QUANTUM X LABS INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS VIEWBIX INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) June 30, 2022 CONTENTS Page Interim Condensed Consolidated Balance Sheets (unaudited) 4 – 5 Interim Condensed Consolidated Statements of Comprehensive Loss (unaudited) 6 Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited) 7 Interim Condensed Consolidated Statements of Cash Flows (unaudited) 8 Notes to the Interim Condensed Consolidated Financial Statements 9 - 19 - 3 - VIEWBIX INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) U.S. dollars in thousands (except share data) As of June 30 As of December 31 Note 2022 2021 ASSETS CURRENT ASSETS Cash and cash equivalents 27 74 Trade receivables 9 8 Other accounts receivable 3 23 30 Prepaid expenses 14 44 Total current assets 73 156 Total assets 73 156 The accompanying notes are an integral part of these condensed consolidated financial statements. - 4 - VIEWBIX INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Cont.) U.S. dollars in thousands (except share data) As of June 30 As of December 31 Note 2022 2021 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Trade payables 14 9 Other accounts payables and accrued liabilities 4 224 242 Parent company loan 5 2,383 2,116 Short term loan 6 69 69 Total current liabilities 2,690 2,436 STOCKHOLDERS’ DEFICIT 7 Share Capital Ordinary shares of $ 0.0001 par value - Authorized: 490,000,000 shares; Issued and outstanding: 34,753,669 shares as of June 30, 2022; and December 31, 2021 3 3 Additional paid-in capital 13,257 13,257 Accumulated deficit ( 15,877 ) ( 15,540 ) Total stockholders’ deficit ( 2,617 ) ( 2,280 ) Total liabilities and stockholders’ deficit 73 156 The accompanying notes are an integral part of these condensed consolidated financial statements. - 5 - VIEWBIX INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) U.S. dollars in thousands (except share data) For the six months ended June 30 For the three months ended June 30 Note 2022 2021 2022 2021 Revenues 3 25 2 17 Cost of revenues - - - - Gross profit 3 25 2 17 Operating expenses: Research and development 28 28 14 12 Selling and marketing - 2 - - General and administrative 138 142 70 79 Other expenses 32 - 19 - Operating loss 195 147 101 74 Financial expenses, net 8 142 11 67 4 Loss before tax 337 158 168 78 Taxes on income 9 - 1 - 1 Net loss 337 159 168 79 Loss per share - basic and diluted 10 0.010 0.005 0.005 0.002 Weighted average number of ordinary shares outstanding used in the computations of loss per share 34,753,669 34,753,669 34,753,669 34,753,669 The accompanying notes are an integral part of these condensed consolidated financial statements. - 6 - VIEWBIX INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (Unaudited) U.S. dollars in thousands (except share data) Ordinary shares Additional paid-in Accumulated Total shareholders’ Number Amount capital deficit deficit Balance as of January 1, 2022 34,753,669 3 13,257 ( 15,540 ) ( 2,280 ) Net loss for the period - - - ( 337 ) ( 337 ) Balance as of June 30, 2022 34,753,669 3 13,257 ( 15,877 ) ( 2,617 ) Ordinary shares Additional paid-in Accumulated Total shareholders’ Number Amount capital deficit deficit Balance as of April 1, 2022 34,753,669 3 13,257 ( 15,709 ) ( 2,449 ) Net loss for the period - - - ( 168 ) ( 168 ) Balance as of June 30, 2022 34,753,669 3 13,257 ( 15,877 ) ( 2,617 ) 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 ) Net loss for the period - - - ( 159 ) ( 159 ) Balance as of June 30, 2021 34,753,669 3 13,073 ( 15,313 ) ( 2,237 ) Ordinary shares Additional paid-in Accumulated Total shareholders’ Number Amount capital deficit deficit Balance as of April 1, 2021 34,753,669 3 13,073 ( 15,234 ) ( 2,158 ) Net loss for the period - - - ( 79 ) ( 79 ) Balance as of June 30, 2021 34,753,669 3 13,073 ( 15,313 ) ( 2,237 ) The accompanying notes are an integral part of these condensed consolidated financial statements. - 7 - VIEWBIX INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) U.S. dollars in thousands For the six months ended June 30 For the three months ended June 30 2022 2021 2022 2021 Unaudited Unaudited Cash flows from operating activities Net loss for the period ( 337 ) ( 159 ) ( 168 ) ( 79 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Finance expenses on loans 139 10 70 6 Changes in assets and liabilities: Increase in trade receivables ( 1 ) Decrease (increase) in prepaid expenses 30 6 14 ( 4 ) Decrease (increase) in other accounts receivable 7 4 ( 2 ) ( 2 ) Increase (decrease) in trade payables 5 - ( 2 ) 4 Decrease in other accounts payable and accrued liabilities ( 18 ) - ( 15 ) - Increase in parent company loan 128 117 73 67 Net cash used in operating activities ( 47 ) ( 22 ) ( 30 ) ( 8 ) Cash flows from investing activities Net cash provided by Investing activities - - - - Cash flows from financing activities Net cash provided by financing activities - - - - Decrease in cash and cash equivalents ( 47 ) ( 22 ) ( 30 ) ( 8 ) Cash and cash equivalents at the beginning of the period 74 148 57 134 Cash and cash equivalents at the end of the period 27 126 27 126 The accompanying notes are an integral part of these condensed consolidated financial statements. - 8 - VIEWBIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share data) NOTE 1: GENERAL 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 changed 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., a 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. 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. - 9 - VIEWBIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except 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 price per share of $ 0.01 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 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”). 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 June 30, 2022, the closing conditions of the Merger Agreement have not been fulfilled yet (see note 12). - 10 - VIEWBIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share data) NOTE 1: GENERAL (Cont.) E. Going Concern The Company has incurred $ 337 in net loss for the six months ended June 30, 2022 and $ 159 in net loss for the six months ended June 30, 2021. The Company has $ 2,617 stockholders’ deficit as of June 30, 2022 and $ 2,237 in stockholders’ deficit as of June 30, 2021. The Company has a negative cash flow from operating activities of $ 47 for the six months ended June 30, 2022 and a negative cash flow from operating activities of $ 22 for the six months ended June 30, 2021. 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. NOTE 2: SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation: The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary and were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. Unaudited Interim Financial Information The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2021 and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 17, 2022 (the “2021 Annual Report”). The results for any interim period are not necessarily indicative of results for any future period. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented. The results for the three months ended June 30, 2022 are not necessarily indicative of the results for the year ending December 31, 2022, or for any future period. As of June 30, 2022, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 2021 Annual Report. - 11 - VIEWBIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share data) NOTE 3: OTHER ACCOUNTS RECEIVABLE Composition: SCHEDULE OF OTHER ACCOUNTS RECEIVABLES COMPOSITION As of June 30 As of December 31 2022 2021 Government authorities $ 23 $ 30 Other accounts receivable 23 30 NOTE 4: OTHER ACCOUNTS PAYABLES AND ACCRUED LIABILITIES SCHEDULE OF OTHER ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Composition: As of June 30 As of December 31 2022 2021 Other payables $ 47 $ 47 Accrued liabilities 177 195 Total other accounts payables $ 224 $ 242 NOTE 5: PARENT COMPANY LOAN SCHEDULE OF PAYABLE TO PARENT COMPANY Balances:   As of June 30 As of December 31 2022 2021 Parent company loan $ 2,383 $ 2,116 According to an agreement between the parties, the parent company (“Gix”) financed certain expenses with respect to the Company’s ongoing operation (mainly salary expenses and other general and administrative expenses). No amounts were repaid by the Company to Gix during 2022 and 2021. The Company entered into an agreement with Gix, pursuant to which, effective as of December 31, 2021 (“Modification Date”), 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. The Company accounted for the modification as an extinguishment of the parent company payable and the issuance of a new debt. As of the Modification Date, the Gix Loan was recorded at its fair value of $ 2,116 , with the difference of $ 184 between its fair value and the carrying value of the payable to Gix. This difference was 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 Gix Loan, to be amortized as finance expense in the Company’s Consolidated Statements of Comprehensive Loss over the term of the Gix Loan. - 12 - VIEWBIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share data) NOTE 6: SHORT TERM LOAN On December 18, 2020, the Company entered into 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 (the “Principal Amount”) to the Company to be repaid in one lump-sum twelve (12) months following the date of the Loan (i.e., December 18, 2021). In addition, 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 to the Company as consideration for the issued shares. The Company allocated the total proceeds in respect of the shares issued and the Loan extended based on its relative fair values. As a result of the allocation, a discount of $ 19 was recorded on the Loan. The discount is amortized over the term of the Loan as finance expense. The allocation of the proceeds to the fair value distribution of the liability and equity components on the transactions date was as follows: SCHEDULE OF FAIR VALUE DISTRIBUTION OF LIABILITY AND EQUITY COMPONENTS Instrument Fair Value % of Fair Value Allocated amount Loan 55 50.55 50 Shares 54 49.45 49 Total 109 100.00 99 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 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. As of June 30, 2022, the Company has not repaid the Principal Amount. - 13 - VIEWBIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share data) NOTE 7: STOCKHOLDERS’ DEFICIT 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 June 30, 2022: 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. - 14 - VIEWBIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share data) NOTE 8: FINANCIAL EXPENSES, NET Composition: SCHEDULE OF FINANCIAL EXPENSES, NET For the six months ended June 30 2022 2021 Unaudited Bank fees - 1 Exchange rate differences 3 2 Interest on loans 139 - Other - 8 Financial (expenses) income, net 142 11 For the three months ended June 30 2022 2021 Unaudited Bank fees - 1 Exchange rate differences ( 3 ) 6 Interest on loans 70 - Other - ( 3 ) Financial (expenses) income, net 67 4 NOTE 9: TAXES ON INCOME A. 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 2022, 2021, 2020 and onwards. - 15 - VIEWBIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 9: TAXES ON INCOME (Cont.) B. Deferred income taxes: Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows: SCHEDULE OF DEFERRED INCOME TAXES As of June 30 As of December 31 2022 2021 Deferred R&D expenses $ 149 $ 167 Operating loss carryforward 33,649 33,055 Differences between tax basis and carrying values of loans (see note 5) $ ( 73 ) $ ( 184 ) Total $ 33,725 $ 33,038 Net deferred tax asset before valuation allowance $ 7,382 $ 7,230 Valuation allowance ( 7,382 ) ( 7,230 ) Net deferred tax asset $ - $ - As of June 30, 2022, the Company has provided valuation allowances of $ 7,382 in respect of deferred tax assets resulting from tax loss carryforward and other temporary differences. Management currently believes that because the Company has a history of losses, it is more likely than not that the deferred tax regarding the loss carryforward and other temporary differences will not be realized in the foreseeable future. C. Available carryforward tax losses: As of June 30, 2022 Viewbix Israel incurred operating losses in Israel of approximately $ 14,840 which may be carried forward and offset against taxable income in the future for an indefinite period. As of June 30, 2022 the Company generated net operating losses in the U.S. of approximately $ 18,809 . 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. - 16 - VIEWBIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share data) NOTE 9: TAXES ON INCOME (Cont.) D. 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 six months ended June 30 For the three months ended June 30 2022 2021 2022 2021 USA $ 195 $ 42 $ 102 $ 15 Israel 142 116 66 63 Total loss before taxes on income $ 337 $ 158 $ 168 $ 78 NOTE 10: LOSS PER SHARE-BASIC AND DILUTED Composition: SCHEDULE OF LOSS PER SHARE-BASIC AND DILUTED For the six months ended June 30 For the three months ended June 30 2022 2021 2022 2021 Basic and diluted: Net loss attributable to ordinary stockholders 337 159 168 79 Weighted-average ordinary shares 34,753,669 34,753,669 34,753,669 34,753,669 Loss per share-basic and diluted 0.010 0.005 0.005 0.002 - 17 - VIEWBIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share data) NOTE 11: 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 12: SUBSEQUENT EVENTS 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. 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 (the “ITA”) relating to the Agreement. On June 30, 2022, Gix Media obtained a tax ruling from the ITA, which effectively satisfied the foregoing condition to closing. As of June 30, 2022, the remaining closing conditions of the Merger Agreement have not been fulfilled yet. - 18 - VIEWBIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share data) NOTE 12: 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 June 30,2022, the Planned Reverse Stock Split has not been effected. - 19 -