on our ability to maintain, expand and further develop successful business relationships in order to increase the network of our supply sources.
Our supply sources typically make their advertising inventory available to us on a non-exclusive basis and are not required to provide any minimum amounts of advertising inventory to us or to provide us with a consistent supply of advertising inventory, at any predetermined price or through real time bidding. Supply sources often maintain relationships with various sources of demand that compete with us, and it is easy for supply sources to quickly shift their advertising inventory among these demand sources, or to shift inventory to new demand sources, without notice or accountability. Supply sources may also seek to change the terms at which they offer inventory to us, or they may allocate their advertising inventory to our competitors who offer more favorable economic terms, better solutions and advanced technology. Supply sources may also elect to sell all, or a portion, of their advertising inventory directly to advertisers and agencies, or they may develop their own competitive offerings, which could diminish the demand for our solutions. In addition, significant supply sources within the industry may enter into exclusivity arrangements with our competitors, which could limit our access to a meaningful supply of inventory. As a result of all of these factors, our supply sources may not supply us with sufficient amounts of high-quality digital advertising inventory in order for us to fulfill the demands of our advertising customers.
Because of these factors, we seek to expand and diversify our supply sources; nonetheless, if our supply sources terminate or reduce our access to their advertising inventory, increase the price of inventory or place significant restrictions on the sale of their advertising inventory, or if platforms or exchanges terminate our access to them and we are unsuccessful in establishing or maintaining our relationships with supply sources on commercially reasonable terms, we may not be able to replace this with inventory from other supply sources that satisfy our requirements in a timely and cost-effective manner. If any of these happen, our revenue could decline or our cost of acquiring inventory could increase, which, in turn, could lower our operating margins and materially adversely affect our advertising business.
A significant portion of our revenue is concentrated with one customer.
With respect to our digital advertising business unit, as of December 31, 2025, Gix Media had one major customer, a reputable international search engine (“Gix Major Customer”). Gix Media generated revenues of approximately $1.2 million from the Gix Major Customer, constituting approximately 81% of the total revenues of Gix Media during the year ended December 31, 2025. Our relationship with this Gix Major Customer originated in 2013 upon the signing of an exclusive cooperation agreement, which is extended from time to time. In March 2020, an extension of the foregoing agreement was signed, whereby the term of the agreement was extended until October 26, 2023, was automatically renewed for an additional one year period until October 26, 2024, and will continue to be automatically renewed for additional one year periods, unless either party gives notice of non-renewal 90 days in advance. We are highly dependent on the material agreement with the Gix Major Customer. If this material agreement is terminated or substantially amended (not on favorable terms), we would experience a material decrease in our revenue from our digital advertising business unit or the profits it generates and would be forced to seek alternative customers, at less competitive terms or accelerate the business we have with the current search engines. There are few companies in the market that provide internet search and search advertising services with whom we can directly engage with in the same manner which we are engaged with our Gix Major Customer. Such companies are substantially the only participants in western markets, and competitors do not offer as much coverage through sponsored links or searches. We may divert our operations and user traffic to other third-party partners which provide search feed to search engines, however we cannot guarantee that we will be successful. If we fail to quickly locate, negotiate and finalize alternative arrangements or otherwise expedite current operations we have with such alternative search providers, or if we do, but the alternatives do not provide for terms that are as favorable as those currently provided and utilized, we would experience a material reduction in our revenue and, in turn, our business, financial condition and results of operations would be adversely affected.
Our Search Platform depends heavily upon revenue generated from the material agreement with our Gix Major Customer, and any adverse change in that agreement could adversely affect our business, financial condition and results of operations.
We are highly dependent on the material agreement with our Gix Major Customer. If this material agreement is terminated or substantially amended (not on favorable terms), we would experience a material decrease in our revenue from our Search Platform or the profits it generates and would be forced to seek alternative customers, at less competitive terms or accelerate the business we have with the current Search Engines. There are few companies in the market that provide internet search and search advertising services with whom we can directly engage with in the same manner which we are engaged with our Gix Major Customer. Such companies are substantially the only participants in western markets, and competitors do not offer as much coverage through sponsored links or searches. We may divert our operations and user traffic to other third-party partners which provide search feed to Search Engines, however we cannot guarantee that we will be successful. If we fail to quickly locate, negotiate and finalize alternative arrangements or otherwise expedite current operations we have with such alternative search providers, or if we do, but the alternatives do not provide for terms that are as favorable as those currently provided and utilized, we would experience a material reduction in our revenue and, in turn, our business, financial condition and results of operations would be adversely affected.
Reliance upon material suppliers may adversely affect our revenue and operating results.
We are dependent on certain material suppliers and service providers for some of the services we render. In certain cases, we rely on a single supplier and/or service provider for the services we offer our customers. In most cases we do not have long term contracts with these suppliers, and even in the cases where we do the contracts include significant qualifications that would make it extremely difficult for us to force the supplier or service provider to provide us with their services, should they choose not to do so. We are therefore subject to the risk that these third-parties we work with will not be able or willing to continue to provide us with services that meet our specifications, quality standards and delivery schedules. Factors that could impact these third parties’ willingness and ability to continue to provide us with the required services include disruption at or affecting their facilities, such as work stoppages or natural disasters, adverse weather or other conditions that affect their supply, their financial conditions and / or deterioration in our relationships with these third parties. In addition, we cannot be sure that we will be able to provide the services we need on satisfactory terms. Any increase in costs could reduce our revenues and harm our gross margins. In addition, any loss of a material supplier and/or service provider may permanently cause a change in one or more of our services that may not be accepted by our customers or cause us to eliminate that product altogether.
We may not be able to receive credit facility to fund our operations, on favorable terms, or at all.
We 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 financing agreement. The Financing Agreement poses certain limitations, as explained elsewhere in this Annual 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.
If 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.
If 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.
We may be unable to pay our obligations when they become due, including under the Financing Agreement.
We have financed our acquisitions principally through the raising of debt, credit facilities, and our operations through credit with our vendors. Our ability to continue our operations and to pay our obligations, including under the financing agreement and credit facilities (as described elsewhere in this Annual Report), when they become due is contingent upon obtaining additional financing.
In addition, during August 2024, we renegotiated the terms of the Financing. If the Company and Gix Media cannot maintain compliance with the terms and covenant of the Financing Agreement, 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 Financing Agreement.
Our success is dependent on the preferences of consumers, internet users and advertisers.
Our services rely on the digital devices used by consumers and users. To the extent that users change their consumption habits, or to the extent that traffic does not grow, our activities might decrease and our business operations might be harmed.
A change in advertisers’ preferences could also affect our operations. Advertisers might change their preferences relating to their willingness to work with certain technologies and certain advertising platforms, which might reduce our activities and harm our business operations.
A loss of the services of our technology vendors could adversely affect the execution of our business strategy.
Should some of our technology vendors terminate their relationship with us, our ability to continue the development of some of our platforms could be adversely affected, until such time that we find adequate replacement for these vendors, or until such time that we can continue the development on our own.
The report of our independent registered public accounting firm contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable terms or at all.
The report of our independent registered public accounting firm on our audited consolidated financial statements for the year ended December 31, 2025, contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our audited consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainty regarding our ability to continue as a going concern. This going concern opinion could materially limit our ability to raise additional funds through the issuance of equity or debt securities or otherwise. Further reports on our consolidated financial statements may include an explanatory paragraph with respect to our ability to continue as a going concern. Until we can generate significant recurring cash flow, we expect to satisfy our future cash needs through debt or equity financing. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay or reduce the scope of our operations.
Risks Related to our Competition
Large and established internet and technology companies, such as Google and Facebook, play a substantial role in the digital advertising market and may significantly impair our ability to operate in this industry.
Google is a substantial player in the digital advertising market along with other players such as Microsoft. In addition, a small number of social network companies, such as Facebook, account for a large portion of digital advertising budgets. The high concentration of power among Google, Facebook and some other large market participants causes us to be subject to any unilateral changes they may make with respect to advertising on their respective platforms, which may be more lucrative than alternative methods of advertising or partnerships with other publishers that are not subject to such changes. Furthermore, we could have limited ability to respond to, and adjust for, changes implemented by large market participants.
These companies, along with other large and established Internet and technology companies, may also leverage their power to make changes to their web browsers, operating systems, platforms, networks or other products or services in a way that impacts the entire digital advertising marketplace. If we fail to comply or adopt to such changes, on the same level as our competitors, it may harm our ability to compete effectively in our market and operate in our market.
The digital advertising market is highly competitive. If we cannot compete effectively in this market, our revenues are likely to decline.
We face intense competition in the marketplace. We operate in a dynamic market that is subject to rapid development and introduction of new technologies, products and solutions, changing branding objectives, evolving customer demands and industry guidelines, all of which affect our ability to remain competitive. There are a large number of companies and advertising technology companies that offer products or services similar to ours and that compete with us for finite advertising budgets. There is also a large number of niche companies that are competitive with us, as they provide a subset of the services that we provide. Some of our existing and potential competitors may be better established, benefit from greater name recognition, may offer solutions and technologies that we do not offer or that are more evolved than ours, and may have significantly more financial, technical, sales and marketing resources than we do. In addition, some competitors, particularly those with a larger and more diversified revenue base and a broader offering, may have greater flexibility than we do to compete aggressively on the basis of price and other contract terms as well as respond to market changes. Additionally, companies that do not currently compete with us in this space may change their services to be competitive if there is a revenue opportunity, and new or stronger competitors may emerge through consolidations or acquisitions. If our platforms are not perceived as competitively differentiated or we fail to develop adequately to meet market evolution, we could lose customers and market share or be compelled to reduce our prices and harm our operational results.
Our implementation and use of artificial intelligence technologies may not be successful, which may impair our ability to compete effectively, result in reputational harm and have an adverse effect on our business.
We use artificial intelligence technologies throughout our business and are making investments to continuously improve our use of such technologies. As with many technological innovations, there are significant risks and challenges involved in developing, maintaining and deploying these technologies and there can be no assurance that the usage of such technologies will always enhance our products or services or be beneficial to our business, including to our efficiency or profitability. In addition, the market for artificial intelligence technologies is rapidly evolving and remains unproven in many industries, including our own. We cannot be sure that the market will continue to grow or that it will grow in ways we anticipate.
We are in varying stages of development of our systems which utilize artificial intelligence, and we may not be successful in our ongoing development of these technologies in the face of novel and evolving technical, reputational and market factors. The development, maintenance and operation of our artificial intelligence technologies is expensive and complex, and may involve unforeseendifficulties including material performance problems, undetecteddefects or errors. We may encounter technical obstacles, and it is possible that we may discover additional problems that may prevent our technologies from operating properly, which could adversely affect our business, customer relationships and reputation.
We face significant competition from other companies in our industry in relation to the development and deployment of artificial intelligence technologies. Those other companies may develop artificial intelligence technologies that are similar or superior to ours and/or are more cost-effective and/or quicker to develop and deploy. If we cannot develop, offer or deploy new artificial intelligence technologies as effectively, as quickly and/or as cost-efficiently as our competitors, we could experience a material adverse effect on our operating results of operation, customer relationships and growth.
Risks Related to our Intellectual Property
If we cannot enforce and protect our intellectual property rights, our business could be adversely affected.
We rely on patents, copyright, trademark, domain name and trade secret laws in the United States and similar laws in other countries, as well as licenses and other agreements with our employees, and other parties, to establish and maintain our intellectual property rights in the technology, products and services used in our operations. These laws and agreements may not guarantee that our intellectual property rights will be protected and our intellectual property rights could be challenged or invalidated. Amendments to or interpretations of U.S. patent laws or new rulings around U.S. patent laws may adversely impact our ability to protect our new technologies, content, products and services and to defendagainstclaims of patent infringement. In addition, such intellectual property rights may not be sufficient to permit us to take advantage of current industry trends or otherwise to provide competitive advantages, which could result in costly redesign efforts, discontinuance of offerings, decreased traffic and associated revenue or otherwise adversely affect our business.
We may in the future be subject to claims of intellectual property infringement that could adversely affect our business.
Many companies (including patent holding companies) and individuals own patents, copyrights, trademarks, and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. As we develop and offer our platforms through various distribution channels we may experience an increase in the number of intellectual property claimsagainst us. These claims, whether meritorious or not, may result in litigation, may be time-consuming and costly to resolve, and may require expensive changes in our methods of doing business. These intellectual property infringementclaims may require us to enter into royalty or licensing agreements on unfavorable terms or to incur substantial monetary liability. Additionally, these claims may result in us being enjoined preliminarily or permanently from further use of certain intellectual property or may require us to cease or significantly alter certain of our operations.
Some of our commercial agreements may require us to indemnify third parties against intellectual property infringementclaims, which may require us to use substantial resources to defendagainst or settle such claims or, potentially, to pay damages. These third parties may also discontinue the use of our platforms, as a result of injunctions or otherwise, which could result in loss of revenues and adversely impact our business. Additionally, we may be exposed to liability or substantially increased costs if a commercial partner does not honor its contractual obligation to indemnify us for intellectual property infringementclaims made by third parties or if any amounts received are not adequate to cover our liabilities or the costs associated with defense of such claims. The occurrence of any of these events could adversely affect our business.
Patent terms may be inadequate to protect our competitive position for an adequate amount of time.
Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional or international patent application filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our products are obtained, once the patent life has expired, we may be open to competition from competitive products, including generics. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
Risks Related to Data Protection Regulation
We may not be able to protect our systems, technology and infrastructure from cyberattacks.
We rely on information technology systems to operate and manage our business and to process, maintain, and safeguard information, including information related to our customers, partners, and personnel. This information is stored and managed within our internal information technology infrastructure or, in certain instances, on platforms maintained by third-party service providers. These systems, whether operated internally or externally, may be subject to attacks by perpetrators of malicious technology-related events, such as the use of botnets, malware or other destructive or disruptive software, distributed denial of service attacks, phishing, attempts to misappropriate user information and other similar malicious activities. The incidence of events of this nature (or any combination thereof) is on the rise worldwide. Since the beginning of the war between Israel and Hamas which began on October 7, 2023, Israeli and Israeli associated companies have become more frequently the target of cyberattacks. As such, the risk of a cyberattackagainst our platforms may become heightened. While we continuously develop and maintain systems designed to detect and prevent events of this nature from impacting our platforms, we have invested and continue to invest heavily in these efforts. These efforts are costly and require ongoing monitoring and updating as technologies change and efforts to overcome preventative security measures become more sophisticated.
Any event of this nature that we experience could damage our systems, technology and infrastructure, prevent us from providing our services, compromise the integrity of our services, damage our reputation and/or be costly to remedy, as well as subject us to investigations by regulatory authorities, fines and/or litigation that could result in liability to third parties.
A failure in our technology infrastructure may adversely affect our business and financial condition and disrupt our customers’ businesses.
We utilize “Cloud” servers, which are not immune to failures and is not without substantial risk, particularly at a time when businesses of almost every kind are finding themselves subject to an ever-expanding range of privacy, data collection and processing and cybersecurity laws and regulations, document retention requirements, and other standards of accountability. Such failures and risks, if materialized, could affect our activities, including its ad space-purchasing and processing capabilities.
Our business depends on our ability to collect and use data, and any limitation on the collection and use of this data could significantly diminish the value of our platforms and cause us to lose customers and revenue.
Our services receive, collect, store, analyze, process, transfer and use certain data about the identification of devices across websites and applications and user interactions with those devices for various purposes for our Search and Digital Platform, such as serving relevant ads and measuring the effectiveness of ads. Our ability to access and utilize such data is crucial to the success of our business and operations. Such ability to either collect or use data could be restricted by new laws or regulations. We are subject to numerous federal, state, local, and international laws, directives and regulations regarding privacy, data protection, and data security and the collection, storing, sharing, processing, transferring, disclosure requirements and protection of personal data. The scope of these regulations is changing, subject to differing interpretations, and may be inconsistent among jurisdictions or conflict with other legal and regulatory requirements.
For example, we collect, use, maintain and otherwise process certain data about our customers (including, without limitation, customers’ clients or users), partners, candidates and employees, consultants, vendors and service providers, leads and consumers. Our ability to collect, use, maintain or otherwise process personal data has been, and could be further restricted by existing and new laws and regulations relating to privacy and data collection and protection. These laws and regulations generally define personal data to include location data and online identifiers, which are commonly used and collected parameters in digital advertising and, among other things, impose stringent user consent requirements and permit data subjects to request we discontinue using certain data. In addition, some countries are considering or have enacted legislation requiring local storage and processing of data that could increase the cost and complexity of delivering our services.
European supervisory authorities have been very active in terms of enforcing data protection rules, including with respect to cookie-related matters. Regulation of cookies and similar technologies, and any decline of cookies or similar online tracking technologies as a means to identify and potentially target individuals, may lead to broader restrictions and impairments on our business activities, may negatively impact our efforts to understand users, and, as a result of us being able to process less data, make our automated decisioning process less accurate. For example, we may need to adapt our advertising solution to a “cookie-less” environment and introduce alternative solutions which may not provide the targeting capabilities provided by cookies Recent state privacy laws and regulations issued pursuant to those laws address and expand on requirements for honoring browser-based or similar technical signals for consumers to opt out of the sale and the use of personal data for targeted advertising purposes. If use of the “Global Privacy Control” or similar signals is adopted by many Internet users or if such a standard is imposed by even more states or by federal or foreign legislation or is agreed upon by standard setting groups, we may have to change our business practices, our clients may reduce their use of our platform and related offerings, and our business, financial condition and results of operations could be adversely affected. In addition, we may be required to implement physical, administrative and technological security measures that differ from those we have now, such as different data access controls or encryption technology. Any limitation on our ability to collect and utilize data, including personal data, would make it more difficult for us to be able to optimize ad placement for the benefit of our advertisers and publishers, which could render our solutions less valuable and potentially result in loss of clients and a decline in revenue.
Regulations, legislation, or self-regulation developments relating to privacy, data collection and protection and internet advertising, and uncertainties regarding the application or interpretation of existing or newly adopted laws and regulations, could harm our business and subject us to significant legal liability for non-compliance.
The regulatory framework for privacy, data protection and data security worldwide is, and is likely to remain for the foreseeable future, uncertain and complex, and it is possible that actual or alleged obligations may be interpreted and applied in a manner that we do not anticipate or that is inconsistent from one jurisdiction to another and may conflict with other legal obligations or with our practices. Further, any significant change to applicable laws, regulations or industry practices regarding the collection, use, retention, security or disclosure of data, or their interpretation, or any changes regarding the manner in which the consent of users or other data subjects for the collection, use, retention or disclosure of such data must be obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete, and may limit our ability to store and process user data or develop new services and features.
If we were found in violation of any applicable laws or regulations relating to privacy, data protection or security, our business may be materially and adversely affected and we would likely have to change our business practices and potentially the services and features available. In addition, these laws and regulations could impose significant costs on us and could constrain our ability to use and process data in manners that may be commercially desirable. In addition, if a breach of data security were to occur or to be alleged to have occurred, if any violation of laws and regulations relating to privacy, data protection or data security were to be alleged, or if we had any actual or allegeddefect in our safeguards or practices relating to privacy, data protection, or data security, our solutions may be perceived as less desirable and our business, prospects, financial condition and results of operations could be materially and adversely affected, which could be costly and cause reputational harm.
Any failure or perceived failure by us to comply with our posted privacy policies, our privacy-related obligations to users or other third parties, or any other legal obligations or regulatory requirements relating to privacy, data protection or data security may result in governmental investigations or enforcement actions, litigation, claims or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose trust in us, and otherwise materially and adversely affect our reputation and business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, other obligations and policies that are applicable to the businesses of our users may limit the adoption and use of and reduce the overall demand for our services.
Additionally, if third parties we work with violate applicable laws, regulations or contractual obligations, such violations may put our users’ data at risk, could result in governmental investigations or enforcement actions, fines, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose trust in us and otherwise materially and adversely affect our reputation and business. Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks.
It is possible that these laws and regulations may be interpreted and applied in a manner that is inconsistent with our data collection, use, preservation and other processing practices or that it may be argued that our practices do not comply with certain countries’ privacy and data collection and protection laws and regulations. Due to rapid changes in technology and the inconsistent interpretations of privacy and data collection and protection laws and regulations, we may be required to materially change the way we conduct business. The challenges imposed by the ongoing need to remain compliant with such laws and regulations, as well the need to implement any changes required based on newly introduced laws and regulations, may slow our growth, and if we are not able to cope with these challenges as effectively as other companies, we will be competitively disadvantaged.
Compliance with such existing and new laws and regulations can be costly and can delay, or impede the development of new services, any and failure or perceived failure to comply with such laws and regulations could result in negative publicity, increase our operating costs, require significant management time and attention and subject us to inquiries or investigations, litigation (including class actions), claims, or other remedies, including penalties, fines, sanctions and criminal and civil liabilities, or demands or orders that we modify or cease existing business practices, each of which could materially affect our operating results and our business. Moreover, concerns about our collection, use, sharing, handling and other processing of data or other privacy related matters, even if unfounded, could harm our reputation and operating results.
We rely on third-party Internet, mobile, and other products and services to deliver our mobile and web applications to users, and any disruption of, or interference with, our use of those services could adversely affect our business, financial condition, results of operations, and customers.
Our services continuing and uninterrupted performance is critical to our success. Our services are dependent on the performance and reliability of internet, mobile, and other infrastructure services that are not under our control. For example, we currently host our services and support our operations using a third-party provider of cloud infrastructure services. While we have engaged reputable vendors to provide these products or services, we do not have control over the operations of the facilities or systems used by our third-party providers. These facilities and systems may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, human error, terrorist attacks, power outages, pandemics, and similar events or acts of misconduct. In addition, any changes in one of our third-party service provider’s service levels may adversely affect our ability to meet the requirements of our customers.
While we believe we have implemented reasonable backup and disaster recovery plans, we expect that in the future we may experience interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, capacity constraints, or external factors beyond our control. Sustained or repeated system failures would reduce the attractiveness of our platforms and services. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times, as we expand our platforms and service offerings. Any negative publicity or user dissatisfaction arising from these disruptions could harm our reputation and brand, may adversely affect the usage of our offerings, and could harm our business, financial condition and results of operation.
As the regulatory framework for artificial intelligence evolves, including with respect to unintentional bias and discrimination, our business, financial condition, and results of operations may be adversely affected.
Our business increasingly relies on artificial intelligence technologies. The legislative and regulatory framework for this technology is rapidly evolving, and we may not always be able to anticipate how to respond to these laws or regulations. Many federal, state and foreign government bodies and agencies have introduced or are currently considering additional laws and regulations governing the use of such technologies. There is also an increase in litigation in a number of jurisdictions, including the United States, relating to the development, security and use of artificial intelligence.
For example, on May 17, 2024, Colorado enacted the Colorado AI Act. The Colorado AI Act creates duties for developers and for those that deploy AI. There is a specific focus on bias and discrimination. The Act will go into effect on February 1, 2026. Federal artificial intelligence legislation has also been introduced in the U.S. Senate. Such additional regulations may impact our ability to develop, use and commercialize artificial intelligence and machine learning technologies in the future. Furthermore, in October 2023, President Biden issued the Executive Order on Safe, Secure and Trustworthy Artificial Intelligence (“The Order”) with the goal of promoting the “safe, secure, and trustworthy development and use of artificial intelligence in the United States.” The Order established certain new standards for the training, testing and cybersecurity of sophisticated artificial intelligence models, and instructed other federal agencies to promulgate additional regulations. Even though The Order was rescinded by President Trump on January 20, 2025, it may still indicate a trend towards federal AI regulation, which could increase our potential liability and adversely affect our business.
The most comprehensive legislation passed in the area of AI in the European Union is the EU Artificial Intelligence Act (the “EU AI Act”), effective from February 2, 2025, with different provisions becoming gradually applicable on different dates. The EU AI Act contains a list of prohibited practices, classifies certain AI systems as high risk, depending on the level of risk they pose, includes transparency obligations for providers and deployers of certain AI systems, and includes obligations and requirements around general-purpose AI models and general-purpose AI systems. For example, fines for noncompliance include fines of the higher of €35,000,000 or up to 7 percent of a company’s total worldwide annual turnover for non-compliance with prohibited AI practices, or the higher of €7,500,000 or up to 1 percent of a company’s total worldwide annual turnover for the supply of incorrect, incomplete, or misleading information to notified bodies and national competent authorities in certain contexts. Noncompliance with the EU AI ACT could also result in other consequences such as loss of business opportunities or reputational damage.
It is possible that the adoption of new laws and regulations in other jurisdictions, or the interpretation of existing laws and regulations, may affect the operation of our platforms and services and the way in which we use artificial intelligence, including with respect to how we train our models, unintentional bias and discrimination. Failure to comply with such laws or regulations could subject us to legal or regulatory liability. Further, the cost of complying with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations.
Risks Related to Our Investment in Quantum Computing
Risks Related to Quantum X Labs’ Status as an Early-Stage Company
Quantum X Labs is an early-stage company and has a limited operating history, which makes it difficult to forecast its future results of operations.
Quantum X Labs was incorporated in January 2025. As a result of Quantum X Labs’ limited operating history, its ability to accurately forecast its future results of operations is limited and subject to a number of uncertainties, including its ability to plan for and model its future growth. Quantum X Labs’ ability to generate revenues will be dependent on its ability to use and leverage a quantum computers with increasing numbers of algorithmic qubits and to connect those quantum computers via quantum networks. The development of its scalable business model will likely require the incurrence of a substantially higher level of costs than incurred to date, while its revenues will not substantially increase until more powerful, scalable computers are produced, which requires a number of technological advancements that may not occur on the currently anticipated timetable or at all.
Quantum X Labs has also encountered, and will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If its assumptions regarding these risks and uncertainties and its future growth are incorrect or change, or if Quantum X Labs does not address these risks successfully, its operating and financial results could differ materially from its expectations, and its business could suffer. Quantum X Labs’ success as a business ultimately relies upon fundamental research and development breakthroughs in the coming years and decade. There is no certainty these research and development milestones will be achieved as quickly as expected, or even at all.
Quantum X Labs may not be able to scale its business quickly enough to meet customer and market demand, which could adversely affect its financial condition and results of operations or cause us to fail to execute on its business strategies.
In order to grow its business, Quantum X Labs will need to continually evolve and scale its business and operations to meet customer and market demand. Quantum computing technology has never been sold at large-scale commercial levels. Evolving and scaling its business and operations places increased demands on its management as well as its financial and operational resources to:
effectively manage organizational change;
design scalable processes;
accelerate and/or refocus research and development activities;
expand manufacturing, supply chain and distribution capacity;
increase sales and marketing efforts;
broaden customer-support and services capabilities;
maintain or increase operational efficiencies;
scale support operations in a cost-effective manner;
implement appropriate operational and financial systems; and
maintain effective financial disclosure controls and procedures.
If Quantum X Labs cannot evolve and scale its business and operations effectively, Quantum X Labs may not be able to execute its business strategies in a cost-effective manner and its business, financial condition and results of operations could be adversely affected.
Quantum X Labs’ estimates of market opportunity and forecasts of market growth may prove to be inaccurate.
Market opportunity estimates and growth forecasts, including those Quantum X Labs has generated, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of its market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of companies covered by its market opportunity estimates will purchase its products at all or generate any particular level of revenue for us. In addition, alternatives to quantum computing may present themselves, which could substantially reduce the market for quantum computing services. Any expansion in its market depends on a number of factors, including the cost, performance, and perceived value associated with quantum computing solutions.
The methodology and assumptions used to estimate market opportunities may differ materially from the methodologies and assumptions previously used to estimate the total addressable market. To estimate the size of its market opportunities and its growth rates, Quantum X Labs have relied on market reports by leading research and consulting firms. These estimates of the total addressable market and growth forecasts are subject to significant uncertainty, are based on assumptions and estimates that may not prove to be accurate and are based on data published by third parties that Quantum X Labs have not independently verified. Advances in classical computing may prove more robust for longer than currently anticipated. This could adversely affect the timing of any quantum advantage being achieved, if at all.
Even if the market in which Quantum X Labs competes achieves the forecasted growth, its business could fail to grow at similar rates, if at all.
Quantum X Labs’ success will depend upon its ability to expand, scale its operations, and increase its sales capability. Even if the market in which Quantum X Labs competes meets the size estimates and growth forecasted, its business could fail to grow at similar rates, if at all.
Quantum X Labs’ growth is dependent upon its ability to successfully scale up manufacturing of its products in sufficient quantity and quality, in a timely or cost-effective manner. Quantum X Labs’ growth is also dependent upon its ability to successfully market and sell quantum computing and networking technology. Quantum X Labs does not have experience with the mass distribution and sale of quantum computing and networking technology. Quantum X Labs’ growth and long-term success will depend upon the development of its sales and delivery capabilities.
Unforeseen issues associated with scaling up and constructing quantum computing and networking technology at commercially viable levels, and selling its technology, could negatively impact its business, financial condition and results of operations.
Moreover, because of its unique technology, its customers will require particular support and service functions, some of which are not currently available. If Quantum X Labs experiences delays in adding such support capacity or servicing its customers efficiently, or experience unforeseen issues with the reliability of its technology, it could overburden its servicing and support capabilities. Similarly, increasing the number of its customers, products or services, for example by entering into government contracts and expanding to new geographies, has required and may continue to require us to rapidly increase the availability of these services. Failure to adequately support and service its customers may inhibit its growth and ability to expand computing targets globally. There can be no assurance that its projections on which such targets are based will prove accurate or that the pace of growth or coverage of its customer infrastructure network will meet customer expectations. Failure to grow at rates similar to that of the quantum computing and networking industry may adversely affect its operating results and ability to effectively compete within the industry.
Risks Related to Quantum X Labs’ Business and Industry
If its quantum computing technologies are not compatible with some or all industry-standard software and hardware in the future, its business could be harmed.
Programming for quantum computing requires unique tools, software, hardware, and development environments. Quantum X Labs focused its efforts on creating quantum computing hardware, the system control platform for such hardware and a suite of low-level software programs that optimize execution of quantum algorithms on its hardware. Further up the stack, Quantum X Labs relies on third parties to create and advance software, standards, specifications, applications, hardware and services that enable these systems to integrate into various environments and be utilized towards various customer use cases. Full utilization of its quantum computing solutions may depend on these third-party software, standards, specifications, applications, hardware and services, which may not be compatible with its quantum computing solutions and their development, or may not be available to us or its customers on commercially reasonable terms, or at all, which could harm its business.
If its customers are unable to achieve compatibility between other software and hardware and its hardware, it could impact its relationships with such customers or with customers, generally, if the incompatibility is more widespread. In addition, the mere announcement of an incompatibilityproblem relating to its products with higher level software tools could cause us to suffer reputational harm and/or lead to a loss of customers. Any adverse impacts from the incompatibility of its quantum computing solutions could adversely affect its business, operating results and financial condition.
If its technology fail to achieve a broad quantum advantage, its business, financial condition and future prospects may be harmed.
Quantum advantage refers to the moment when a quantum computer can compute faster than traditional computers, while quantum supremacy is achieved once quantum computers are powerful enough to complete calculations that traditional supercomputers cannot perform at all. Broad quantum advantage is when quantum advantage is seen in many applications and developers prefer quantum computers to a traditional computer. No current quantum computers, including its quantum hardware, have reached a broad quantum advantage, and they may never reach such advantage. Achieving a broad quantum advantage will be critical to the success of any quantum computing company, including us. However, achieving quantum advantage would not necessarily lead to commercial viability of the technology that accomplished such advantage, nor would it mean that such system could outperform classical computers in tasks other than the one used to determine a quantum advantage.
Quantum computing technology, including broad quantum advantage, may take decades to be realized, if ever. If Quantum X Labs cannot develop quantum computers that have quantum advantage, customers may not continue to purchase its products and services. If other companies’ quantum computers reach a broad quantum advantage prior to the time ours reaches such capabilities, it could lead to a loss of customers. If any of these events occur, it could have a material adverse effect on its business, financial condition or results of operations.
An element of its business is currently dependent upon its relationship with its cloud providers. There are no assurances that Quantum X Labs will be able to commercialize quantum computers from its relationships with cloud providers.
Quantum X Labs currently uses its QECC on public clouds provided by AWS’s Amazon Braket, Microsoft’s Azure Quantum, and the Google Cloud Marketplace. The companies that own these public clouds have internal quantum computing efforts that are competitive to its technology. There is risk that one or more of these public cloud providers could use their respective control of their public clouds to embed innovations or privileged interoperating capabilities in competing products, bundle competing products, provide us with unfavorable pricing, leverage their public cloud customer relationships to exclude us from opportunities, and treat us and its end users differently with respect to terms and conditions or regulatory requirements than they would treat their similarly situated customers. Further, they have the resources to acquire or partner with existing and emerging providers of competing technology and thereby accelerate adoption of those competing technologies. All of the foregoing could make it difficult or impossible for us to provide products and services that compete favorably with those of the public cloud providers.
Any material change in its contractual and other business relationships with its public cloud providers could result in harm to its brand and reputation and reduced use of its systems, which could have a material adverse effect on its business, financial condition and results of operations.
The quantum computing and networking industry is competitive on a global scale and Quantum X Labs may not be successful in competing in this industry or establishing and maintaining confidence in its long-term business prospects among current and future partners and customers.
The markets in which Quantum X Labs operates are rapidly evolving and highly competitive. As these markets continue to mature and new technologies and competitors enter such markets, Quantum X Labs expects competition to intensify. Quantum X Labs’ current competitors include (among others):
large, well-established tech companies that generally compete in all of its markets, including Amazon, Google, IBM, Intel, and Microsoft;
countries such as the United States, China, Russia, Australia, Canada, the United Kingdom, and certain countries in the European Union;
less-established public and private companies with competing technology, including companies located outside the United States; and
new or emerging entrants seeking to develop competing technologies.
Quantum X Labs competes based on various factors, including technology, price, performance, multi-cloud availability, brand recognition and reputation, customer support and differentiated capabilities, including ease of administration and use, scalability and reliability, data governance and security. Many of its competitors have substantially greater brand recognition, customer relationships, and financial, technical and other resources, including an experienced sales force and sophisticated supply chain management. They may be able to respond more effectively than us to new or changing opportunities, technologies, standards, customer requirements and buying practices or to cross-subsidize their quantum offerings from their other higher margin operations. In addition, many countries are focused on developing quantum solutions either in the private or public sector and may subsidize quantum computers or quantum networks, which may make it difficult for us to compete. Many of these competitors do not face the same challenges Quantum X Labs does in growing its business. In addition, other competitors might be able to compete with us by bundling their other products in a way that does not allow us to offer a competitive solution.
Additionally, Quantum X Labs must be able to achieve its objectives in a timely manner or quantum computing and networking may lose ground to competitors, including competing technologies. Because there are a large number of market participants, including certain sovereign nations, focused on developing quantum computing and networking technology, Quantum X Labs must dedicate significant resources to achieving any technical objectives on the timelines established by its management team. Any failure to achieve objectives in a timely manner could adversely affect its business, operating results and financial condition.
For all of these reasons, competition may negatively impact its ability to maintain and grow consumption of its platform or put downward pressure on its prices and gross margins, any of which could materially harm its reputation, business, results of operations, and financial condition.
The quantum computing and networking industry is in its early stages and volatile, and if it does not develop, if it develops slower than Quantum X Labs expects, if it develops in a manner that does not require use of its quantum computing solutions, if it encounters negative publicity or if its solution does not drive commercial engagement, the growth of its business will be harmed.
The nascent market for quantum computers and networks is still rapidly evolving, characterized by rapidly changing technologies, competitive pricing and competitive factors, evolving government regulation and industry standards, and changing customer demands and behaviors. If the market for quantum computers and networks in general does not develop as expected, or develops more slowly than expected, its business, prospects, financial condition and operating results could be harmed.
In addition, its growth and future demand for its products is highly dependent upon the adoption of quantum computers and networks and commercially useful quantum algorithms to run on quantum computers by developers and customers, as well as on its ability to demonstrate the value of quantum computing to its customers. Delays in future generations of its quantum computers or technical failures at other quantum computing and networking companies could limit market acceptance of its solution. Negative publicity concerning its solution or the quantum computing and networking industry as a whole could limit market acceptance of its solution. Quantum X Labs believes quantum computing will solve many large-scale problems. However, such problems may never be solvable by quantum computing technology, or may only be solvable by systems that are more technologically mature than Quantum X Labs currently expects. If its clients and partners do not perceive the benefits of its solution, or if its solution does not drive customer engagement, then its market may not develop at all, or it may develop slower than Quantum X Labs expects. If any of these events occur, it could have a material adverse effect on its business, financial condition or results of operations. If progress towards quantum advantage ever slows relative to expectations, it could adversely impact revenues and customer confidence to continue to pay for testing, access and “quantum readiness.” This would adversely affect revenues in the period before quantum advantage.
Quantum X Labs may to face supply chain issues that could delay the introduction of its product and negatively impact its business and operating results.
Quantum X Labs is reliant on third-party suppliers, including sole source suppliers, for components necessary to develop and manufacture its quantum computing and networking solutions. As its business grows, Quantum X Labs must continue to scale and adapt its supply chain or it could have an adverse impact on its business. Any of the following factors (and others) could have an adverse impact on the availability of these components necessary to its business:
its inability to enter into agreements with suppliers on commercially reasonable terms, or at all;
inability of suppliers to mature their operations in line with its growth and to meet its evolving requirements;
a significant increase in the price of one or more components, including due to industry consolidation occurring within one or more component supplier markets or as a result of decreased production capacity at manufacturers;
any reductions or interruption in supply, including disruptions on its global supply chain as a result of the global chip shortage, geopolitical tensions in and around Ukraine, Israel and other areas of the world and any indirect effects thereof;
financial problems of either manufacturers or component suppliers;
intentionalsabotage by a malicious actor or actors;
significantly increased raw material costs and other expenses associated with its business;
difficulty obtaining raw materials that meet its quality standards;
significantly increased freight charges, disruptions in shipping or reduced availability of freight transportation;
imposition of, or increase in, tariffs, trade protection measures, or import and export controls by the United States or other countries;
reduced access to raw materials due to suppliers entering into exclusivity arrangements with its competitors;
other factors beyond its control or that Quantum X Labs does not presently anticipate, could also affect its suppliers’ ability to deliver components to us on a timely basis;
a failure to develop its supply chain management capabilities and recruit and retain qualified professionals;
a failure to adequately authorize procurement of inventory by its contract manufacturers; or
a failure to appropriately cancel, reschedule, or adjust its requirements based on its business needs.
If any of the aforementioned factors were to materialize, it could cause us to delay or halt production of its quantum computing and networking solutions and/or entail higher manufacturing costs, any of which could materially adversely affect its business, operating results, and financial condition and could materially damage customer relationships.
If Quantum X Labs cannot successfully execute on its strategy, including in response to changing customer needs and new technologies and other market requirements, or achieve its objectives in a timely manner, its business, financial condition and results of operations could be harmed.
The quantum computing and networking market is characterized by rapid technological change, changing user requirements, uncertain product lifecycles and evolving industry standards. Quantum X Labs believes that the pace of innovation will continue to accelerate as technology changes and different approaches to quantum computing mature on a broad range of factors, including system architecture, errorcorrection, performance and scale, integration with classical computing resources, ease of programming, user experience, markets addressed, types of data processed, and data governance and regulatory compliance. Quantum X Labs’ future success depends on its ability to continue to innovate and increase customer adoption of its quantum computers and networks. If Quantum X Labs is unable to enhance its quantum computing system to keep pace with these rapidly evolving customer requirements, or if new technologies emerge that are able to deliver competitive products at lower prices, more efficiently, with better functionality, more conveniently, or more securely than its platform, its business, financial condition and results of operations could be adversely affected.
If Quantum X Labs is unable to maintain its current strategic partnerships or Quantum X Labs is unable to develop future collaborative partnerships, its future growth and development could be negatively impacted.
Quantum X Labs has entered into, and may enter into, strategic partnerships to develop and commercialize its current and future research and development programs with other companies to accomplish one or more of the following:
obtain expertise in relevant markets;
obtain sales and marketing services or support;
obtain equipment and facilities;
develop relationships with potential future customers; and
generate revenue.
Quantum X Labs may not be successful in establishing or maintaining suitable partnerships, and Quantum X Labs may not be able to negotiate collaboration agreements having terms satisfactory to us, or at all. Failure to make or maintain these arrangements or a delay or failure in a collaborative partner’s performance under any such arrangements could harm its business and financial condition.
Quantum X Labs’ business depends on its customers’ abilities to implement useful quantum algorithms and sufficient quantum resources for their business. If they are unable to do so, including due to their algorithmic challenge or other technical or personnel dilemmas, its growth may be negatively impacted.
Quantum X Labs has entered into, and may enter into, contracts, partnerships and other arrangements with customers to develop, test and run quantum algorithms specific to their business. The success of these contracts and partnerships is dependent on its customer’s ability to identify, implement, and realize useful and scalable algorithms for their portfolio at a speed commensurate with the pace of hardware, software, and technological development. These arrangements are also dependent on the availability of time and resources to develop and optimize these algorithms. The development and optimization of these algorithms is reliant on employing sufficient talent familiar with quantum computing and quantum networking, unique skills that require special training and education. If the market fails to train a sufficient number of engineers, researchers and other key quantum personnel, its customers may not find sufficient talent to partner with us to solve these problems. To the extent its customers are unable to effectively develop or utilize resources to advance algorithmic-use cases, its business, operating results and financial condition may be adversely impacted.
Quantum X Labs is highly dependent on its key employees who have specialized knowledge, and its ability to attract and retain senior management and other key employees is critical to its success.
Quantum X Labs’ future success is highly dependent on its ability to attract and retain its certain key employees and other qualified personnel, including its employees who have specialized knowledge and its employees from acquired businesses. Quantum X Labs has experienced in the past, and as Quantum X Labs builds its brand and becomes more well known, there is increased risk that Quantum X Labs may further experience in the future, competitors or other companies hiring its personnel. The loss of the services provided by these individuals could adversely impact the achievement of its business strategy. These individuals could leave its employment at any time, as they are “at will” employees. A loss of one of its key employees, particularly to a competitor, could also place us at a competitive disadvantage. Effective succession planning is important to its long-term success, and failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder its strategic planning and execution.
Quantum X Labs’ future success also depends on its continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. The market for highly skilled workers and leaders in the quantum computing industry is extremely competitive. In particular, hiring qualified personnel specializing in engineering, software development and sales, as well as other technical staff and research and development personnel is critical to its business and the development of its quantum computing and networking systems. Some of these professionals are hard to find and Quantum X Labs may encounter significant competition in its efforts to hire them. Many of the other companies with which Quantum X Labs competes for qualified personnel have greater financial and other resources than Quantum X Labs does. The effective operation of its supply chain, including the acquisition of critical components and materials, the development of its quantum computing and networking technologies, the commercialization of its quantum computing and networking technologies and the effective operation of its managerial and operating systems all depend upon its ability to attract, train and retain qualified personnel in the aforementioned specialties. Additionally, changes in immigration and work permit laws and regulations or the administration or interpretation of such laws or regulations, including changes following the recent U.S. federal elections, could impair its ability to attract and retain highly qualified employees. If Quantum X Labs cannot attract, train and retain qualified personnel, in this competitive environment, Quantum X Labs may experience delays in the development of its quantum computing and networking technologies and be otherwise unable to develop and grow its business as projected, or even at all.
Quantum X Labs’ future growth and success depends in part on its ability to sell effectively to government entities and large enterprises.
Quantum X Labs’ customers and potential customers include domestic and international government agencies and large enterprises. Therefore, its future success will depend on its ability to effectively sell its products to such customers. Sales to these end-customers involve risks that may not be present (or that are present to a lesser extent) with sales to non-governmental agencies or smaller customers. These risks include, but are not limited to, (i) increased purchasing power and leverage held by such customers in negotiating contractual arrangements with us and (ii) longer sales cycles and the associated risk that substantial time and resources may be spent on a potential end-customer that elects not to purchase its solutions. Sales to government agencies can be priced as fixed fee development contracts, which involve additional risks. Cost-plus and time-and-materials contracts can adversely affect its results of operations and financial condition if its costs do not qualify as allowable costs under applicable regulations. In addition, government contracts generally include the ability of government agencies to terminate early which, if exercised, would result in a lower contract value and lower than anticipated revenues generated by such arrangement. Additionally, such government contracts may limit its ability to do business with foreign governments or prevent us from selling its products in certain countries.
Government agencies and large organizations often undertake a significant evaluation process that results in a lengthy sales cycle. Quantum X Labs’ contracts with government agencies are typically structured in phases, with each phase subject to satisfaction of certain conditions. As a result, the actual scope of work performed pursuant to any such contracts, in addition to related contract revenue, could be less than total contract value. In addition, product purchases by such organizations are frequently subject to budget constraints, multiple approvals and unanticipated administrative, processing and other delays. Finally, these organizations typically have longer implementation cycles, require greater product functionality and scalability, require a broader range of services, demand that vendors take on a larger share of risks, require acceptance provisions that can lead to a delay in revenue recognition and expect greater payment flexibility. All of these factors can add further risk to business conducted with these potential customers and could lead to lower revenue results than originally anticipated.
Additionally, changes in government spending could have adverse consequences on its financial position, results of operations and business. Quantum X Labs’ anticipated future revenues from the U.S. government result from contracts awarded under various U.S. government programs. Cost cutting, including through consolidation and elimination of duplicative organizations, has become a major initiative for certain departments within the U.S. government. The funding of its programs is subject to the overall U.S. government budget and appropriation decisions and processes, which are driven by numerous factors, including geo-political events and macroeconomic conditions.
Significant reduction in U.S. government spending could have long-term consequences for its size and structure. In addition, changes in government priorities and requirements could impact the funding, or the timing of funding, of its programs, which could negatively impact its results of operations and financial condition.
Risks Related to Quantum X Labs’ Intellectual Property
If Quantum X Labs is unable to obtain and maintain effective intellectual property rights for its products, Quantum X Labs may not be able to compete effectively in its markets.
Quantum X Labs’ ability to protect its intellectual property is paramount to its business. Quantum X Labs relies upon a combination of protections afforded to owners of patents, designs, copyrights, trade secrets, and trademarks, along with employee and third-party nondisclosure agreements and other contractual restrictions to establish and protect Quantum X Labs’ intellectual property rights. In addition, industry know-how and unpatented trade secrets in the fields of research, development and engineering are an important aspect of its business by ensuring that its technology and strategic business assets remain confidential. Quantum X Labs pursues patent protection when it develops a patentable invention and the benefits of obtaining a patent outweigh the risks of making the invention public through patent filings.
Quantum X Labs cannot offer any assurances about which, if any, patent applications will issue, the breadth of any such patent or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any successfulopposition to these patents or any other patents owned by or licensed to us after patent issuance could deprive us of rights necessary for the successful commercialization of any new products that Quantum X Labs may develop.
Even if patents do successfully issue, and even if such patents cover its products, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, its patent applications and any future patents may not adequately protect its intellectual property, provide exclusivity for its new products, or prevent others from designing around its claims. Any of these outcomes could impair its ability to prevent competition from third parties, which may have an adverse impact on its business.
If Quantum X Labs cannot obtain and maintain effective patent rights for its products, Quantum X Labs may not be able to compete effectively, and its business and results of operations would be harmed.
Intellectual property rights of third parties could adversely affect its ability to commercialize its products, and Quantum X Labs might be required to litigate or obtain licenses from third parties in order to develop or market its product candidates. Such litigation or licenses could be costly or not available on commercially reasonable terms.
It is inherently difficult to conclusively assess its freedom to operate without infringing on third party rights. Quantum X Labs’ competitive position may be adversely affected if existing patents or patents resulting from patent applications issued to third parties or other third-party intellectual property rights are held to cover its products or elements thereof, or its manufacturing or uses relevant to its development plans. In such cases, Quantum X Labs may not be in a position to develop or commercialize products or its product candidates unless Quantum X Labs successfully pursues litigation to nullify or invalidate the third-party intellectual property right concerned or enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms. There may also be pending patent applications that if they result in issued patents, could be alleged to be infringed by its new products. If such an infringement claim should be brought and be successful, Quantum X Labs may be required to pay substantial damages, be forced to abandon its new products or seek a license from any patent holders. No assurances can be given that a license will be available on commercially reasonable terms, if at all.
It is also possible that Quantum X Labs has failed to identify relevant third-party patents or applications. For example, U.S. patent applications filed before November 29, 2000 and certain U.S. patent applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Patent applications in the United States and in most of the other countries are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering its new products or platform technology could have been filed by others without its knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover its platform technologies, its new products or the use of its new products. Third party intellectual property right holders may also actively bring infringementclaimsagainst us. Quantum X Labs cannot guarantee that Quantum X Labs will be able to successfully settle or otherwise resolve such infringementclaims. If Quantum X Labs is unable to successfully settle future claims on terms acceptable to us, Quantum X Labs may be required to engage in or continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in pursuing the development of and/or marketing its new products. If Quantum X Labs fails in any such dispute, in addition to being forced to pay damages, Quantum X Labs may be temporarily or permanently prohibited from commercializing its new products that are held to be infringing. Quantum X Labs might, if possible, also be forced to redesign its new products so that Quantum X Labs no longer infringes the third party’s intellectual property rights. Any of these events, even if Quantum X Labs were ultimately to prevail, could require us to divert substantial financial and management resources that Quantum X Labs would otherwise be able to devote to its business.
Patent policy and rule changes could increase the uncertainties and costs surrounding the prosecution of its patent applications and the enforcement or defense of any issued patents.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of any patents that may issue from its patent applications or narrow the scope of its patent protection. The laws of foreign countries may not protect its rights to the same extent as the laws of the United States. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Quantum X Labs therefore cannot be certain that it was the first to file the invention claimed in its owned and licensed patent or pending applications, or that Quantum X Labs or its licensor were the first to file for patent protection of such inventions. Assuming all other requirements for patentability are met, in the United States prior to March 15, 2013, the first to make the claimed invention without unduedelay in filing is entitled to the patent, while outside the United States, the first to file a patent application is entitled to the patent. Since March 15, 2013, the United States has moved to a first to file system. Changes to the way patent applications will be prosecuted could increase the uncertainties and costs surrounding the prosecution of its patent applications and the enforcement or defense of any issued patents, all of which could have a material adverse effect on its business and financial condition.
Quantum X Labs may be involved in lawsuits to protect or enforce its intellectual property, which could be expensive, time consuming, and unsuccessful.
Competitors may infringe its intellectual property. If Quantum X Labs were to initiate legal proceedings against a third party to enforce a patent covering one of its new products, the defendant could counterclaim that the patent covering its product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendantcounterclaimsalleginginvalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an allegedfailure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the United States Patent and Trademark Office, or USPTO, or made a misleading statement, during prosecution. The validity of U.S. patents may also be challenged in post-grant proceedings before the USPTO. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
Derivation proceedings initiated by third parties or brought by us may be necessary to determine the priority of inventions and/or their scope with respect to its patent or patent applications or those of its licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Quantum X Labs’ business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Quantum X Labs’ defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract its management and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on its ability to raise the funds necessary to continue its research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring its new products to market.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of its confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of its ordinary shares.
Quantum X Labs may be subject to claimschallenging the inventorship of its intellectual property.
Quantum X Labs may be subject to claims that former employees, collaborators or other third parties have an interest in, or right to compensation, with respect to its current patent and patent applications, future patents or other intellectual property as an inventor or co-inventor. For example, Quantum X Labs may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing its products. Litigation may be necessary to defendagainst these and other claimschallenging inventorship or claiming the right to compensation. If Quantum X Labs fails in defending any such claims, in addition to paying monetary damages, Quantum X Labs may losevaluable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on its business. Even if Quantum X Labs is successful in defendingagainst such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Quantum X Labs may not be able to protect its intellectual property rights throughout the world.
Filing, prosecuting, and defending patents on products, as well as monitoring their infringement in all countries throughout the world would be prohibitively expensive, and its intellectual property rights in some countries can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States.
A substantial part of its potential commercial success will depend on its ability to maintain, establish and protect its intellectual property assets, maintain trade secret protection, register copyrights and trademarks, and operate without infringing the proprietary rights of third parties. Quantum X Labs cannot assure investors that any of its currently pending or future patent applications will result in issued patents and Quantum X Labs cannot predict how long it will take for such patent applications to issue as patents. There is a further risk that the claims of each patent application, as filed, may change in scope during examination by the patent offices. Further, if and where a patent is granted, there can be no guarantee that such patent will be valid or enforceable or that the patent will be granted in other jurisdictions.
Competitors may use its technologies in jurisdictions where Quantum X Labs has not obtained patent protection to develop their own products and may also export otherwise infringing products to territories where Quantum X Labs has patent protection, but enforcement is not as strong as that in the United States. These products may compete with its products. Future patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, which could make it difficult for us to stop the marketing of competing products in violation of its proprietary rights generally. Proceedings to enforce its patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert its efforts and attention from other aspects of its business, could put its future patents at risk of being invalidated or interpreted narrowly and its patent applications at risk of not issuing and could provoke third parties to assert claimsagainst us. Quantum X Labs may not prevail in any lawsuits that Quantum X Labs initiates, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, its efforts to monitor and enforce its intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from intellectual property that Quantum X Labs develops or licenses.
Quantum X Labs may become subject to claims for remuneration or royalties for assigned service invention rights by its employees, which could result in litigation and adversely affect its business.
A significant portion of Quantum X Labs’ intellectual property has been developed by its employees in the course of their employment for us. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee during the scope of his or her employment with a company are regarded as “service inventions,” which belong to the employer, absent an agreement between the employee and employer providing otherwise. The Patents Law also provides that if there is no agreement between an employer and an employee determining whether the employee is entitled to receive consideration for service inventions and on what terms, this will be determined by the Israeli Compensation and Royalties Committee, or the Committee, a body constituted under the Patents Law. Case law clarifies that the right to receive consideration for “service inventions” can be waived by the employee and that in certain circumstances, such waiver does not necessarily have to be explicit. The Committee will examine, on a case-by-case basis, the general contractual framework between the parties, using interpretation rules of the general Israeli contract laws. Further, the Committee has not yet determined one specific formula for calculating this remuneration, but rather uses the criteria specified in the Patents Law. Although Quantum X Labs generally enters into agreements with its employees pursuant to which such individuals assign to us all rights to any inventions created during and as a result of their employment with us, Quantum X Labs may face claims demanding remuneration in consideration for assigned inventions. As a consequence of such claims, it could be required to pay additional remuneration or royalties to its current and/or former employees, or be forced to litigate such monetary claims (which will not affect its proprietary rights), which could negatively affect its business.
Risks Related to Our Common Stock
Raising additional capital or the issuance of additional equity securities would cause dilution to our existing stockholders and may affect the rights of existing stockholder or the market price of our common stock.
We may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic arrangements. To the extent that we raise additional capital through the issuance of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a holder of our common stock.
In addition, our authorized share capital consists 500,000,000 shares of capital stock, including 490,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. As of March 26, 2026, we had 13,336,392 shares of common stock issued and no shares of preferred stock issued and outstanding. As of March 26, 2026, we also had (i) warrants to purchase 11,695,211 shares of common stock outstanding; (ii) 862,004 shares of common stock issuable upon the conversion of outstanding convertible debt; and (iii) 862,004 shares of common stock issuable upon the exercise of warrants that are issuable upon the conversion of the outstanding convertible debt. In addition, we may issue up to an additional 12,702,847 shares of common stock (or pre-funded warrants in lieu thereof) upon the achievement of certain milestones in connection with our acquisition of Quantum. Our board of directors may issue, or reserve for issuance, up to 2,713,613 shares of common stock that are reserved and available for future awards under the Viewbix Inc. 2023 Stock Incentive Plan, which might dilute your holdings substantially.
To the extent that shares of common stock or preferred stock are issued or options and warrants are exercised, holders of our ordinary shares will experience dilution. In addition, in the event of any future issuances of equity securities or securities convertible into or exchangeable for ordinary shares, holders of our ordinary shares may experience dilution. We also consider from time to time various strategic alternatives that could involve issuances of additional ordinary shares, including but not limited to acquisitions and business combinations, but do not currently have any definitive plan to enter into any such transaction.
To the extent any of these warrants are exercised and any additional warrants are issued and subsequently exercised, there will be further dilution to our stockholders. Until the warrants expire, these warrant holders will have an opportunity to profit from any increase in the market price of our common stock without assuming the risks of ownership. Holders of options and warrants may exercise these securities at a time when we could obtain additional capital on terms more favorable.
The exercise price of the warrants will dilute the voting interest of the owners of presently outstanding shares of common stock by adding a substantial number of additional shares of our common stock. We have reserved shares of common stock for issuance upon the exercise of the warrants and may increase the shares reserved for these purposes in the future.
The shares of our common stock, which are issuable upon the exercise of any outstanding warrants may be sold in the public market pursuant to Rule 144, if applicable. The sale of our common stock issued or issuable upon the exercise of the warrants and options described above, or the perception that such sales could occur, may adversely affect the market price of our common stock.
A more active, liquid trading market for our common stock may not develop, and the price of our common stock may fluctuate significantly.
Although our common stock is listed on the Nasdaq Capital Market and has been traded on the Nasdaq Capital Market since June 5, 2025, there has been relatively limited trading volume in the market for our common stock, and a more active, liquid public trading market may not develop or may not be sustained. Limited liquidity in the trading market for our common stock may adversely affect a stockholder’s ability to sell its shares of common stock at the time it wishes to sell them or at a price that it considers acceptable. If a more active, liquid public trading market does not develop, we may be limited in our ability to raise capital by selling shares of common stock and our ability to acquire other companies or assets by using shares of our common stock as consideration. In addition, if there is a thin trading market or “float” for our stock, the market price for our common stock may fluctuate significantly more than the stock market as a whole. Without a large float, our common stock would be less liquid than the stock of companies with broader public ownership and, as a result, the trading prices of our common stock may be more volatile and it would be harder for you to liquidate any investment in our common stock. Furthermore, the stock market is subject to significant price and volume fluctuations, and the price of our common stock could fluctuate widely in response to several factors, including:
our quarterly or annual operating results;
changes in our earnings estimates;
investment recommendations by securities analysts following our business or our industry;
additions or departures of key personnel;
changes in the business, earnings estimates or market perceptions of our competitors;
our failure to achieve operating results consistent with securities analysts’ projections;
changes in industry, general market or economic conditions;
announcements of legislative or regulatory changes; and
natural disasters and political and economic instability, including wars, terrorism, political unrest, results of certain elections and votes, emergence of a pandemic, or other widespread health emergencies (or concerns over the possibility of such an emergency), boycotts, adoption or expansion of government trade restrictions, and other business restrictions.
The stock market has experienced extreme price and volume fluctuations in recent years that have significantly affected the quoted prices of the securities of many companies. The changes often appear to occur without regard to specific operating performance. The price of our common stock could fluctuate based upon factors that have little or nothing to do with us and these fluctuations could materially reduce our stock price.
We are subject to compliance with securities law, which exposes us to potential liabilities, including potential rescission rights.
We have offered and sold our common stock to investors pursuant to certain exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Act”) as well as those of various state securities laws. The basis for relying on such exemptions is factual; that is, the applicability of such exemptions depends upon our conduct and that of those persons contacting prospective investors and making the offering. We have not received a legal opinion to the effect that any of our prior offerings were exempt from registration under any federal or state law. Instead, we have relied upon the operative facts as the basis for such exemptions, including information provided by investors themselves.
If any prior offering did not qualify for such exemption, an investor would have the right to rescind its purchase of the securities if it so desired. It is possible that if an investor should seek rescission, such investor would succeed. A similar situation prevails under state law in those states where the securities may be offered without registration in reliance on the partial preemption from the registration or qualification provisions of such state statutes. If investors were successful in seeking rescission, we would face severe financial demands that could adversely affect our business and operations. Additionally, if we did not in fact qualify for the exemptions upon which it has relied, we may become subject to significant fines and penalties imposed by the SEC and state securities agencies.
We have never paid cash dividends and do not anticipate doing so in the foreseeable future.
We have never declared or paid cash dividends on our Common Shares. We currently plan to retain any earnings to finance the growth of our business rather than to pay cash dividends. Payments of any cash dividends in the future will depend on our financial condition, results of operations and capital requirements, as well as other factors deemed relevant by our Board of Directors.
We incur significant increased costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives.
We incur significant legal, accounting and other expenses as a public company. In addition, the Sarbanes-Oxley Act has imposed various requirements on public companies including requiring establishment and maintenance of effective disclosure and financial controls. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased and will continue to increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain directors’ and officers’ liability insurance, which could make it more difficult for us to attract and retain qualified members of our board of directors. We cannot predict or estimate the amount of additional costs we will incur as a public company or the timing of such costs.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. In addition, we will be required to have our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting the later of our second Annual Report on Form 10-K or the first Annual Report on Form 10-K following the date on which we are no longer an emerging growth company or a smaller reporting company. Our compliance with Section 404 of the Sarbanes-Oxley Act will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the value of our securities could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.
Our ability to successfully implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate financial statements. We expect that we will need to continue to improve existing, and implement new operational and financial systems, procedures and controls to manage our business effectively. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls, may cause our operations to suffer and we may be unable to conclude that our internal control over financial reporting is effective and to obtain an unqualified report on internal controls from our auditors as required under Section 404 of the Sarbanes-Oxley Act. This, in turn, could have an adverse impact on value of our securities, and could adversely affect our ability to access the capital markets.
We are a smaller reporting company and, as a result of the reduced disclosure and governance requirements applicable to such companies, our common stock may be less attractive to investors.
We are a smaller reporting company, (i.e. a company with “public float” held by non-affiliates with a market value of less than $250 million) and we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies. We have elected to adopt these reduced disclosure requirements. We cannot predict if investors will find our common stock less attractive as a result of our taking advantage of these exemptions. If some investors find our common stock less attractive as a result of our choices, there may be a less active trading market for our common stock and our stock price may be more volatile.
Shares of common stock eligible for future sale may adversely affect the market.
From time to time, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144 promulgated under the Act, subject to certain limitations. In general, pursuant to amended Rule 144, non-affiliate stockholders may sell freely after six months, subject only to the current public information requirement. Affiliates may sell after six months, subject to the Rule 144 volume, manner of sale (for equity securities), current public information and notice requirements. Any substantial sales of our common stock pursuant to Rule 144 may have a material adverse effect on the market price of our common stock.
If we fail to maintain compliance with the Nasdaq minimum listing requirements, our common stock will be subject to delisting. Our ability to publicly or privately sell equity securities and the liquidity of our common stock could be adversely affected if our common stock delisted.
Our common stock is listed on the Nasdaq Capital Market. To maintain our listing, we are required to satisfy certain continued listing requirements, including, among other things, minimum bid price, minimum market value of publicly held shares, minimum stockholders’ equity (or other financial metrics), corporate governance requirements, and timely filing of periodic reports with the SEC.
There can be no assurance that we will be able to comply with Nasdaq’s continued listing standards in the future. If we fail to satisfy any of Nasdaq’s continued listing requirements, we may receive a deficiency notice from Nasdaq and, depending on the nature of the deficiency, may be afforded a limited period of time to regain compliance. However, certain deficiencies may not be subject to a cure period or may result in immediate delisting. If we do not regain compliance within any applicable cure period, or if Nasdaq determines that we are not eligible for a compliance period, Nasdaq may determine to delist our common stock.
On January 26, 2026, Nasdaq filed a rule proposal with the SEC that would permit the immediate suspension and delisting of a company listed on the Nasdaq Capital Market if its market value of listed securities remains below $5 million for 30 consecutive business days. As of the date of this Annual Report, our market value of listed securities is above $5 million.
If we do not meet Nasdaq’s continued listing requirements, our common stock could be delisted. A delisting of our common stock from Nasdaq could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and fewer business development opportunities and strategic alternatives. There can be no assurance that our common stock, if delisted from the Nasdaq Capital Market in the future, would be listed on a national securities exchange, a national quotation service, the Over-The-Counter Markets or the pink sheets. Delisting from the Nasdaq Capital Market, or even the issuance of a notice of potential delisting, would also result in negative publicity, make it more difficult for us to raise additional capital, adversely affect the market liquidity of our common stock, reduce security analysts’ coverage of us and diminish investor, supplier and employee confidence. Additionally, the threat of delisting or the delisting of our common stock from the Nasdaq Capital Market could reduce the number of investors willing to hold or acquire our shares of common stock, thereby further restricting our ability to obtain equity financing, and it could reduce our ability to retain, attract and motivate our directors, officers and employees. In addition, as a consequence of any such delisting, our stock price could be negatively affected and our stockholders would likely find it more difficult to sell, or to obtain accurate quotations as to the prices of, our common stock. Accordingly, any failure to maintain compliance with Nasdaq’s continued listing requirements could have a material adverse effect on our business, financial condition, results of operations and the value of our common stock.
Our share price has fluctuated significantly and could continue to fluctuate significantly.
The market price for our common stock, as well as the prices of shares of other technology and ad-tech companies, has been volatile. The following factors may cause significant fluctuations in the market price of our common stock:
negative fluctuations in our quarterly revenue and earnings or those of our competitors;
pending sales into the market due to the sale of large blocks of shares, due to, among other reasons, the expiration of any tax-related or contractual lock-ups with respect to significant amounts of our shares of common stock;
changes in our senior management;
changes in regulations or in policies of Search Engines or other industry conditions;
mergers and acquisitions by us or our competitors;
technological innovations;
the introduction of new products; and
the conditions of the securities markets, political, economic and other developments worldwide.
In addition, share prices of many technology companies in general and ad-tech companies in particular fluctuate significantly for reasons that may be unrelated or disproportionate to operating results. The factors discussed above may depress or cause volatility to our share price, regardless of our actual operating results.
Delaware law contains provisions that could discourage, delay or prevent a change in control of our Company, prevent attempts to replace or remove current management and reduce the market price of our stock.
Provisions in our Certificate of Incorporation and Bylaws may discourage, delay or prevent a merger or acquisition involving us that our stockholders may consider favorable. For example, our Certificate of Incorporation authorizes our Board of Directors to issue up to ten million shares of “blank check” preferred stock. As a result, without further stockholder approval, the Board of Directors has the authority to attach special rights, including voting and dividend rights, to this preferred stock. With these rights, preferred stockholders could make it more difficult for a third party to acquire us.
We are also subject to the anti-takeover provisions of the Delaware General Corporation Law (the “DGCL”). Under these provisions, if anyone becomes an “interested stockholder,” we may not enter into a “business combination” with that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change in control of us. An “interested stockholder” is, generally, a stockholder who owns 15% or more of our outstanding voting stock or an affiliate of ours who has owned 15% or more of our outstanding voting stock during the past three years, subject to certain exceptions as described in the DGCL.
Were our common stock to become subject to the penny stock rules then this could result in U.S. broker-dealers becoming discouraged from effecting transactions in shares of our common stock.
Rule 15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. If we do not retain a listing on the Nasdaq Capital Market or do not meet certain net tangible asset or average revenue requirements and if the price of our common stock is less than $5.00, our common stock will be deemed a penny stock. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Scrutiny of sustainability and environmental, social, and governance initiatives could increase our costs or otherwise adversely impact our business.
Public companies have recently faced scrutiny related to environmental, social, and governance (“ESG”) practices and disclosures from certain investors, capital providers, shareholder advocacy groups, other market participants and other stakeholder groups. Such scrutiny may result in increased costs, enhanced compliance or disclosure obligations, or other adverse impacts on our business, financial condition or results of operations. If our ESG practices and reporting do not meet investor or other stakeholder expectations, we may be subject to investor or regulator engagement regarding such matters. Our failure to comply with any applicable ESG rules or regulations could lead to penalties and adversely impact our reputation, access to capital and employee retention. Such ESG matters may also impact our third-party contract manufacturers and other third parties on which we rely, which may augment or cause additional impacts on our business, financial condition, or results of operations
Our business, operating results and growth rates may be adversely affected by current or future unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk.
Our business depends on the economic health of the global economies. If the conditions in the global economies remain uncertain or continue to be volatile, or if they deteriorate, including as a result of the impact of military conflict, such as the war between Russia and Ukraine, terrorism or other geopolitical events, our business, operating results and financial condition may be materially adversely affected. Economic weakness, inflation and increases in interest rates, limited availability of credit, liquidity shortages and constrained capital spending have at times in the past resulted, and may in the future result, in challenging and delayed sales cycles, slower adoption of new technologies and increased price competition, and could negatively affect our ability to forecast future periods, which could result in an inability to satisfy demand for our products and a loss of market share.
In addition, increases in inflation raise our costs for commodities, labor, materials and services and other costs required to grow and operate our business, and failure to secure these on reasonable terms may adversely impact our financial condition. Additionally, increases in inflation, geopolitical developments and global supply chain disruptions, have caused, and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which may make it more difficult, costly or dilutive for us to secure additional financing. A failure to adequately respond to these risks could have a material adverse impact on our financial condition, results of operations or cash flows.
There can be no assurance that future credit and financial market instability and a deterioration in confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, or if adverse developments are experienced by financial institutions, it may cause short-term liquidity risk and also make any necessary debt or equity financing more difficult, more costly, more onerous with respect to financial and operating covenants and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to alter our operating plans. In addition, there is a risk that one or more of our service providers, financial institutions, manufacturers, suppliers and other partners may be adversely affected by the foregoing risks, which could directly affect our ability to attain our operating goals on schedule and on budget.
Risks Related to our Operations in Israel
Conditions in Israel, including Israel’s conflicts with Hamas and other parties in the region, as well as political and economic instability, may impede our ability to operate and harm our financial results.
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. Accordingly, political, economic and military conditions in the Middle East may affect our business directly. 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, including Iran, Hamas (an Islamist militia and political group in the Gaza Strip) and Hezbollah (an Islamist militia and political group in Lebanon).
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. Hamas 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 January 2025, Israel and Hamas entered into a ceasefire agreement, which remained in effect until March 18, 2025, when hostilities resumed. As of October 9, 2025, Israel and Hamas entered into a renewed ceasefire agreement calling for a permanent end of the war. However, there are no assurances that such as agreement will hold. While the conflict has created heightened security concerns, disruptions to business operations, and economic instability, the ceasefire may contribute to improved regional stability. However, the security situation remains fluid, and any renewed military actions, restrictions, or government-imposed measures could adversely affect our operations, supply chains, and financial condition.
Since the commencement of these events, there have been continued hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization) and on other fronts from various extremist groups in region, such as the Houthis in Yemen and various rebel militia groups in Syria and Iraq. In October 2024, Israel began limited ground operations against Hezbollah in Lebanon, and in November 2024, a ceasefire was brokered between Israel and Hezbollah. In March 2026, hostilities resumed along Israel’s northern border with Lebanon, when Hezbollah resumed its attacks as part of a broader regional escalation. In response, Israel resumed military operations against Hezbollah in Lebanon.
In addition, in April 2024 and October 2024, Iran launched direct attacks on Israel involving hundreds of drones and missiles and has threatened to continue to attack Israel and is widely believed to be developing nuclear weapons. In addition, in response to ongoing Iranian aggression and support of proxy attacks against Israel, on June 13, 2025, Israel conducted a series of preemptive defensive air strikes in Iran targeting Iran’s nuclear program and military commanders. While a ceasefire was reached in June 2025 following 12 days of hostilities, on February 28, 2026, the United States and Israel launched coordinated military strikes against Iran, including attacks on strategic military infrastructure and leadership targets, with the stated aim of degrading Iran’s capacity to conduct or support hostile operations against them. In response, Iran has fired missiles and drones toward population centers and military installations in Israel, Europe and neighboring countries in the Gulf region, and also launched counter-strikes against U.S. forces and allied bases throughout the Gulf region. A broader regional conflict involving additional state and non-state actors remains a significant risk. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. These situations may potentially escalate in the future to more violent events which may affect Israel and us. Continued military escalation, retaliatory actions, or broader regional involvement may adversely affect economic conditions, disrupt markets, and create uncertainty that could negatively impact our business, financial condition and results of 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. None of our directors, officers, employees or consultants were called to reserve duty and there has been no material impact on our business from past reserve services. Although many of such military reservists have since been released, they may be called up for additional reserve duty, depending on developments in the war in Gaza and along Israel’s other borders. Military service call ups that result in absences of personnel from us for an extended period of time may materially and adversely affect our business, prospects, financial condition and results of operations. As of the date of this Annual Report, none of our directors, officers, employees or consultants are serving in active or reserve duty.
Since the war broke out on October 7, 2023, our operations have not been adversely affected by this situation, and we have not experienced disruptions to our product or business development activities. However the intensity and duration of the security situation in Israel have been difficult to predict, as are the economic implications on our business and operations and on Israel’s economy in general. If the war continues for a long period of time or expands to other fronts, our operations may be harmed.
Our insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East or for any resulting disruption in our operations. Although the Israeli government has in the past covered the reinstatement value of direct damages that were caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or, if maintained, will be sufficient to compensate us fully for damages incurred, and the government may cease providing such coverage or the coverage might not suffice to cover potential damages. Any losses or damages incurred by us could have a material adverse effect on our business.
Exchange rate fluctuations between foreign currencies and the U.S. Dollar may negatively affect our earnings.
We anticipate being subject to fluctuations in currency exchange rates because our reporting and functional currency is the U.S. dollar. Our revenues are currently primarily payable in U.S. dollars and we expect our future revenues to be denominated primarily in U.S. dollars and Euros. However, certain amount of our expenses is in NIS. As a result, our operating results are exposed primarily to movements in the USD/NIS. In addition, we are exposed to the currency fluctuation risks relating to the recording of our expenses in U.S. dollars. We may, in the future, decide to enter into currency hedging transactions. These measures, however, may not adequately protect us from material adverse effects. We cannot predict any future trends in the rate of inflation in Israel or the rate of appreciation or devaluation (if any) of the shekel against the dollar. Appreciation of the NIS against the U.S. dollar increases the U.S. dollar cost of our NIS denominated expenses and may adversely impact our net loss or net income (if any). Based on our 2025 expense levels, a 10% appreciation of the NIS against the U.S. dollar would have increased our net loss by approximately $119 thousand.
Foreign exchange rates may fluctuate due to many factors, including interest rate differentials between markets, capital flows, monetary policy decisions, geopolitical events, global macroeconomic developments, and investor sentiment toward Israel and regional markets. These factors may cause the NIS to appreciate or depreciate against the U.S. dollar independent of local inflation levels. If the NIS strengthens without a corresponding increase in our foreign currency revenues, our U.S. dollar measured costs will rise.
The value of the NIS relative to the U.S. dollar, and other currencies has fluctuated significantly. For example, the shekel appreciated on average by 12.5% relative to the U.S. dollar in 2025, after depreciating by 0.4% in 2024 and by 3.1% in 2023, thereby increasing, in 2025, the U.S. dollar cost of our shekel denominated expenses. Any significant revaluation of the NIS may materially and adversely affect our cash flows, revenues, and financial condition. Fluctuations in the NIS exchange rate, or even the appearance of instability in such exchange rate, could adversely affect our ability to operate our business.
It may be difficult to enforce a judgment of a U.S. court against us, our officers and directors or the Israeli experts named in our reports filed with the SEC in Israel or the United States, to assert U.S. securities laws claims in Israel or to serve process on our officers and directors and these experts.
Our directors reside outside of the United States, and most of the assets of our directors are located outside of the United States. Therefore, a judgment obtained against us, or our directors, including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and may not be enforced by an Israeli court. It may also be difficult for you to effect service of process on our directors in the United States or to assert U.S. securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on an allegedviolation of U.S. securities laws reasoning that Israel is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact by expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli law.
There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against us in Israel, you may not be able to collect any damages awarded by either a U.S. or foreign court.
The Company, through its subsidiary, Gix Media, is focused on digital advertising operations the Search Platform. Gix Media develops and markets a variety of technological software solutions that automate, optimize and monetize online campaigns. These technological tools enable advertisers and website owners to earn more from their advertising campaigns and generate additional profits from their sites. Through the Search Platform, the Company provides services to leading Search Engines worldwide by developing, marketing and distributing software products to internet users. The operations and activity on this platform are powered by Gix Media.
Until November 2025, in addition to Gix Media’s Search Platform, the Company, through a previous majority-owned subsidiary of Gix Media, Cortex, operated a digital content platform, which produced engaging content and marketing material in various languages to various target audiences, in order to generate revenues from advertisements displayed together with the content, which are posted on digital content, marketing and advertising platforms. Following the Cortex Sale (as defined below), the Company only operates the Search Platform.
The Company, through its wholly-owned subsidiary, Quantum, is focused on developing and promoting quantum algorithms for the transportation, drug discovery and security segments as well as developing quantum-based GPS replacement and quantum atom accuracy solutions. Quantum currently owns and operates six portfolio-companies, each dealing with a different quantum segment and challenge. Quantum’s proprietary intellectual property portfolio, including an innovative patent in quantum errorcorrection, sub-licensed in collaboration with Ramot, the technology transfer company of Tel Aviv University, addresses criticalchallenges in noisy intermediate-scale quantum devices by enablingefficient, real-time decoding of surface code errors—reducing computational overhead by up to 50% compared to traditional methods and supporting scalable fault-tolerant quantum computing.
The Company, through its wholly-owned subsidiary, Metagramm, is focused on artificial intelligence (AI) and natural language processing (NLP) communication-based solutions. Metagramm specializes in developing advanced writing assistance tools that leverage artificial intelligence, machine learning and natural language processing technologies. Metagramm’s main product, “Bubbl” is a writing tool designed to provide personalized and customized text tailored to the user’s unique expression and can translate various languages into English. Metagramm licenses its products on a subscription basis to businesses and individual customers.
Recent Developments
Quantum Acquisition
On December 15, 2025, we entered into a securities exchange agreement (the “Quantum Exchange Agreement”) with Quantum and certain of the shareholders of Quantum (the “Quantum Shareholders”) pursuant to which we agreed to issue to the Quantum Shareholders an aggregate of up to 40.0% of our issued and outstanding capital stock as of December 15, 2025, inclusive of the 800,000 shares of our common stock issuable by us in a private placement offering that we entered into in November 2025 (the “Private Placement Shares”), consisting of (i) up to 2,666,000 shares of our common stock, representing 19.99% of our issued and outstanding capital stock (the “Viewbix Exchange Shares”), inclusive of the Private Placement Shares, and (ii) pre-funded warrants to purchase up to 4,447,595 shares of our common stock, representing the balance of up to the 40.0%, as of December 15, 2025, less the Viewbix Exchange Shares (the “Viewbix Exchange Pre-Funded Warrants”), in exchange for up to 100%, but not less than 85%, of Quantum’s issued and outstanding share capital on a fully diluted and post-closing basis, equal to an amount up to 589,319 of Quantum’s ordinary shares.
In addition, pursuant to the Quantum Exchange Agreement, we may issue up to 12,702,847 additional shares of our common stock or pre-funded warrants to purchase shares of our common stock (collectively, the “Earn-Out Securities”), upon the achievement of certain milestones as follows: (i) the issuance of up to 1,975,998 Earn-Out Securities upon the submission of five (5) patent applications including provisional applications in total, across at least three (3) distinct sub-fields within the quantum sector, by the Quantum or any of its Portfolio Companies (as defined in the Quantum Exchange Agreement) during the 18-month period following the Quantum Closing Date (as defined below), (ii) the issuance of up to 3,436,519 Earn-Out Securities upon the closing of listing, public offering, or an M&A Transaction (as defined in the Quantum Exchange Agreement) of any Portfolio Company of Quantum, at a pre-money valuation of no less than $20 million during the twenty four-month period following the Quantum Closing Date, and (iii) the issuance of up to 7,290,330 Earn-Out Securities upon the earlier of: (1) a capital raise of at least $10 million into either Viewbix or Quantum at a pre-money valuation of no less than $250 million; or (2) closing of any M&A Transaction of Quantum, at a pre-money valuation not less than $250 million during the 48-month period following the Quantum Closing Date. Pursuant to the Quantum Exchange Agreement, the Earn-Out Securities may become issuable to the Quantum Shareholders only following the 12-month anniversary of the Quantum Closing Date, and only upon achievement of the applicable earn-out milestones set forth above.
The Viewbix Exchange Shares and the shares of common stock k issuable upon the exercise of the Viewbix Exchange Pre-Funded Warrants issuable to the Quantum Shareholders will be subject to a 12-month lock-up period following the Quantum Closing Date, subject to certain exceptions. The Viewbix Exchange Pre-Funded Warrants and the pre-funded warrants issuable as Earn-Out Securities are, or will be, immediately exercisable upon issuance at an exercise price of $0.0001 per share and will not expire until exercised in full.
The transaction closed on March 4, 2026 (the “Quantum Closing Date”) and resulted in us acquiring 100% of Quantum’s issued and outstanding share capital on a fully diluted and post-closing basis and Quantum becoming a majority-owned subsidiary of Viewbix.
November 2025 PIPE
On November 5, 2025, we entered into a securities purchase agreement (the “Original SPA”) with certain accredited investors (the “Investors”) in connection with a private placement (the “November 2025 Private Placement”). The Original SPA as a closing condition had that we shall have entered into a definitive and binding agreement to acquire 100% of the share capital on a fully diluted basis of Quantum. As of January 1, 2026, we had entered into a definitive and binding agreement to acquire only 85.01% of the share capital on a fully diluted basis of Quantum (the “Quantum Acquisition”). Accordingly, we and the Investors have amended certain terms of the November 2025 Private Placement.
On January 1, 2026, we entered into an amended and restated securities purchase agreement (the “November 2025 Purchase Agreement”) with the Investors pursuant to which we issued and sold an aggregate of 800,000 shares of our common stock (the “November 2025 Private Placement Shares”). Each November 2025 Private Placement Share was sold together with a number of warrants equal to the 80% of the total number of November 2025 Private Placement Shares sold in the November 2025 Private Placement, or in total warrants to purchase up to an aggregate of 640,000 shares of our common stock (the “November 2025 Common Warrants” and together with the November 2025 Private Placement Shares, the “November 2025 PIPE Securities”), at a combined purchase price of $1.75 per November 2025 Private Placement Share and accompanying November 2025 Common Warrant. The November 2025 Private Placement closed on March 4, 2026 (the “Closing Date”).
The November 2025 Common Warrants are immediately exercisable upon issuance at an exercise price of $2.625 per share, subject to adjustment as set forth therein, and will expire five years from the issuance date. The November 2025 Common Warrants may be exercised on a cashless basis if there is no effective registration statement registering the shares of our common stock underlying the November 2025 Common Warrants. A holder of the November 2025 Common Warrants will not have the right to exercise any portion of its November 2025 Common Warrants if the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates or any other persons whose beneficial ownership of shares of our common stock would be aggregated with the holder’s or any of the holder’s affiliates), would beneficially own shares of common stock in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise.
In connection with the November 2025 Purchase Agreement, we entered into a registration rights agreement on November 5, 2025 (the “November 2025 Registration Rights Agreement”) with the Investors. Pursuant to the November 2025 Registration Rights Agreement, we are required to file a resale registration statement (the “November 2025 Registration Statement”) with the SEC to register for resale the November 2025 Private Placement Shares and the shares of our common stock issuable upon exercise of the November 2025 Common Warrants within thirty (30) calendar days after the Closing Date (the “Filing Date”), and to have such Registration Statement declared effective within sixty (60) calendar days after the Filing Date in the event the Registration Statement is not reviewed by the SEC, or ninety (90) calendar days of the Filing Date in the event the November 2025 Registration Statement is reviewed by the SEC. If, due to a shutdown or suspension of operations of the U.S. federal government or the SEC, the Registration Statement cannot be declared effective, the Corporation shall not be deemed to be in breach of the Registration Rights Agreement for failure to cause such Registration Statement to be declared effective during such period.
We also entered into an advisory agreement (the “Advisory Agreement”) with L.I.A. Pure Capital Ltd. (“the Advisor”) pursuant to which the Advisor provided advisory services in connection with the November 2025 Private Placement. We paid a commission to the Advisor of (i) a cash fee of $70,000 and (ii) a warrant to purchase 32,000 shares of our common stock (the “Advisor Warrant”), which was conditioned upon the closing of the November 2025 Private Placement. The Advisor Warrant has the same terms as the November 2025 Common Warrants. In addition, in connection with the closing of the November 2025 Private Placement, we repaid $200,000 of the outstanding loan amount owed to the Advisor pursuant to that certain Amended and Restated Facility Agreement, dated July 22, 2024, by and between Viewbix and by and between certain lenders including the Advisor.
Aggregate gross proceeds to us in respect of the November 2025 Private Placement were approximately $1.4 million, before deducting fees payable to the Advisor and other offering expenses payable by us. If the November 2025 Common Warrants are exercised in cash in full this would result in an additional $1.68 million of gross proceeds.
Sale of Cortex
On November 9, 2025, Gix Media, a wholly-owned subsidiary of the Company, Cortex, and the Founders entered into the Cortex Purchase Agreement with Pro Sportority, a subsidiary of Minute Media.
Pursuant to the Cortex Purchase Agreement, Pro Sportority acquired from Gix Media all of the issued and outstanding share capital of Cortex held by Gix Media, constituting 80% of Cortex’s issued and outstanding share capital, and, together with similar agreements entered into with the other shareholders of Cortex and the cancellation of all outstanding options, warrants, and other convertible securities of the Cortex, which resulted in Pro Sportority owning 100% of Cortex’s issued and outstanding share capital on a fully diluted basis. The Cortex Sale was signed and closed on November 9, 2025 (the “Cortex Closing”). As a result, Cortex became a wholly-owned subsidiary of Pro Sportority and Cortex ceased being a majority-owned direct subsidiary of Gix Media and an indirect subsidiary of Viewbix.
The aggregate consideration payable to Gix Media is $800,000, consisting of (i) $200,000 in cash, and (ii) $600,000 in the form of 5,161 newly issued Preferred J Shares of Minute Media (the “Minute Media Shares”), the most senior class of preferred shares of Minute Media. Minute Media retains a call option to repurchase the Minute Media Shares from Gix Media under certain conditions, including insolvency or a change of control of Gix Media.
Gix Media is subject to a two-year non-compete and non-solicitation covenant following the Cortex Closing.
As a result of the Cortex Sale, Cortex is presented as discontinued operations in our audited consolidated financial statements for the years ended December 31, 2025 and 2024.
July 2025 PIPE
On July 11, 2025, the Company entered into a securities purchase agreement (the “July 2025 Purchase Agreement”) with certain accredited investors pursuant to which the Company issued and sold in a private placement, (the “July 2025 Private Placement”) an aggregate of 848,763 shares of common stock, pre-funded warrants to purchase up to 77,160 shares of common stock and common warrants to purchase up to an aggregate of 925,923 shares of common stock, at an offering price of $4.86 per share of common stock and associated common warrant and an offering price of $4.8599 per pre-funded warrant and associated common warrant.
The pre-funded warrants were immediately exercisable upon issuance at an exercise price of $0.0001 per share and will not expire until exercised in full. The common warrants were immediately exercisable upon issuance at an exercise price of $4.74 per share, subject to adjustment as set forth therein, and will expire five and a half years from the issuance date. The common warrants may be exercised on a cashless basis if there is no effective registration statement registering the shares of shares of common stock underlying the common warrants.
In connection with the July 2025 Purchase Agreement, we entered into a registration rights agreement (the “July 2025 Registration Rights Agreement”) with each investor. Pursuant to the July 2025 Registration Rights Agreement, the Company was required to file a resale registration statement with the SEC (the “July 2025 PIPE Registration Statement”) to register for resale the shares of common stock issued in the July 2025 Private Placement and the shares of common stock issuable upon exercise of the pre-funded warrants and common warrants issued in the July 2025 Private Placement within fourteen (14) trading days of the signing date of the July 2025 Purchase Agreement (the “July 2025 PIPE Signing Date”) and to have such July 2025 PIPE Registration Statement declared effective within sixty (60) calendar days after the July 2025 PIPE Signing Date in the event the July 2025 PIPE Registration Statement is not reviewed by the SEC, or ninety (90) calendar days of the July 2025 PIPE Signing Date in the event the July 2025 PIPE Registration Statement is reviewed by the SEC. The Company filed the July 2025 PIPE Registration Statement on July 23, 2025, which was declared effective by the SEC on July 31, 2025.
In connection with the July 2025 Private Placement, the Company also entered into a letter agreement (the “July 2025 Placement Agent Agreement”) with Aegis Capital Corp., as placement agent (the “Placement Agent”) dated July 11, 2025, pursuant to which the Placement Agent served as the placement agent for in connection with the July 2025 Private Placement. The Company paid the Placement Agent a cash placement fee equal to 7.0% of the gross proceeds received in the July 2025 Private Placement and $50,000 for reasonable legal fees and disbursements for the Placement Agent’s counsel. In addition, pursuant to the July 2025 Placement Agent Agreement, the Company agreed to abide by certain customary standstill restrictions for a period of thirty (30) days following the later of the closing of the July 2025 Private Placement and the date that the July 2025 PIPE Registration Statement is declared effective by the SEC.
Aggregate gross proceeds to the Company in respect of the July 2025 Private Placement were approximately $4.5 million, before deducting fees payable to the Placement Agent and other offering expenses payable by us. If the warrants are exercised in cash in full this would result in an additional $4.4 million of gross proceeds. The July 2025 Private Placement closed on July 14, 2025.
Filing of Insolvency Petition Against Gix Media
On March 27, 2025, a petition (the “Petition”) was filed with the District Court of Tel Aviv-Jaffa (the “Court”) for a court order to commence insolvency proceedings under the Insolvency and Economic Rehabilitation Law, 5778 – 2018 against Gix Media. The Petition was filed by a primary service provider (the “Service Provider”) of Gix Media claiming that Gix Media owes it approximately $260,000 (excluding linkage differentials and interest) and that Gix Media is unable to repay its debts to the Service Provider.
On July 16, 2025, the Court approved a settlement agreement entered into between Gix Media, the Service Provider and other creditors of Gix Media that joined the Petition (collectively, the “Service Providers”) with respect to the debts owed by Gix Media to the Service Providers. In connection with the settlement agreement, the Company agreed to provide a guarantee for the debts owed by Gix Media to the Service Providers. On July 22, 2025, pursuant to the terms of the settlement agreement, Gix Media paid approximately $1.13 million to the Service Providers as payment in full of the debts owed to the Service Providers. As a result of such payment in full by Gix Media to the Service Providers, the Petition was dismissed.
Nasdaq Uplisting
On June 4, 2025, we issued a press release announcing that our shares of common stock, par value $0.0001 per share were approved for listing on the Nasdaq Capital Market. Our shares of common stock began trading under the symbol “VBIX” on The Nasdaq Capital Market on June 5, 2025 (the “Uplist”). Our shares of common stock were previously quoted on the OTC Markets, Pink Tier under the symbol “VBIX”, and ceased to be quoted on the OTC Markets, Pink Tier at the close of business on June 4, 2025.
Metagramm Acquisition
On March 24, 2025, we entered into a securities exchange agreement with Metagramm and the Metagramm Shareholders pursuant to which we issued to the Metagramm Shareholders an aggregate of 19.99% of our issued and outstanding capital stock on a pro rata and post-closing basis, equal to 1,323,000 shares of our common stock in exchange for 100% of Metagramm’s issued and outstanding share capital on a fully diluted and post-closing basis, equal to 718,520 Metagramm ordinary shares. The transaction closed on March 24, 2025 and resulted in Metagramm becoming a wholly-owned subsidiary of Viewbix.
Financing Agreement
Effective as of January 29, 2025, Gix Media and Leumi entered into a fifth addendum, to a certain financing agreement with Leumi for the provision of a line of credit in the total amount of up to $3.5 million and a long-term loan totaling $6 million, which Gix Media used to finance the acquisition of Cortex on October 13, 2021 (the “Cortex Acquisition” and “Financing Agreement”), which was effective as of January 29, 2025, pursuant to which, inter alia: (i) the existing credit facility to Gix Media was extended to March 31, 2025; (ii) the repayment schedule of all outstanding obligations under the long term bank loans of Gix Media under the Financing Agreement, was deferred until the actual deposit by the Company in Gix Media’s account of an investment account equal to the amounts of the deferred long term bank loans owned by Gix Media (the “Investment Amount”), which in any event shall be no later than March 31, 2025 (the “Deposit Date”); (iii) upon such deposit date, all deferred payments shall be immediately repaid using the deposited amounts and any remaining amounts from any other sources; (iv) all remaining future due payments will be repaid as scheduled until the end of the updated terms of each long term bank loan. On March 30, 2025, Gix Media and Leumi entered into a sixth additional addendum to the Financing Agreement, which extended the Deposit Date until May 20, 2025. On July 8, 2025, Gix Media and Leumi entered into an agreement in respect of the Financing Agreement (the “July 2025 Repayment and Financing Agreement”), which further extended the Deposit Date until October 1, 2025. In connection with the July 2025 Repayment Financing Agreement, Gix Media agreed to repay $2.4 million to Leumi by October 1, 2025. In addition, in connection with the July 2025 Repayment Financing Agreement, as of October 1, 2025, Bank Leumi shall grant to Gix Media a loan in an amount equal to Gix Media’s then-current outstanding principal portion of the loan plus interest, fees and expenses. The loan shall accrue interest at Bank Leumi’s applicable rate as of October 1, 2025, shall be repaid on a monthly basis and shall have a term of 24 months. During July 2025, Gix Media repaid a total of $2.4 million to Bank Leumi in accordance with the July 2025 Repayment and Financing Agreement. On July 10, 2025, Gix Media received a new loan in the amount of $1.56 million to be repaid in 24 consecutive monthly payments beginning in October 2025, at an annual interest rate of SOFR + 4.92%.
Cortex Adverse Effect
On November 9, 2025, Gix Media completed the Cortex Sale, which resulted in Cortex ceasing to be a consolidated indirect subsidiary of the Company and a direct, majority-owned subsidiary of Gix Media. In addition, Cortex is presented as discontinued operations in the Company’s audited consolidated financial statements for the years ended December 31, 2025 and 2024. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Sale of Cortex” above.
Prior to the Cortex Sale, in April 2024, the Company was informed by Cortex, that certain 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 materially affected Cortex’s business and operations. In connection with the foregoing, a significant customer of Cortex notified Cortex that in light of the foregoing changes relating to MFA that customer decided to stop advertising on Cortex’s Websites, which decision significantly and negatively impacted Cortex’s future revenue streams (the “Cortex Adverse Effect”).
Consolidated Results of Operations
Following the Cortex Sale, Cortex is presented as discontinued operations in the Company’s audited consolidated financial statements for the years ended December 31, 2025 and 2024. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Sale of Cortex” above and Note 3 to our consolidated financial statements.
Results of Operations during the year ended December 31, 2025, as compared to the year ended December 31, 2024
Revenues for the year ended December 31, 2025, were $1,569 thousand a decrease of $3,400 thousand as compared to $4,969 thousand for the year end December 31, 2024.
Our revenue from Gix Media’s Search Platform’s direct model was $1,518 thousand for the year ended December 31, 2025, compared to $3,200 thousand for the year ended December 31, 2024. During the year ended December 31, 2025, the number of search referrals to the Gix Major Customer conducted by users from the direct model was 21.51 million, compared to 55.1 million for the year ended December 31, 2024. The decrease in user search referrals is primarily due to changes and updates in internet browsers’ technology, which have reduced the scale of distribution of the Company’s products through the direct model. The Company anticipates that its revenues from add-ons to internet browsers will continue to decrease due to changes and updates in internet browsers’ technology while its revenues from the Search to Search model will increase.
Our revenue from Gix Media’s Search Platform’s indirect model was $25 thousand for the year ended December 31, 2025, compared to $1,769 thousand for the year ended December 31, 2024. During the year ended December 31, 2025, the number of search referrals to the Gix Major Customer conducted by users from the indirect model was 0.5 million, as compared to 42.1 million for the year ended December 31, 2024. The decrease in user search referrals through the indirect model is primarily due to: (i) a decrease in the number of searches received from Gix Media’s third-party strategic partners through the indirect model mainly as a result of decrease in the credit received from third-party strategic partners and (ii) global changes in a main Search Engine which led to reductions in search base advertising budgets of Gix Media’s customers. In order to increase the revenues from the Search Platform’s indirect model, the Company engaged with new third-party strategic partners in 2025.
Traffic acquisition and related costs for the year ended December 31, 2025, were $297 thousand, a decrease of $1,433 thousand as compared to $1,730 thousand for the year ended December 31, 2024. The reason for the decrease in the year ended December 31, 2025, is due to the decrease in revenues as compared to the year ended December 31, 2024, as mentioned above.
Research and development expenses for the year ended December 31, 2025, were $69 thousand as compared to $830 thousand for the year ended December 31, 2024. The reason for the decrease in the year ended December 31, 2025 is due to the expense reduction primarily in salaries and professional services during the year ended December 31, 2025.
Sales and marketing expenses for the year ended December 31, 2025, were $100 thousand as compared to $309 thousand for the year ended December 31, 2024. The reason for the decrease in the year ended December 31, 2025, is due to the expense reduction primarily in salaries, as compared to the year ended December 31, 2024.
General and administration expenses for the year ended December 31, 2025, were $1,625 thousand as compared to $1,853 thousand for the year ended December 31, 2024. The reason for the decrease in the year ended December 31, 2025, is due to expense reduction primarily in salaries, rental and headquarters expenses, offset by an increase due to higher professional services expenses in the period following the Uplist in the year ended December 31, 2025, as compared to the year ended December 31, 2024.
Our depreciation and amortization expenses for the year ended December 31, 2025, were $848 thousand, a slight increase as compared to $813 thousand during the same period in the prior year.
Our other expenses were $814 thousand for the year ended December 31, 2025, compared to $271 during the year ended December 31, 2024. Other expenses for the year ended December 31, 2025, were primarily related to costs incurred in connection with the Uplist and registration for the resale of the Company’s common stock. Other expenses for the year ended December 31, 2024, were primarily related to costs incurred in connection with the Uplist which were offset by other income attributable to governmental grants received by Gix Media from the Israel Tax Authority in connection with the war in Israel.
Our net financial expense was $11,253 thousand for the year ended December 31, 2025, as compared to net financial expense of $2,610 thousand for the year ended December 31, 2024. The reason for the increase during the year ended December 31, 2025 is mainly attributable to financing expenses related to financial instruments arising from facility agreements entered into during June and July 2024, which are measured at fair value.
Our income tax benefit was $39 thousand for the year ended December 31, 2025, as compared to $131 thousand income tax expense for the year ended December 31, 2024. The reason for the increase in our income tax benefit during the year ended December 31, 2025, is due to the decrease in income before tax.
Net loss from discontinued operations decreased by $3,111 thousand to $7,417 thousand in the year ended December 31, 2025, as compared to $10,528 thousand for the year ended December 31, 2024. For further details regarding the amounts recorded in respect of discontinued operations in the years ended December 31, 2025 and 2024, please refer to note 3 to our consolidated financial statements.
Liquidity and Capital Resources
As of December 31, 2025, we had current assets of $1,652 thousand consisting of $1,018 thousand in cash and cash equivalents, $20 thousand in restricted deposits, $315 thousand in accounts receivable and $299 thousand in other current assets.
As of December 31, 2025, we had non-current assets of $9,105 thousand consisting of $12 thousand in deferred taxes, $56 thousand in property and equipment net, $600 thousand in financial assets measured at cost method, $2,045 thousand in intangible assets net and $6,392 thousand in goodwill.
As of December 31, 2025, we had $4,063 thousand in current liabilities consisting of $1,204 thousand in accounts payable, $951 thousand in other payables, $1,041 thousand in short term loans and current maturities of a long-term loans and $867 thousand in short-term convertible loans.
As of December 31, 2025, we had $1,705 thousand in non-current liabilities consisting of $586 thousand long-term loans, $793 thousand in earn out liability and $326 thousand in deferred taxes.
As of December 31, 2024, we had current assets of $7,752 thousand consisting of $24 thousand in cash and cash equivalents, $30 thousand in restricted deposits, $557 thousand in accounts receivable, $775 thousand in other current assets, $2,385 thousand in current assets of discontinued operations and $3,981 thousand in the loan to our parent company, in accordance with the Second Loan Agreement, as defined below.
As of December 31, 2024, we had non-current assets of $14,214 thousand consisting of $56 thousand in deferred taxes, $17 thousand in property and equipment net, $1,886 thousand in intangible assets net, $1,083 thousand in goodwill and $11,172 thousand in non-current assets of discontinued operations.
As of December 31, 2024, we had $12,929 thousand in current liabilities consisting of $2,442 thousand in accounts payable, $597 thousand in other payables, $4,544 thousand in short term loans and current maturities of a long-term loans, $29 thousand in embedded derivatives, $779 thousand in short-term convertible loans and $4,538 thousand in current liabilities of discontinued operations.
As of December 31, 2024, we had $1,530 thousand in non-current liabilities consisting of $496 thousand long-term loans, $222 thousand in deferred taxes and $812 thousand in non-current liabilities of discontinued operations.
We had a negative working capital of $2,411 thousand as of December 31, 2025, as compared to a negative working capital of $5,177 thousand as of December 31, 2024.
During the fiscal year ended December 31, 2025, we had negative cash flows from operating activities of continuing operations of $2,769 thousand as compared to positive cash flows from operating activities of continuing operations of $1,400 thousand during the year ended December 31, 2024. The reason for the decrease in the year ended December 31, 2025 is due to: (i) a decrease in changes in assets and liabilities items in an amount of $760 thousand during the year ended December 31, 2025 as compared an increase in the amount of $2,042 thousand during the year ended December 31, 2024 mainly due to fact that Gix Media paid approximately $1.13 million to the Service Providers as part of the settlement agreement, and (ii) an increase in the net loss continuing operations for the year ended December 31, 2025 in an amount of $9,820 thousand as compared to the year ended December 31, 2024 due to the decrease in the company’s revenues.
During the fiscal year ended December 31, 2025, we had negative cash flows from operating activities of discontinuing operations of $694 thousand as compared to positive cash flows from operating activities of discontinuing operations of $143 thousand during the year ended December 31, 2024.
During the fiscal year ended December 31, 2025, we had $151 thousand negative cash flow from investing activities of continuing operations as compared to $0 thousand cash flow from investing activities of continuing operations during the year ended December 31, 2024. The decrease in the cash flow from investing activities of continuing operations is due to net cash from the sale of Cortex shares.
During the fiscal year ended December 31, 2025, we had $0 thousand cash flow from investing activities of discontinuing operations as compared to $1 thousand negative cash flow from investing activities of discontinuing operations during the year ended December 31, 2024.
During the fiscal year ended December 31, 2025, we had $3,800 thousand positive cash flow from financing activities of continuing operations as compared to $2,113 thousand negative cash flow from financing activities of continuing operations during the year ended December 31, 2024. The increase was primarily attributable to proceeds of $2,222 thousand from the exercise of warrants in connection with facility agreements and a private placement, $4,023 thousand received under the July 2025 Purchase Agreement, net repayments of bank loans and convertible loans, which totaled $2,441 thousand compared to $2,242 thousand net repayments of bank loans and convertible loans during the year ended December 31, 2024.
During the fiscal year ended December 31, 2025, we had $170 thousand positive cash flow from financing activities of discontinuing operations as compared to $670 thousand negative cash flow from financing activities of discontinuing operations during the year ended December 31, 2024.
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.
Gix Media has provided several liens under the Financing Agreement with Leumi in connection with the Cortex Transaction, as follows: (1) a floating lien on Gix Media’s assets; (2) a lien on Gix Media’s bank account in Leumi; (3) a lien on Gix Media’s rights under the Cortex Transaction; (4) a fixed lien on Gix Media’s intellectual property; and (5) a lien on all of Gix Media’s holdings in Cortex.
The Company has also provided several liens under the Financing Agreement with Leumi in connection with the Cortex Transaction, as follows: (1) a guarantee to Leumi of all of Gix Media’s obligations and undertakings to Leumi unlimited in amount; (2) a subordination letter signed by the company to Leumi; (3) A first ranking all asset charge over all of the assets of the Company; and (4) a Deposit Account Control Agreement over the Company’s bank accounts.
According to the Financing Agreement, Gix Media undertook to meet a financial covenant over the life of the loans. As of December 31, 2025, Gix Media is in compliance with the financial covenant in connection with the Financing Agreement.
Going Concern
During the period ended December 31 2025, we experienced a decrease in its revenues from the Search Platforms and Cortex’s digital content platform as a result of the Cortex Adverse Effect, a decrease in user traffic acquired from third party advertising platforms, an industry-wide decrease in advertising budget, changes and updates to internet browsers’ technology, which adversely impacted the Company’s ability to acquire traffic in the Search Segment and a decrease in revenues from routing of traffic acquired from third-party strategic partners in the Search Segment, as a result of lack of availability of suppliers credit from such third party strategic partners. As a result of the foregoing, the Company’s operations were adversely affected.
As a result of such decreases, for the year ended December 31, 2025, we recorded an operating loss from continuing operations of $2,184 thousand compared to $837 thousand during the year ended December 31, 2024, and a net loss of $20,815 thousand compared to $14,106 thousand during the year ended December 31, 2024. As of December 31, 2025, we had cash and cash equivalents $1,018 thousand, bank loans and convertible loans of $2,494 thousand and an accumulated deficit of $46,047 thousand. Such a decline in revenues raise a substantial doubt about our ability to continue as a going concern during the 12-month period following the issuance date of our consolidated financial statements for the year ended December 31, 2025.
Management’s response to these conditions included reduction of salaries and related expenses and reduction of professional services in the research and development, selling and marketing functions, reduction of other operational expenses, such as lease costs and overheads, as well as creation of new partnerships and other new income sources. In addition, the company entered into the facility agreements and a private placement, through which it has raised capital. Additionally, following the consummation of the Uplist, the Company received additional funds from the exercise of warrants and the receipt of additional loans in connection with a private placement and facility agreements. Furthermore, on July 14, 2025, the Company closed the July 2025 Private Placement with certain accredited investors, pursuant to which the Company received gross proceeds of $4.5 million. In addition, on March 4, 2026, the Company closed the November 2025 Private Placement with certain accredited investors, pursuant to which the Company received gross proceeds of $1.4 million. However, there is significant uncertainty as to whether the Company will be able to secure additional funds when needed.
Our consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Availability of Additional Capital
Our potential financing transactions may include the issuance of equity and/or debt securities including convertible debt, obtaining credit facilities, or other financing mechanisms. In the event that we seek to raise funds through additional private placements of equity or convertible debt, the trading price of our common stock could be adversely affected. Further, any adverse conditions in the financial markets could make it more difficult to obtain future financing through the issuance of equity or debt securities when and if needed. Even if we are able to raise a sufficient amount of funds that may be required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek additional and/or alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we may have to curtail our plan of operations.
Critical Accounting Policies and Estimates
Our significant accounting policies are summarized in note 2 to our consolidated financial statements. We identify here a policy that entail significant judgments or estimates by management.
Business Combination - Metagramm acquisition
See notes 1C and 8 C to our consolidated financial statements.
In March 24, 2025 (the “acquisition date”), the Company completed the acquisition of 100% of the issued and outstanding share capital of Metagramm for a total consideration of $6.17 million, of which $1,010 thousands was recorded as contingent consideration related to a potential earn-out provision, which is based on achieving certain financing and revenue milestones of Metagramm during the years of the earn-out provision terms.
The transaction was accounted for as a business combination in accordance with ASC 805 “Business Combinations”. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values which primarily consisted of technology, customer relationships and goodwill intangible assets of $550 thousands, $390 thousands and $5,309 thousands, respectively (collectively the “Intangible Assets”). In addition, the Company estimated the fair value of the contingent consideration (“Earn-out Liability”) of $1,010 thousands as of the acquisition date.
Third party appraisal firms and other consultants are engaged to assist management in determining the fair values of the Intangible Assets and Earn-out Liability. The Company primarily uses the income approach in the valuation of intangible assets and uses the Monte Carlo Method in the valuation of the Earn-Out Liability. The income approach to valuation is based on the present value of future cash flows attributable to each identifiable intangible asset. This approach to valuation requires management to make significant estimates and assumptions including but not limited to: discount rates, future cash flows, technology, and customer relationships. The Monte Carlo Method requires management to make significant estimates and assumptions including but not limited to: discount rates, future cash flows and other management’s estimates. These estimates are based on historical experience and information obtained from the management of the company and the acquired company and are inherently uncertain.
