QUANTUM X LABS INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Viewbix Inc. Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID No. 1197 ) F-2 Consolidated Balance Sheets F-4 Consolidated Statements of Comprehensive Loss F-5 Consolidated Statements of Changes in Stockholders’ Deficit F-6 Consolidated Statements of Cash Flows F-7 - F-8 Notes to Consolidated Financial Statements F-9 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Viewbix Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Viewbix Inc. and its subsidiary (the “Company”) as of December 31, 2021 and 2020 and the related consolidated statements of comprehensive loss, stockholder’s deficit and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1.E to the consolidated financial statements, the Company’s substantial net losses, shareholder’s deficit and negative cash flows from operations raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 1.E to the financial statements. The financial statements do not include any adjustments that might result from the outcome of’ these uncertainties Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. F- 2 Payable to Parent Company - Valuation of Fair Value of Debt Recognized upon Modification – Refer to Note 4 to the consolidated financial statements Critical Audit Matter Description The Company entered into an agreement with its parent company, Gix Internet Ltd., (the “Parent Company”), effective as of December 31, 2021, for the modification of the balance payable to the Parent Company, in the amount of $2,299,956, from a current payable balance into a loan. The Company accounted for the modification as an extinguishment of the balance payable to the Parent Company and the issuance of a new debt. Accordingly, the loan was recorded at its fair value of $2,115,853 as of December 31, 2021. The difference of $184,103 between the fair value of the loan and the carrying value of the payable to the Parent Company was recorded in the Company’s consolidated statement of changes in stockholders’ deficit as a deemed contribution to the Company by the Parent Company. The Company determined the fair value of the loan using the discounted cash flow model. This valuation involves management judgement in determining the discount rate. We identified the valuation of the loan at fair value as a critical audit matter because of the magnitude of the loan balance, the judgment involved in determining the discount rate and due to the increased extent of audit effort in relation to our audit as a whole, including the need to involve our fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the valuation of the fair value of the loan included the following, among others: ● With the assistance of our fair value specialists, we evaluated the Company’s valuation methodologies, assumptions and fair value results. ● With the assistance of our fair value specialists, we developed an independent estimate of the discount rate and the resulting fair value and compared our estimate to the Company’s estimate. /S/ Brightman Almagor Zohar & Co. Certified Public Accountants A Firm in the Deloitte Global Network Tel Aviv, Israel March 17, 2022 We have served as the Company’s auditor since 2019 F- 3 Viewbix Inc. Consolidated Balance Sheets U.S. dollars in thousands (except share and per share data) As of December 31, As of December 31 Note 2021 2020 ASSETS CURRENT ASSETS Cash and cash equivalents $ 74 $ 148 Trade receivables 8 15 Other accounts receivable 30 20 Prepaid expenses 44 42 Total current assets $ 156 $ 225 Total assets $ 156 $ 225 LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Trade payables $ 9 $ 22 Other accounts payable and accrued liabilities 3 242 177 Parent company 4 2,116 2,054 Short term loan 5 69 50 Total current liabilities $ 2,436 $ 2,303 STOCKHOLDERS’ DEFICIT 6 Share Capital Common stock, $ 0.0001 par value; 490,000,000 shares authorized; 34,753,669 shares issued and outstanding at December 31, 2021 and at December 31, 2020 3 3 Additional paid-in capital 4,5 13,257 13,073 Accumulated deficit ( 15,540 ) ( 15,154 ) Total stockholders’ deficit $ ( 2,280 ) $ ( 2,078 ) Total liabilities, temporary equity and stockholders’ deficit $ 156 $ 225 The accompanying notes are an integral part of these consolidated financial statements. F- 4 Viewbix Inc. Consolidated Statements of Comprehensive Loss U.S. dollars in thousands (except share and per share data) Note Year ended December 31, 2021 Year ended December 31, 2020 Revenues 7 41 96 Cost of revenues - 5 Gross profit 41 91 Expenses: Research and development 8 64 108 Sales and marketing 9 2 8 General and administrative 10 304 437 Other expenses 25 - Gain from sale of a subsidiary - ( 8 ) Total operating expenses 395 545 Loss from operations ( 354 ) ( 454 ) Finance income 11 1 20 Finance expense 11 ( 31 ) ( 7 ) Loss Before taxes on income ( 384 ) ( 441 ) Taxes on income 12 2 2 Net Loss ( 386 ) ( 443 ) Basic and diluted net loss per share: ( 0.011 ) ( 0.014 ) Weighted average shares outstanding - basic and diluted 13 34,753,669 31,201,669 The accompanying notes are an integral part of these consolidated financial statements. F- 5 Viewbix Inc. Consolidated Statements of Changes in Stockholders’ Deficit U.S. dollars in thousands (except share and per share data) Ordinary shares Additional paid-in Accumulated Total shareholders’ Number Amount capital deficit deficit Balance as of January 1, 2021 34,753,669 3 13,073 ( 15,154 ) ( 2,078 ) Financing provided by the Parent Company (see note 4) - - 184 184 Issuance of shares Issuance of shares, shares Net loss for the period - - - ( 386 ) ( 386 ) Balance as of December 31, 2021 34,753,669 3 13,257 ( 15,540 ) ( 2,280 ) Ordinary shares Additional paid-in Accumulated Total shareholders’ Number Amount capital deficit deficit Balance as of January 1, 2020 31,201,669 3 13,015 ( 14,711 ) ( 1,693 ) Balance 31,201,669 3 13,015 ( 14,711 ) ( 1,693 ) Issuance of shares 3,552,000 - (*) 58 - 58 Net loss for the period - - - ( 443 ) ( 443 ) Balance as of December 31, 2020 34,753,669 3 13,073 ( 15,154 ) ( 2,078 ) Balance 34,753,669 3 13,073 ( 15,154 ) ( 2,078 ) (*) Represents an amount less than $1. The accompanying notes are an integral part of these consolidated financial statements. F- 6 Viewbix Inc. Consolidated Statements of Cash Flows U.S. dollars in thousands (except share and per share data) 2021 2020 For the year ended December 31 2021 2020 Cash flows from operating activities Net loss for the period ( 386 ) ( 443 ) Adjustments to reconcile net loss to net cash used in operating activities: Gain from sale of a subsidiary - ( 8 ) Depreciation - 5 Changes in operating assets and liabilities: Decrease (Increase) in trade receivables and prepaid expenses 5 ( 40 ) Decrease (Increase) in other accounts receivable ( 10 ) 100 Increase (decrease) in trade payables 52 ( 55 ) Increase in payable to parent company 246 443 Increase (decrease) in other accounts payables and accrued liabilities 19 ( 55 ) Net cash used by operating activities ( 74 ) ( 53 ) Cash flows from investing activities Cash received from the sale of a subsidiary - 13 Net cash used in investing activities - 13 Cash flows from financing activities Issuance of shares - 49 Short term loan received - 50 Net cash provided by financing activities - 99 Increase (decrease) in cash and cash equivalents and restricted cash ( 74 ) 59 Cash and cash equivalents and restricted cash at the beginning of the period 148 89 Cash and cash equivalents and restricted cash at the end of the period $ 74 $ 148 F- 7 Viewbix Inc. Condensed Consolidated Statements of Cash Flows U.S. dollars in thousands (except share and per share data) (Unaudited) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: As of December 31 2021 Modification of parent company payable into a loan (see note 4) 2,116 As of February 12, 2020 Current assets excluding cash and cash equivalents 6 Current liabilities ( 1 ) Gain from sale of a subsidiary 8 Cash received from the sale of a subsidiary 13 The accompanying notes are an integral part of these consolidated financial statements. F- 8 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) NOTE 1. GENEREL A. Organizational Background Viewbix Inc. (formerly known as Virtual Crypto Technologies, Inc.) (the “Company”) was incorporated in the State of Ohio in 1989 under a predecessor name, Zaxis International, Inc. (“Zaxis”). On August 25, 1995, Zaxis merged with a subsidiary of The InFerGene Company, a Delaware corporation, which entity changed its name to Zaxis International, Inc. and the Company was reincorporated in Delaware under the name of Zaxis International, Inc. In 2015 the Company changes its name to Emerald Medical Applications Corp. On January 17, 2018, the Company formed a new wholly-owned subsidiary under the laws of the State of Israel, Virtual Crypto Technologies Ltd. (“VCT Israel”), to develop and market software and hardware products facilitating and supporting the purchase and/or sale of cryptocurrencies. Effective as of March 7, 2018, the Company’s name was changed from Emerald Medical Applications Corp. to Virtual Crypto Technologies, Inc. to reflect its new operations and business focus. VCT Israel ceased its business operation prior to consummation of the Recapitalization Transaction. On January 27, 2020, VCT Israel was sold to a third party for NIS 50,000 ($ 14,459 ). On February 7, 2019, the Company entered into a share exchange agreement (the “Share Exchange Agreement” or the “Recapitalization Transaction”) with Gix Internet Ltd., an company organized under the laws of the State of Israel (“Gix”), pursuant to which, Gix assigned, transferred and delivered its 99.83 % holdings in Viewbix Ltd., a company organized under the laws of the State of Israel (“Viewbix Israel”), to the Company in exchange for shares of restricted common stock of the Company, which resulted in Viewbix Israel becoming a subsidiary of the Company. In connection with the Share Exchange Agreement, effective as of August 7, 2019, the Company’s name was changed from Virtual Crypto Technologies, Inc. to Viewbix Inc. On January 1, 2020, the Company announced certain cost reduction measures due the fact the Company not achieved certain revenues goals. On December 5, 2021, the Company entered into a certain Agreement and Plan of Merger (the “Merger Agreement” or the “Gix Merger”) with Gix Media Ltd., an Israeli company and the majority-owned subsidiary of Gix (“Gix Media”) and Vmedia Merger Sub Ltd., an Israeli company and wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which, following the Gix Merger and upon satisfaction of the closing conditions listed in the Merger Agreement, Merger Sub will merge with and into Gix Media, with Gix Media being the surviving entity and wholly-owned subsidiary of the Company. As of the reporting date, the closing conditions of the Merger Agreement have not been fulfilled yet the Gix Merger has not been consummated. The Company and its subsidiaries are collectively referred to as the “Company”. The Company has developed an interactive video platform based on Software as a Service (“SaaS”) business model with interactive elements, and the ability to collect and analyze information about each interactive action performed during the viewing of the video clip. The interactive elements and information gathered, allowing the advertiser to analyze user viewing habits and optimize real-time throughout the campaign while increasing the effectiveness of online and live video advertising. F- 9 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) NOTE. 1 GENERAL (Cont.): B. Emerald Medical Applications Ltd. Emerald Medical Applications Ltd., the Company’s wholly-owned subsidiary (“Emerald Israel”) was engaged in the business of developing DermaCompare technology and the development, sale and service of imaging solutions utilizing its DermaCompare software for use in derma imaging and analytics for the detection of skin cancer. On January 29, 2018, the Company ceased the DermaCompare operations of its former subsidiary. On May 2, 2018, the District Court of Lod, Israel issued a winding-up order for Emerald Israel and appointed an Israeli attorney as special executor for Emerald Israel. C. Stock Subscription Agreement and Loan Agreement On December 18, 2020, the Company entered into a Stock Subscription Agreement (the “Subscription”) with certain investors (the “Investors”) in connection with the sale and issuance of an aggregate of 3,000,000 shares of Common Stock, at a purchase price of $ 0.01 per share, and for an aggregate purchase price of $ 30,000 . In addition, and on the same date, the company entered into a Loan Agreement (the “Loan”) with the Investors, pursuant to which the Investors lent an aggregate of $ 69,000 (the “Principal Amount”). In accordance with the terms of the Loan, the company repaid the interest on the Principal Amount ( 8 % compounded annually) to the Investors in the form of an issuance of an aggregate of 552,000 shares of Common Stock, at a price per share of $ 0.01 . The shares of Common Stock were issued to the Investors pursuant to Regulation S of the Securities Act of 1933, as amended. D. Merger with Gix Media Ltd. On December 5, 2021, the Company entered into the Merger Agreement with Gix Media and Merger Sub, pursuant to which, following the Gix Merger, and upon satisfaction of additional closing conditions, Merger Sub will merge with and into Gix Media, with Gix Media being the surviving entity and wholly-owned subsidiary of the Company. As of the reporting date, the closing conditions of the Merger Agreement have not been fulfilled yet and the Gix Merger has not been consummated (see Note 15). F- 10 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) NOTE. 1 GENERAL (Cont.) E. Going Concern The Company has incurred $ 386 in net loss for the year ended December 31, 2021 and 443 in net loss for the year ended December 31,2020, has $ 2,280 stockholders’ deficit as of December 31, 2021 and $ 2,078 in total stockholders’ deficit as of December 31, 2020 and $ 74 in negative cash flows from operations for the year ended December 31, 2021 and 53 in negative cash flows from operations for the year ended December 31, 2020. Since January 2020, the Company has significantly reduced its operations and expenses of Viewbix Israel. Management expects the Company to continue to generate substantial operating losses and to continue to fund its operations primarily through utilization of its current financial resources and through additional raises of capital. Such conditions raise substantial doubts about the Company’s ability to continue as a going concern. Management’s plan includes raising funds from outside potential investors. However, there is no assurance such funding will be available to the Company or that it will be obtained on terms favorable to the Company or will provide the Company with sufficient funds to meet its objectives. These financial statements do not include any adjustments relating to the recoverability and classification of assets, carrying amounts or the amount and classification of liabilities that may be required should the Company be unable to continue as a going concern. F- 11 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) NOTE. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies used in the preparation of the financial statements are as follows: Functional currency The functional currency of the Company and its subsidiary is the US dollar, which is the currency of the primary economic environment in which it operates. In accordance with ASC 830, “Foreign Currency Matters” (ASC 830), balances denominated in or linked to foreign currency are stated on the basis of the exchange rates prevailing at the applicable balance sheet date. For foreign currency transactions included in the statement of operations, the exchange rates applicable on the relevant transaction dates are used. Gains or losses arising from changes in the exchange rates used in the translation of such transactions are carried as financing income or expenses. Principles of consolidation The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany balances and transactions have been eliminated in consolidation. Cash and cash equivalents The Company considers all short-term investments, which are highly liquid investments with original maturities of three months or less at the date of purchase, to be cash equivalents. Fair value of financial instruments The carrying values of Company’s financial assets and liabilities, including cash and cash equivalents, restricted cash, other current assets, trade payables, other accounts payable and financing provided by the Parent Company approximate their fair value due to the short-term maturity of these instruments. F- 12 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) NOTE. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) Earnings per Common Share Earnings or loss per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to ASC 260-10-45. Pursuant to ASC 260-10-45-10 through 260-10-45-16 Basic EPS is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. Revenue recognition The Company applies the provisions of Accounting Standards Codification (or “ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). The Company generates revenues primarily by granting customers the right to access software products through the Company’s cloud-based SaaS subscription offerings. Under a SaaS subscription agreement, the customer receives a right to access the software for a specified period of time in an environment hosted, supported, and maintained by the Company. SaaS subscription services are a single performance obligation satisfied over time, and associated revenue is generally recognized ratably over the contract term once the software is made available to the customer. The SaaS subscription offerings are typically sold with one year subscription terms, generally invoiced in advance of each annual subscription period, and are non-cancelable during the committed subscription term. Research and development expenses : Research and development expenses are charged to the statement of operations as incurred. Income Taxes : The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”, and (“ASC 740”). ASC 740 prescribes the use of the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and for carry forward tax losses. Deferred taxes are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more-likely-than-not that some portion or all of the deferred tax asset will not be realized. In addition, ASC 740 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The first step is to evaluate the tax position taken or expected to be taken in a tax return. This is done by determining if the weight of available evidence indicates that it is more-likely-than-not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. F- 13 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) Contingencies : The Company records accruals for loss contingencies arising from claims, litigation and other sources when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. Legal costs incurred in connection with loss contingencies are expensed as incurred. Accounting for Income Taxes In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update No. ASU 2019-12, “Simplifying the Accounting for Income Taxes”. This ASU amends Accounting Standards Codification (“ASC”) 740 by removing certain exceptions to the general principles, clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. The Company adopted this standard in the first quarter of 2021. The adoption of this ASU did not impact our financial statements or the related disclosures. Recently issued accounting pronouncements Financial Instruments – Credit Losses In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 replaces the current incurred loss model guidance with a new method that reflects expected credit losses. Under this guidance, an entity would recognize an allowance for credit losses equal to its estimate of expected credit losses on financial assets measured at amortized cost. In November 2019, the FASB extended the effective date of ASU 2016-13 for smaller reporting companies. As a result, ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2022, with early adoption permitted. The standard is not expected to have a significant impact on the Company’s consolidated financial statements. Convertible instruments In August 2020, the FASB issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible instruments by removing certain separation models in Accounting Standards Codification (“ASC”) 470-20, “Debt—Debt with Conversion and Other Options,” (“ASC 470-20”) for convertible instruments. Under ASU 2020-06, the embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under ASC 815, “Derivatives and Hedging,” or that do not result in substantial premiums accounted for as paid-in capital. For smaller reporting companies, ASU 2020-06 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2023, with early adoption permitted for fiscal years beginning after December 15, 2020. The Company is currently assessing the impact of this update on the Company’s consolidated financial statements. F- 14 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) Business Combination On October 28, 2021, the FASB issued ASU 2021-08, which amends ASC 805 to “require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.” Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. According to the FASB, this Update is intended “to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the following: ● Recognition of an acquired contract liability ● Payment terms and their effect on subsequent revenue recognized by the acquirer. ASU 2021-08 06 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently assessing the impact of this update on the Company’s consolidated financial statements. Warrants In May 2021, the Financial Accountings Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-04, “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815- 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”). The guidance is effective for the Company on January 1, 2022. The Company is currently evaluating the impact of adopting this standard Note 3. OTHER ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Composition: SCHEDULE OF OTHER ACCOUNTS PAYABLE AND ACCRUED LIABILITIES As of December 30 As of December 31 2021 2020 Other payables and deferred revenues $ 47 $ 47 Accrued liabilities 195 130 Total other accounts payables $ 242 $ 177 F- 15 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) Note 4. RELATED PARTY TRANSACTIONS . Balances: SCHEDULE OF RELATED PARTY TRANSACTIONS December 31, December 31, 2021 2020 Gix – Company Payable $ 2,116 $ 2,054 As part of the agreement with Gix, the parties agreed to have the Company’s operations outsourced to Gix from the agreement date and until the acquisition is consummated. The following term were included in the agreement pursuant to the above: (a) From May 2018 all of the Company’s employees will become employees of Gix. (b) Between the periods of May 2018 to October 2018, Gix will pay the full expenses of the employees as well as other related expenses. (c) From November 2018 until to the Closing Date, the employees transferred from the Company to Gix will dedicate half of their time to the Company’s operations and correspondingly 50 % of the costs to be incurred by Gix in respect of these employees are to be charged to the Company. From the closing date, the actual of the expenses incurred by Gix that related to the Company will be charged to the Company. No amounts were paid by the Company to Gix during 2021 and 2020. The Company entered into an agreement with Gix, its parent company, pursuant to which, effective as of December 31, 2021, the parent company payable was modified into a loan, which may be increased from time to time, upon the written mutual consent of the Company and Gix (the “Gix Loan”) .The Gix Loan bears interest at a rate equivalent to the minimal interest rate recognized and attributed by the Israel Tax Authority and will be repaid, together with the accrued interest, in one payment until December 31, 2022, unless extended upon mutual consent of the Company and Gix Internet. The Company accounted for the modification as an extinguishment of the parent company payable and the issuance of a new debt. The loan was recorded at its fair value of $ 2,115,853 as of the modification date, with the difference of $ 184,103 between the fair value of the loan and the carrying value of the payable to the Parent Company recorded in the Company’s Consolidated Statement of Changes in Stockholders’ Deficit as a deemed contribution to the Company by the Parent Company, with a corresponding discount on the loan, to be amortized as finance expense in the Company’s Consolidated Statements of Comprehensive Loss over the term of the loan. F- 16 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) Note 5. SHORT TERM LOAN AND ISSUES OF SHARES On December 18, 2020, the company entered into a Loan Agreement (the “Loan”) and Stock Subscription Agreement with certain Investors as described in note 1c, pursuant to which the Investors lent an aggregate amount of $ 69,000 (the “Principal Amount”). In accordance with the terms of the Loan, the company prepaid the interest on the Principal Amount of 8 % compounded annually to the Investors as an issuance of 552,000 shares of Common Stock, at a price per share of $ 0.01 . Under the Stock Subscription Agreement, the Investors transferred an amount of $ 30,587 to the company as consideration for the issued shares. The Company allocated the total proceeds in respect of the shares issued and the Loan extended based on theirrelative fair values. As a result of the allocation, a discount of $ 19 was recorded on the loan. The discount is amortized over the term of the loan as finance expense. The allocation of the proceeds to the fair value distribution of the liability and equity components on the transactions date was as follows: SCHEDULE OF FAIR VALUE DISTRIBUTION OF LIABILITY AND EQUITY COMPONENTS Instrument Fair Value % of total fair Allocated amount Loan 55,200 49.45 49,246 Shares 54,000 50.55 50,340 Total 109,200 100 99,586 The composition of short term loan balance as of the transaction is as follows: SCHEDULE OF COMPOSITION OF SHORT TERM LOAN Principal amount 69 Discount on Short term loan ( 19 ) Short term loan, Net 50 F- 17 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) Note 6. STOCKHOLDERS’ DEFICIT . Ordinary Shares: Ordinary shares confer the right to: (i) participate in the general meetings, to one vote per share for any purpose, to an equal part, on share basis, (ii) in distribution of dividends and (iii) to equally participate, on share basis, in distribution of excess of assets and funds from the Company and they shall not confer other privileges unless stated hereunder or in the Companies Law otherwise. Some investors have standard anti-dilutive rights, registration rights, and information and representation rights. On December 18, 2020, the company entered into a Stock Subscription Agreement (the “Subscription”) with certain investors (the “Investors”) in connection with the sale and issuance of an aggregate of 3,000,000 shares of Common Stock, at a purchase price of $ 0.01 per share, and for an aggregate purchase price of $ 30,000 . In accordance with the terms of the Loan, the company repaid the interest on the Principal Amount 8 % compounded annually to the Investors in the form of an issuance of an aggregate of 552,000 shares of Common Stock, at a price per share of $ 0.01 . The shares of Common Stock were issued to the Investors pursuant to Regulation S of the Securities Act of 1933, as amended. For more details, please see note 1c. Warrants The following table summarizes information of outstanding warrants as of December 31, 2021: SUMMARY OF OUTSTANDING WARRANTS Warrants Warrant Term Exercise Price Exercisable Class J Warrants 3,649,318 July 2029 0.48 3,649,318 Class K Warrants 3,649,318 July 2029 0.80 3,649,318 Additionally, in connection with the Share Exchange Agreement, upon the earlier of: (a) the launch of a live video product to an American consumer in the United States by Viewbix Israel, or (b) the launch of an interactive television product to an American consumer in the United States by Viewbix Israel, the Company will issue to Gix an additional 1,642,193 shares of restricted common stock of the Company. All of the Company’s warrants meet the US GAAP criteria for equity classification. During 2020, 50,000 class H warrants , 38,095 class I warrants and 142,857 Class G warrants expired. F- 18 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) Note 7. REVENUES . SCHEDULE OF REVENUES Year ended December 31, 2021 2020 Individual Subscriptions 10 13 Enterprise Subscriptions 31 83 41 96 Note 8. RESEARCH AND DEVELOPMENT EXPENSES . SCHEDULE OF RESEARCH AND DEVELOPMENT EXPENSES Year ended December 31, 2021 2020 Salaries and related expense - 55 Subcontractors 64 53 64 108 Note 9. SALES AND MARKTING EXPENSES . SCHEDULE OF SALES AND MARKETING EXPENSES Year ended December 31, 2021 2020 Salaries and related expense - 7 Others 2 1 2 8 Note 10. GENERAL AND ADMINISTRATIVE EXPENSES . SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES 2021 2020 Year ended December 31, 2021 2020 Wages, salaries and related expenses 140 214 Professional fees 150 176 Depreciation - 5 Other 14 42 General and administrative expenses 304 437 F- 19 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) Note 11. FINANCIAL EXPENSES (INCOME), NET . SCHEDULE OF FINANCIAL (EXPENSES) INCOME, NET Year ended December 31, 2021 2020 Bank fees 3 1 Exchange rate differences ( 1 ) ( 14 ) Interest expenses 28 - 30 ( 13 ) Note 12. INCOME TAXES . The Company is subject to income taxes under the Israeli and U.S. tax laws Tax rates applicable to the income of the Company: Viewbix Inc. is taxed according to U.S. tax laws. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which among other provisions, reduced the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018.Viewbix Israel and Israeli subsidiaries are taxed according to Israeli tax laws. The Israeli corporate tax rate is 23 % in the years 2021, 2020 and onwards. Deferred income taxes: Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows: SCHEDULE OF DEFERRED INCOME TAXES 2021 2020 As of December 31 As of December 31 2021 2020 Deferred R&D expenses $ 167 $ 114 Operating loss carryforward 33,055 32,256 Differences between tax basis and carrying values of loans (see notes 4 and 5) $ ( 184 ) $ ( 18 ) Total $ 33,038 $ 32,352 Net deferred tax asset before valuation allowance $ 7,230 $ 7,072 Valuation allowance ( 7,230 ) ( 7,072 ) Net deferred tax asset $ - $ - F- 20 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) Note 12. INCOME TAXES. (Cont.) As of December 31, 2021, the Company has provided valuation allowances of $ 3,909 in respect of deferred tax assets resulting from tax loss carryforward and other temporary differences. Management currently believes that because the Company has a history of losses, it is more likely than not that the deferred tax regarding the loss carryforward and other temporary differences will not be realized in the foreseeable future. Available carryforward tax losses: As of December 31, 2021, Viewbix Israel incurred operating losses in Israel of approximately $ 14,624 which may be carried forward and offset against taxable income in the future for an indefinite period. As of December 31, 2021 the Company generated net operating losses in the U.S. of approximately $ 18,615 Net operating losses in the U.S. are available through 2035. Utilization of U.S. net operating losses may be subject to substantial annual limitation due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization. Loss from continuing operations, before taxes on income, consists of the following: SCHEDULE OF LOSS (INCOME) FROM CONTINUING OPERATIONS, BEFORE TAXES ON INCOME For the year ended December 31 2021 2020 USA $ 164 $ 65 Israel 220 376 $ 384 $ 441 NOTE 13. LOSS PER SHARE-BASIC AND DILUTED Composition: SCHEDULE OF LOSS PER SHARE-BASIC AND DILUTED For the year ended December 31 2021 2020 Net loss attributable to ordinary stockholders 386 443 Weighted-average ordinary shares 34,753,669 31,201,669 Loss per share-basic and diluted 0.011 0.014 F- 21 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) NOTE 14. COVID-19 PANDEMIC IMPLICATIONS . . The COVID-19 pandemic which originated in China in late 2019, has resulted in a widespread health crisis that has adversely affected businesses, economies and financial markets worldwide, placed constraints on the operations of businesses, decreased consumer mobility and activity, and caused significant economic volatility in the United States, Israel and international capital markets. The COVID-19 pandemic has caused an economic recession, high unemployment rates and other disruptions, both in the United States, Israel and the rest of the world. The Company is actively monitoring the pandemic and is taking any necessary measures to respond to the situation in cooperation with the various stakeholders. Due to the uncertainty surrounding the COVID-19 pandemic, the Company will continue to assess the situation, including government-imposed restrictions, market by market. The COVID-19 pandemic has not yet currently adversely affected our business, however, it is not possible at this time to estimate the full impact that the COVID-19 pandemic, the continued spread of COVID-19, and any additional measures taken by governments, health officials or by the Company in response to such spread, could have on the Company’s business, results of operations and financial condition. NOTE 15. SUBSEQUENT EVENTS . Loan Agreement In January 2022, the Investors under the Loan Agreement expressed their intention to convert the Principal Amount to the Company’s shares of Common Stock, and accordingly, the Company agreed to extend the repayment date (see note 5). Gix Merger On December 5, 2021, the Company entered into the Merger Agreement with Gix Media and Merger Sub, pursuant to which, following the Gix Merger, and upon satisfaction of additional closing conditions, Merger Sub will merge with and into Gix Media, with Gix Media being the surviving entity and wholly-owned subsidiary of the Company. As of the reporting date, the closing conditions of the Merger Agreement have not been fulfilled yet. Subject to the terms and conditions of the Merger Agreement, at the Merger Effective Date (as defined in the Merger Agreement) all outstanding ordinary shares of Gix Media, having no par value (the “Gix Media Shares”) will be converted into shares of Common Stock, such that immediately following the Gix Merger, holders of Gix Media Shares will hold 90% of the Company’s capital stock on a fully diluted basis. The Merger Agreement contains customary representations, warranties and covenants made by each of the Company, Gix Media and Merger Sub. On December 21, 2021, the shareholders of each of Gix Media and Merger Sub approved the Merger Agreement. Consummation of the Gix Merger is subject to certain additional closing conditions, including, among other things, (i) the Company filing an amendment to its certificate of incorporation to change the Company’s name to “Gix Media, Inc.”, (ii) obtaining approval from certain third parties, including the approval of Bank Leumi due to certain liens registered in its favor against ordinary shares of Gix Media; (iii) conversion of the Company’s outstanding convertible instruments into restricted shares of Common Stock and (iv) obtaining a tax pre-ruling from the Israeli Tax Authority relating to the Agreement. F- 22 Viewbix Inc. Notes to Consolidated Financial Statements U.S. dollars in thousands (except share and per share data) NOTE 15. SUBSEQUENT EVENTS. (Cont.) Reverse Stock Split In connection with the Gix Merger, on February 13, 2022, the requisite majority of the Company’s stockholders approved certain amendments to the Company’s certificate of incorporation, including, but not limited to (i) a name change from “Viewbix Inc.” to “Gix Media, Inc.”, (ii) a reverse stock split of the Company’s common Stock at a ratio of 1-for-28 (the “Planned Reverse Split”), (iii) a staggered board structure, and (iv) certain other provisions therein. Pursuant to the Planned Reverse Stock Split, each twenty-eight (28) shares of the Company’s common stock will be automatically converted, without any further action by the stockholders, into one share of the Company’s common stock. No fractional shares will be issued as the result of the reverse stock split. Instead, each stockholder will be entitled to receive one share of common stock in lieu of the fractional share that would have resulted from the reverse stock split. The Company intends to effect the foregoing amended and restated certificate of incorporation upon the closing of the Gix Merger, thus, as of the reporting date the Planned Reverse Stock Split has not been effected. F- 23 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.