QUANTUM X LABS INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of December 31, 2020, the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, due to the material weakness discussed below, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at a reasonable assurance level as of December 31, 2020. 48 Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management evaluated the design and operating effectiveness of internal control over financial reporting based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO 2013”). Based on this evaluation, management concluded that our internal control over financial reporting as of December 31, 2019 was not effective due to the material weakness described below. In connection with the preparation of our consolidated financial statements as of and for the year ended December 31, 2020, we have identified a material weakness in our internal control over financial reporting. The material weakness was identified in the period-end financial reporting process, and is associated with our history as a private company and a material weakness is a deficiency or combination of deficiencies in our internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements would not be prevented or detected on a timely basis. This deficiency could result in additional misstatements to our consolidated financial statements that would be material and would not be prevented or detected on a timely basis. We are evaluating and implementing additional procedures in order to remediate this material weakness, however, we cannot assure you that these or other measures will fully remediate the material weakness in a timely manner. Attestation Report of the Registered Public Accounting Firm This annual report on Form 10-K does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company, as a non-accelerated filer, to provide only management’s report in this annual report on Form 10-K. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the fourth quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. 49 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Our directors were elected to serve until the next annual meeting of shareholders and until his respective successors will have been elected and will have qualified. The following table sets forth the name, age and position held with respect to our present executive officers and directors: Name Age Title Amihay Hadad 43 Director, Chief Executive Officer and Chief Financial Officer Alon Dayan 43 Director Amihay Hadad has served as our chief executive officer since February 20, 2020, chief financial officer since July 25, 2019, and was appointed as a member of our board of directors on January 1, 2020. From 2011 until 2018, Mr. Hadad served as the chief financial officer of Yedioth Internet. As of January 30, 2020, Mr. Hadad serves as the chief executive officer of Gix, a controlling stockholder of the Company, in addition to his existing role as Gix’s chief financial officer. Mr. Hadad holds both a B.A. and an MBA from the College of Management Academic Studies in Rishon LeZion, Israel, and an M.A. in law from Bar-Ilan University, Israel. Mr. Hadad is also a certified public accountant in Israel. Alon Dayan has served as a member of our board of directors since March 14, 2018, and from January 24, 2018 until July 25, 2019, he served as our chief executive officer. From July 2014 to the present, Mr. Dayan served as the chief executive officer and founder of L1 Systems Ltd., an Israeli based company engaged in the business of providing the public and private sectors with advanced security solutions. Since July 2013, Mr. Dayan has served as chief executive officer and was the founder of Polaris Star, an Israeli-based company which is engaged in providing advanced cyber security telecommunication for utilities world-wide. Mr. Dayan earned his B.Tech. degree in electronic engineering from Ariel University in Israel. Involvement in Certain Legal Proceedings Our director, officers or affiliates have not, within the past five years, filed any bankruptcy petition, been convicted in or been the subject of any pending criminal proceedings, or is any such person the subject or any order, judgment or decree involving the violation of any state or federal securities laws. Family Relationships There are no family relationships between or among any of our directors or executive officers. Compliance with Section 16(a) Compliance. Section 16(a) of the Securities and Exchange Act of 1934 requires that directors and executive officers, and persons who own beneficially more than ten percent (10%) of the Registrant’s Common Stock, to file reports of ownership and changes of ownership with the Securities and Exchange Commission. Copies of all filed reports are required to be furnished to the Registrant pursuant to Section 16(a). The Registrant’s officers and directors are current in their filings are required under Section 16(a). Director Independence. The Company does not currently have any independent directors. Directors’ Term of Office. Our directors are elected for a term of one year and serve until such director’s successor is duly elected and qualified. Each executive officer serves at the pleasure of the board. 50 Audit Committee and Financial Expert, Compensation Committee, Nominations Committee. We do not have any of the above mentioned standing committees because our corporate financial affairs and corporate governance are simple in nature at this stage of development and each financial transaction is approved by our officers or board of directors. Potential Conflicts of Interest. Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our board of directors. Thus, there is a potential conflict of interest in that our directors have the authority to determine issues concerning management compensation, in essence their own, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors. Board’s Role in Risk Oversight. Our board of directors assess on an ongoing basis the risks faced by the Company. These risks include financial, technological, competitive, and operational risks. In addition, since the Company does not have an audit committee, the board of directors is also responsible for the assessment and oversight of the Company’s financial risk exposures. Involvement in Certain Legal Proceedings. We are not aware of any material legal proceedings that have occurred within the past ten years concerning any director or control person which involved a criminal conviction, a pending criminal proceeding, a pending or concluded administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations. ITEM 11. EXECUTIVE COMPENSATION Any compensation received by our officers, directors, and management personnel will be determined from time to time by our Board of Directors. Our officers, directors, and management personnel will be reimbursed for any out-of-pocket expenses incurred on our behalf. The following table sets out the compensation paid for the fiscal years ended December 31, 2020, 2019 and 2018, as applicable, to the following Named Executive Officers: ● Mr. Amihay Hadad, our current Chief Executive Officer and Chief Financial Officer; ● Mr. Jonathan Stefansky, our former Chief Executive Officer, who resigned from such role on January 1, 2020; and The table is in U.S. dollars Name and principal position Year Salary Bonus Stock Awards Option Awards All Other Compensation Total Mr. Amihay Hadad 2020 47,072 - - - - 47,072 Current Chief Executive Officer, Chief Financial Officer 2019 - - - - - - 2018 - - - - - - Mr. Jonathan Stefansky 2020 59,805 59,805 Former Chief Executive Officer 2019 134,838 - - - - 134,838 2018 160,370 - - - - 160,370 51 Director’s Compensation Our directors are not entitled to receive compensation for service rendered to us or for meeting(s) attended except for reimbursement of out-of-pocket expenses. There is no formal or informal arrangements or agreements to compensate employee directors for service provided as a director; however, compensation for new non-employee directors is determined on an ad hoc basis by the existing members of the board of directors at the time a director is elected. Compensation Policies and Practices as They Relate to the Company’s Risk Management We believe that our compensation policies and practices for all employees, including executive officers, do not create risks that are reasonably likely to have a material adverse effect on us. Employment Contracts We do not have any formal employment agreement with any of our officers. Any future compensation will be determined by the Board of Directors, and, as appropriate, an employment agreement will be executed. We do not currently have plans to pay any compensation until such time as the Company maintains a positive cash flow. Outstanding Equity Awards There were no equity awards outstanding as of the end the year ended December 31, 2020. Option Grants During the year ended December 31, 2020, the board of directors did not authorize the issuance of stock options to executive officers and directors to purchase shares of Common Stock. Aggregated Option Exercises and Fiscal Year-End Option Value There were no stock options exercised during the year ending December 31, 2020 by our executive officers. Long-Term Incentive Plan (“LTIP”) Awards There were no awards made to named executive officers in the last completed fiscal year under any LTIP. Indebtedness of Management No officer, director or security holder known to us to own of record or beneficially more than 5% of our common stock or any member of the immediate family or sharing the household (other than a tenant or employee) of any of the foregoing persons is indebted to us in the years 2020 and 2019. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The table below provides information regarding the beneficial ownership of our Common Stock as of December 31, 2020, of (i) each of our current directors, (ii) each of the Named Executive Officers, (iii) all of our current directors and officers as a group, and (iv) each person or entity known to us who owns more than 5% of our common stock. 52 The percentage of Common Stock beneficially owned is based on 34,753,669 shares of Common Stock outstanding as of December 31, 2020. The number and percentage of shares of Common Stock beneficially owned by a person or entity also include shares of Common Stock issuable upon exercise of warrants that are currently exercisable or will become exercisable within 60 days of December 31, 2020. However, these shares are not deemed to be outstanding for the purpose of computing the percentage of shares beneficially owned of any other person or entity. Name and Address of Beneficial Owner Title of Class Amount and Nature of Beneficial Ownership (1) Percent of Class Gix Internet Ltd. Common Stock 27,579,721 (2) 79.36 % Alon Dayan Common Stock 50,000 0.14 % L.I.A. Pure Capital Ltd. Common Stock 2,631,571 (3) 8.43 % Directors and officers as a group (2 individuals) Common Stock 50,000 0.14 % (1) Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Each of the beneficial owners named in the table have, to our knowledge, direct ownership of and sole voting and investment power with respect to the shares of Common Stock beneficially owned by them. (2) Includes (i) 20,281,085 of shares of Common Stock, (ii) warrants to purchase up to 3,649,318 shares of restricted Common Stock with an exercise price of $0.48 per share, and (iii) warrants to purchase up to 3,649,318 shares of restricted Common Stock with an exercise price of $0.80 per share, which are currently exercisable or will become exercisable within 60 days of December 31, 2020. (3) The number of shares shown as beneficially owned by this stockholder is based on its Schedule 13G filed on February 8, 2021. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTORS INDEPENDENCE Certain Related Party Transactions On December 18, 2020, L.I.A. Pure Capital Ltd. (“Pure Capital”), together with other Investors, entered into the Stock Subscription Agreement, pursuant to which Pure Capital was issued 1,000,000 shares of Common Stock in exchange for an investment of $10,000, at a purchase price of US$0.01 per share. Additionally, Pure Capital, together with other Investors, entered into the Loan Agreement, pursuant to which Pure Capital lent $23,000 and we repaid the interest on that amount in the form of an issuance of 184,000 shares of Common Stock to Pure Capital, at a price per share of $0.01. The shares of Common Stock were issued to the Investors pursuant to Regulation S of the Securities Act of 1933, as amended. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Independent Public Accountants The Registrant’s Board of Directors has appointed Brightman Almagor Zohar & Co. as independent public accountant for the fiscal years ended December 31, 2020. Halperin had served as the Company’s independent registered public accounting firm for the fiscal periods beginning July 6, 2018 through November 7, 2019. Principal Accounting Fees The following table presents the fees for professional audit services rendered by (a) Brightman Almagor Zohar & Co. for the audit of the Registrant’s annual financial statements for the year ended December 31, 2020; (b) professional audit services rendered by (i) Halperin Ilanit CPA and (ii) Brightman Almagor Zohar & Co. for the audit of the Registrant’s annual financial statements for the year ended December 31, 2019; (c) fees billed for other services rendered by Brightman Almagor Zohar & Co. for the Registrant’s fiscal period beginning November 7, 2019 and ending December 31, 2019; and (c) the aggregate fees billed in each of the last two fiscal years as pertaining to, among others, tax compliance, tax advice and tax planning conferred to the Registrant. 53 Year Ended Year Ended December 31, 2020 December 31, 2019 Audit fees (1) 50,000 42,500 (2) Audit-related fees (3) - 60,000 (4) Tax -related fees (5) 2,948 20,500 (1) Audit fees consist of audit and review services, consents and review of documents filed with the SEC. (2) Audit Fees consists of $12,500 in connection with the services rendered by Halperin Ilanit CPA, and $30,000 in connection with the services rendered by Brightman Almagor Zohar & Co Audit-related fees. (3) Audit-related fees consist of assistance and discussion concerning financial accounting and reporting standards and other accounting issues in connection with the Share Exchange Agreement. (4) Consists of $2,000 in connection with the services rendered by Halperin Ilanit CPA, and $58,000 in connection with the services rendered by Brightman Almagor Zohar & Co. (5) Tax fees consist of, among other items, preparation of federal and state tax returns, review of quarterly estimated tax payments, Israeli tax rulings, consultation concerning tax compliance issues, and services rendered for purposes of a tax ruling filed with government agencies and institutions in connection with the Recapitalization Transaction. 54 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as exhibits to this report on Form 10-K or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document. Exhibit No. Description Exhibit No. Exhibit Description 3.1 Certificate of Incorporation (incorporated by reference to the Registrant’s registration statement on Form S-1 filed with the SEC on August 5, 2015) 3.2 Certificate of Amendment to the Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 25, 2019) 3.3 Bylaws (incorporated by reference to the Registrant’s registration statement on Form S-1 filed with the SEC on August 5, 2015) 4.1 Description of Registrant’s Securities (incorporated by reference to the Registrant’s annual report on Form 10-K filed for the fiscal year ended December 31, 2019 with the SEC on March 20, 2020) 4.2 Form of Warrant by and between the Company and Gix Ltd., dated July 25, 2019 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 25, 2019) 10.1 2017 Employee Incentive Plan (incorporated by reference to the Registrant’s annual report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on April 17, 2018) 10.2 Form of Stock Subscription Agreement between the Company and the investors set forth therein (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 21, 2020) 10.3 Form of Loan Agreement between the Company and the investors set forth therein (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 21, 2020) 21.1* Subsidiaries of the Registrant 31.1* Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer and Principal Financial Officer 32.1* Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer and Principal Financial Officer 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document * Filed herewith. ** Furnished herewith. 55 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned. VIEWBIX INC. Date: March 16, 2021 By: /s/ Amihay Hadad Amihay Hadad Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on this 16th day of March 2021 by the following persons on behalf of the registrant and in the capacities indicated, including a majority of the directors. Signature Title /s/ Amihay Hadad Chief Executive Officer Amihay Hadad (Principal Executive Officer) /s/ Amihay Hadad Chief Financial Officer and Director Amihay Hadad (Principal Financial and Accounting Officer) /s/ Amihay Hadad Director Amihay Hadad /s/ Alon Dayan Director Alon Dayan 56