QUANTUM X LABS INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS VIEWBIX INC. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2025 CONTENTS Page Interim Condensed Consolidated Balance Sheets (unaudited) 4 - 5 Interim Condensed Consolidated Statements of Operations (unaudited) 6 Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited) 7 Interim Condensed Consolidated Statements of Cash Flows (unaudited) 8 - 9 Notes to the Interim Condensed Consolidated Financial Statements (unaudited) 10 - 29 - 3 - VIEWBIX INC. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) U.S. dollars in thousands (except share data) As of March 31 As of December 31 Note 2025 2024 ASSETS CURRENT ASSETS Cash and cash equivalents 181 624 Restricted deposits 59 58 Accounts receivable 1,037 1,832 Loan to parent company 3 4,013 3,981 Other current assets 1,224 1,257 Total current assets 6,514 7,752 NON-CURRENT ASSETS Deferred taxes 48 56 Property and equipment, net 129 27 Intangible assets, net 5 10,017 9,552 Goodwill 5 9,704 4,579 Total non-current assets 19,898 14,214 Total assets 26,412 21,966 The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements. - 4 - VIEWBIX INC. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Cont.) U.S. dollars in thousands (except share data) As of March 31 As of December 31 Note 2025 2024 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable 4,957 5,935 Short-term loans 7 2,928 2,310 Current maturities of long-term loans 7 2,902 3,064 Embedded derivatives 7,8 2,752 29 Short-term convertible loans 7 790 779 Other payables 1,027 812 Total current liabilities 15,356 12,929 NON-CURRENT LIABILITIES Long-term loans, net of current maturities 7 - 496 Deferred taxes 1,221 1,034 Earn-out liability 6 1,010 - Total non-current liabilities 2,231 1,530 Commitments and Contingencies 9 - - SHAREHOLDERS’ EQUITY Common stock of $ 0.0001 par value - Authorized: 490,000,000 shares; Issued and outstanding: 6,619,959 and 5,296,945 shares as of March 31, 2025, and December 31, 2024, respectively (*) . 3 3 Additional paid-in capital 33,641 28,482 Accumulated deficit ( 26,382 ) ( 22,714 ) Equity attributed to shareholders of Viewbix Inc. 7,262 5,771 Non-controlling interests 1,563 1,736 Total equity 8,825 7,507 Total liabilities and shareholders’ equity 26,412 21,966 (*) Share and per share data in these financial statements have been retrospectively adjusted, for all periods presented, to reflect a number of shares that is equivalent to the number of shares of the Company post the Reverse Stock Split (see note 10.D). The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements. - 5 - VIEWBIX INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) U.S. dollars in thousands (except share data) 2025 2024 For the three months ended March 31, 2025 2024 Revenues 2,733 10,002 Costs and Expenses: Traffic-acquisition and related costs 2,323 8,215 Research and development 147 730 Selling and marketing 216 658 General and administrative 253 656 Depreciation and amortization 719 734 Other expenses, net 44 20 Operating loss 969 1,011 Financial expense, net 2,903 163 Loss before income taxes 3,872 1,174 Income tax expense (benefit) ( 28 ) 1 Net loss 3,844 1,175 Less: net loss attributable to non-controlling interests 176 176 Net loss attributable to shareholders of Viewbix Inc. 3,668 999 Net loss per share – Basic and diluted attributed to shareholders: 0.68 0.27 Weighted average number of shares – Basic and diluted: 5,414,548 3,732,169 (*) (*) Share and per share data in these financial statements have been retrospectively adjusted, for all periods presented, to reflect a number of shares that is equivalent to the number of shares of the Company post the Reverse Stock Split (see note 10.D). The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements. - 6 - VIEWBIX INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) U.S. dollars in thousands (except share data) Number Amount (*) capital Deficit Shareholders Interests Equity Common stock (*) Additional paid-in Accumulated Total Attributed to the company’s Non- Controlling Total Number Amount capital Deficit Shareholders Interests Equity Balance as of January 1, 2025 5,296,945 3 28,482 ( 22,714 ) 5,771 1,736 7,507 Net loss - - - ( 3,668 ) ( 3,668 ) ( 176 ) ( 3,844 ) Shares issued in connection with the Reverse Stock Split (see note 10.D) 14 - (**) - - - - - Issuance of shares in connection with acquisition of a subsidiary (see note 6) 1,323,000 - (**) 5,159 - 5,159 - 5,159 Share-based compensation - - - - - 3 3 Balance as of March 31, 2025 6,619,959 3 33,641 ( 26,382 ) 7 ,262 1,563 8,825 Common stock (*) Additional paid-in Accumulated Total Attributed to the company’s Non- Controlling Total Number Amount capital Deficit Shareholders Interests Equity Balance as of January 1, 2024 3,732,169 3 25,476 ( 10,661 ) 14,818 3,806 18,624 Balance 3,732,169 3 25,476 ( 10,661 ) 14,818 3,806 18,624 Net loss - - - ( 999 ) ( 999 ) ( 176 ) ( 1,175 ) Share-based compensation - - 6 - 6 12 18 Balance as of March 31, 2024 3,732,169 3 25,482 ( 11,660 ) 13,825 3,642 17,467 Balance 3,732,169 3 25,482 ( 11,660 ) 13,825 3,642 17,467 (*) Share and per share data in these financial statements have been retrospectively adjusted, for all periods presented, to reflect a number of shares that is equivalent to the number of shares of the Company post the Reverse Stock Split (see note 10.D). (**) Represents an amount less than $1. The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements. - 7 - VIEWBIX INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) U.S. dollars in thousands (except share data) 2025 2024 For the three months ended March 31, 2025 2024 Cash flows from Operating Activities Net loss ( 3,844 ) ( 1,175 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortizations 719 734 Share-based compensation 3 18 Deferred taxes ( 76 ) ( 81 ) Accrued interest, net ( 20 ) 14 Interest income ( 38 ) ( 39 ) Amortization of loan discounts 22 2 Change in the fair value of financial assets at fair value through profit or loss (see note 8) 2,723 - Amortization of deferred debt issuance costs (see note 7.F, 7.G) 68 - Changes in assets and liabilities items: Decrease in accounts receivable 795 4,355 Decrease (increase) in other current assets ( 21 ) 148 Decrease in operating lease right-of-use assets - 23 Decrease in accounts payable ( 966 ) ( 3,952 ) Increase in other payables 226 85 Decrease in operating lease liabilities - ( 25 ) Net cash provided by (used in) operating activities ( 409 ) 107 The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements. - 8 - VIEWBIX INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Cont.) U.S. dollars in thousands (except share data) For the three months ended March 31, 2025 2024 Cash flows from Investing Activities Net cash from acquisition of a subsidiary (see note 6) 12 - Net cash provided by investing activities 12 - Cash flows from Financing Activities Receipt of short-term bank loans 2,029 100 Repayment of short-term bank loans ( 1,422 ) ( 743 ) Repayment of long-term bank loans ( 658 ) - Change in loan to parent company 6 ( 17 ) Net cash used in financing activities ( 45 ) ( 660 ) Decrease in cash and cash equivalents and restricted cash ( 442 ) ( 553 ) Cash and cash equivalents and restricted cash at beginning of period 682 1,923 Cash and cash equivalents and restricted cash at end of period 240 1,370 Supplemental Disclosure of Cash Flow Activities: Cash paid during the period Taxes paid 1 54 Interest paid 141 205 Total Cash paid during the period 142 259 The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements. - 9 - VIEWBIX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data) NOTE 1: GENERAL A. Organizational Background Viewbix Inc. (the “Company”) was incorporated in the State of Delaware on August 16, 1985, under a predecessor name, The InFerGene Company (“InFerGene Company”). On August 25, 1995, a wholly owned subsidiary of InFerGene Company merged with Zaxis International, Inc., an Ohio corporation, which following such merger, the surviving entity, InFerGene Company, changed its name to Zaxis International, Inc (“Zaxis”). In 2015 the Company changed its name to Emerald Medical Applications Corp., subsequent to which the Company, through its subsidiary, was engaged in the development of technology for use in detection of skin cancer. On January 29, 2018, the Company ceased its business operations in this field. 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. VCT Israel ceased its business operation in 2019 and prior to consummation of the Recapitalization Transaction. On January 27, 2020, VCT Israel was sold to a third party for NIS 50 thousand (approximately $ 13 ). 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” or “Parent Company”), 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 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. B. Reorganization Transaction On December 5, 2021, the Company entered into a certain Agreement and Plan of Merger with Gix Media Ltd. (“Gix Media”), an Israeli company and the majority-owned ( 77.92 %) subsidiary of Gix, the Parent Company and Vmedia Merger Sub Ltd., an Israeli company and wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which, Merger Sub merged with and into Gix Media, with Gix Media being the surviving entity and a wholly-owned subsidiary of the Company (the “Reorganization Transaction”). On September 19, 2022, (the “Closing Date”) the Reorganization Transaction was consummated and as a result, all outstanding ordinary shares of Gix Media, having no par value (the “Gix Media Shares”) were delivered to the Company in exchange for the Company’s shares of common stock, par value $ 0.0001 per share (“Common Stock”). As a result of the Reorganization Transaction, the former holders of Gix Media Shares, who previously held approximately 68% of the Company’s Common Stock, held approximately 97% of the Company’s Common Stock, and Gix Media became a wholly owned subsidiary of the Company. - 10 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 1: GENERAL (Cont.) B. Reorganization Transaction (Cont.) In connection with the Closing of the Reorganization Transaction, the Company filed an Amended and Restated Certificate of Incorporation (the “Amended COI”) with the Secretary of State of Delaware, effective as of August 31, 2022, pursuant to which, concurrently with the effectiveness of the Amended COI, the Company, among other things, effected a reverse stock split of its common stock at a ratio of 1-for-28 . As the Company and Gix Media were consolidated both by the Parent Company and Xylo Technologies Ltd. (formerly known as Medigus Ltd.) (the “Ultimate Parent”), before and after the Reorganization Transaction, the Reorganization Transaction was accounted for as a transaction between entities under common control. Accordingly, the financial information of the Company and Gix Media is presented in these financial statements, for all periods presented, reflecting the historical cost of the Company and Gix Media, as it is reflected in the consolidated financial statements of the Parent Company, for all periods preceding March 1, 2022, the date the Ultimate Parent obtained a controlling interest in the Parent Company and as it is reflected in the consolidated financial statements of the Ultimate Parent for all periods subsequent to March 1, 2022. C. Business Overview The Company and its subsidiaries (the “Group”), Gix Media and Cortex Media Group Ltd. (“Cortex”), operate in the field of digital advertising. The Group has two main activities that are reported as separate operating segments: the search segment and the digital content segment. The search segment develops a variety of technological software solutions, which perform automation, optimization, and monetization of internet campaigns, for the purposes of obtaining and routing internet user traffic to its customers. The search segment activity is conducted by Gix Media. The digital content segment is engaged in the creation and editing of content, in different languages, for different target audiences, for the purposes of generating revenues from leading advertising platforms, by utilizing such content to obtain and route internet user traffic for its customers. The digital content segment activity is conducted by Cortex. On January 23, 2023, Gix Media acquired an additional 10 % of the share capital of Cortex, increasing its holdings to 80 % in consideration for $ 2,625 (the “Subsequent Purchase”). The Subsequent Purchase was financed by Gix Media’s existing cash balances and by a long-term bank loan received on January 17, 2023, in the amount of $ 1,500 (see also note 10.B). The Subsequent Purchase was recorded as a transaction with non-controlling interests in the Company’s statement of changes in shareholders equity for the year ended December 31, 2023. On March 24, 2025, the Company entered into a securities exchange agreement with the shareholders of Metagramm Software Ltd. (“Metagramm”), pursuant to which the Company acquired 100 % of Metagramm’s shares in exchange for consideration of $ 5,159 . The consideration was paid to Metagramm’s shareholders in the form of 1,323,000 shares of commons stock of the Company, representing 19.99 % of the Company’s issued and outstanding share capital. Metagramm specializes in developing advanced writing assistance tools that leverage artificial intelligence, machine learning and natural language processing technologies. Metagramm’s main product, “Bubbl” is a writing tool designed to provide personalized and customized text tailored to the user’s unique expression and can translate various languages into English. Metagramm licenses its products on a subscription basis to businesses and individual customers. - 11 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 1: GENERAL (Cont.) D. Impact of the “Iron Swords” War on Israel On October 7, 2023, following the brutal attacks on Israel by Hamas, a terrorist organization located in the Gaza Strip that infiltrated Israel’s southern border and conducted a series of attacks on civilian and military targets, Israel’s security cabinet declared war (the “War”). Following the commencement of the War, hostilities also intensified between Israel and Hezbollah, a terrorist organization located in Lebanon. This may escalate in the future into a greater regional conflict. The War led to a reduction of business activities in Israel, evacuation of residences located in the northern and southern borders of Israel, a significant call up of military reserves and lower availability of work force. As the Group’s customers are mainly in the US and Europe, its operations, revenues, and profitability were indirectly affected due to recruitment of senior employees to military reserves for an extended period of time. In January 2024, Gix Media and Cortex filed a request with the Israeli Tax Authority (the “ITA”) to receive compensation for the decrease in revenues related to the War. In April and May 2024, Gix Media and Cortex received a total of $ 337 from the ITA that were recorded as a reduction of other expenses, net in the Company’s consolidated statement of operations for the year ended December 31, 2024. As of the date of these financial statements the War is still on going. Therefore, there is no assurance that future developments of the War will not have any impact for reasons beyond the Company’s control, such as expansion of the War to additional regions. The Company has business continuity procedures in place, and will continue to follow developments, assessing potential impact, if any, on the Company’s business, financials, and operations. E. Cortex Adverse Effect In April 2024, the Company was informed by Cortex that a significant customer of Cortex recently notified Cortex it will stop advertising on Cortex’s sites, as part of its policy decision to cease advertising on Made for Advertising (“MFA”) sites (the “Cortex Adverse Effect”). The Cortex Adverse Effect, which has materially affected Cortex’s business and operations, has occurred following certain recent developments relating to publishers that are categorized by a number of on-line advertisers as MFA, including decisions made by leading media on-line advertisers to prioritize different media categories and implement publishing restrictions in connection with MFA. Due to the Cortex Adverse Effect and additional circumstances as explained in note 5.B, the Company recorded an impairment of $ 7,675 in the goodwill related to the digital content segment as of December 31, 2024. F. Filing of Insolvency Petition Against Gix Media On March 27, 2025, a petition was filed with the District Court of Tel Aviv-Jaffa for a court order to commence insolvency proceedings against Gix Media. The petition was filed by a primary service provider alleging that Gix Media owes it approximately $ 260 (excluding linkage differentials and interest) and that Gix Media is unable to repay its debts (see note 9.B). Due to the filing of the petition, Leumi bank has the right to demand immediate repayment of Gix Media’s bank loans. As a result, long-term loans were classified as a current liability (see note 7.A, 7.B). As of the date of approval of these financial statements, the Company cannot assess the likelihood of success of the Petition or its potential impact on the Company’s business. - 12 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 1: GENERAL (Cont.) G. Going Concern From the second half of 2023 through March 31, 2025, the Company experienced a decrease in its revenues from the digital content and search segments, as a result of: the Cortex Adverse Effect (see note 1.E), a decrease in user traffic acquired from third party advertising platforms, an industry-wide decrease in advertising budget, changes and updates to internet browsers’ technology, which adversely impacted the Company’s ability to acquire traffic in the search segment and a decrease in revenues from routing of traffic acquired from third-party strategic partners in the search segment, as a result of lack of availability of suppliers credit from such third party strategic partners. As a result of the foregoing, during the three months ended March 31, 2025, the Company recorded an operating loss of $ 969 compared to $ 1,011 during the three months ended March 31, 2024. Additionally, the Company recorded a net loss of $ 3,844 during the three months ended March 31, 2025, compared to $ 1,175 during the three months ended March 31, 2024. As of March 31, 2025, the Company had cash and cash equivalents of $ 181 , bank loans of $ 5,477 , accumulated deficit of $ 26,382 and a negative cash flow of $409 for the three months ended March 31, 2025 . The decline in revenues and other circumstances described above raise substantial doubts about the Company’s ability to continue as a going concern during the 12-month period following the issuance date of these financial statements. Management’s response to these conditions included reduction of salaries and related expenses and reduction of professional services in the research and development and selling and marketing functions, reduction of other operational expenses, such as lease costs and overheads, as well as creation of new partnerships and other new income sources. In addition, during the period from June to August 2024, the Company raised through a private placement and through three facility agreements with certain investors and lenders (see note 7.B) aggregate gross proceeds of $ 887 . Moreover, the Company plans to uplist its shares of common stock to a national securities exchange (the “Uplist”), after which, in accordance with the terms of the aforesaid private placement and facility agreements, the company is expected to receive additional funds. Furthermore, the Company’s subsidiaries entered into an addendum to a loan agreement with Bank Leumi pursuant to which loans repayments were deferred while short term credit lines with Bank Leumi continued to be utilized. However, there is significant uncertainty as to whether the Company will further succeed to implement its plans or be able to secure additional funds when needed. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. - 13 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 2: SIGNIFICANT ACCOUNTING POLICIES A. Unaudited Interim Financial Statements The accompanying unaudited interim condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Group’s Annual Report on Form 10-K for the year ended December 31, 2024. B. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. C. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The Company evaluates on an ongoing basis its assumptions, including those related to contingencies, deferred taxes, inventory impairment, stock-based compensation, as well as in estimates used in applying the revenue recognition policy. Actual results may differ from those estimates. D. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the unaudited condensed statements of operations. - 14 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.) E. Fair Value of Financial Instruments Fair value is defined as the price that would be received for sale of an asset or paid to transfer of a liability, in an orderly transaction between market participants at the measurement date. US GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include: ● Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets. ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. F. Significant Accounting Policies The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements other than the significant accounting policies of derivative financial instruments and fair value of financial instruments (see notes 2.D and 2.E above). G. Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Group’s interim condensed consolidated financial statements. - 15 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 3: LOAN TO PARENT COMPANY SCHEDULE OF LOAN TO PARENT COMPANY As of March 31 2025 As of December 31 2024 Loan to Parent Company $ 4,013 $ 3,981 The balance with the Parent Company represents a balance of an intercompany loan under a loan agreement signed between Gix Media and the Parent Company on March 22, 2020. The loan bears interest at a rate to be determined from time to time in accordance with Section 3(j) of the Income Tax Ordinance, new version, and the Income Tax Regulations (Determination of Interest Rate for the purposes of Section 3(j), 1986) or according to a market interest rate decision as agreed between the parties. The amount of the loan is in U.S. dollars. On March 19, 2025, the Company’s board of directors approved to extend the loan between Gix Media and the Parent Company until September 1, 2025. All other terms and conditions of the loan will remain unchanged. For the three months ended March 31, 2025 and 2024, Gix Media recognized interest income in the amount of $ 38 and $ 39 , respectively. NOTE 4: LEASES On February 25, 2021, Gix Media entered into a lease agreement for a new corporate office of 479 square meters in Ramat Gan, Israel, at a monthly rent fee of $ 10 . The lease period was for 36 months (the “initial lease period”) with an option by the Company to extend the lease period for two additional terms of 24 months each. In accordance with the lease agreement, the Company made leasehold improvements in exchange for a rent fee discount of $ 67 which will be spread over the initial lease period. The Company included renewal options that it was reasonably certain to exercise in the measurement of the lease liabilities. In December 2023, the Company exercised the option to extend the lease period for an additional term of 24 months (from March 1, 2024, to February 28, 2026 ). On June 20, 2024, Gix Media and the lessor of its offices entered into a lease termination agreement. According to the agreement, the lease, which originally had a termination date of February 28, 2026, terminated on June 30, 2024. In compensation for the lessor’s consent to an early termination, Gix Media paid the lessor $ 7 in cash and $ 62 in office furniture and equipment, as per the carrying values of such assets on the Company’s books as of the early termination date. Operating lease expenses amounted to $ 0 and $ 28 for the three months ended March 31, 2025 and 2024, respectively. - 16 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 5: GOODWILL AND INTANGIBLE ASSETS, NET A. Composition: SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS Internal-use Software Customer Relations Technology Goodwill Total Cost: Balance as of January 1, 2025 465 6,234 11,008 4,579 22,286 Consolidation of Metagramm (see note 6) - 420 760 5,125 6,305 Impairment of goodwill Balance as of March 31, 2025 465 6,654 11 ,768 9,704 28,591 Accumulated amortization: Balance as of January 1, 2025 429 2,522 5,204 - 8,155 Amortization recognized during the period 36 222 457 - 715 Balance as of March 31, 2025 465 2,744 5,661 - 8,870 Amortized cost: As of March 31, 2025 - 3,910 6,107 9,704 19,721 Internal-use Software Customer Relations Technology Goodwill Total Cost: Balance as of January 1, 2024 465 6,234 11,008 12,254 29,961 Cost, beginning balance 465 6,234 11,008 12,254 29,961 Impairment of goodwill - - - ( 7,675 ) ( 7,675 ) Balance as of December 31, 2024 465 6,234 11,008 4,579 22,286 Cost, ending balance 465 6,234 11,008 4,579 22,286 Accumulated amortization: Balance as of January 1, 2024 276 1,631 3,366 - 5,273 Accumulated amortization, beginning balance 276 1,631 3,366 - 5,273 Amortization recognized during the year 153 891 1,838 - 2,882 Balance as of December 31, 2024 429 2,522 5,204 - 8,155 Accumulated amortization, ending balance 429 2,522 5,204 - 8,155 Amortized cost: As of December 31, 2024 36 3,712 5,804 4,579 14,131 Amortized cost 36 3,712 5,804 4,579 14,131 - 17 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 5: GOODWILL AND INTANGIBLE ASSETS, NET (Cont.) B. Impairment of goodwill: As of December 31, 2024, the Company identified indicators of impairment of the digital content reporting unit. As a result, the Company performed an impairment test which included a quantitative analysis of the fair value of the reporting unit. The fair value was estimated using the income approach, which is based on the present value of the future cash flows attributable to the reporting unit. The Company compared the fair value of the reporting unit to its carrying amount. As the carrying amount exceeded the fair value, the Company recognized an impairment loss of $ 7,675 which was driven mainly due to the Cortex Adverse Effect (see note 1.E) and due to a decrease in the cash flow projections. The Company also performed a quantitative impairment test of the search reporting unit. The Company did not recognize an impairment regarding this reporting unit. NOTE 6: BUSINESS COMBINATION Metagramm Acquisition: On July 31, 2024, the Company entered into a securities exchange agreement with Metagramm pursuant to which the Company agreed to issue to Metagramm 9.99 % of its issued and outstanding share capital in exchange for 19.99 % of Metagramm’s issued and outstanding share capital (the “2024 SEA”). On March 24, 2025 (the “Closing Date”), the Company entered into a new securities exchange agreement with the shareholders of Metagramm which replaced and terminated the 2024 SEA (the “2025 SEA”). Pursuant to the 2025 SEA, the Company acquired 100 % of Metagramm’s shares in exchange for consideration of $ 5,159 . The consideration was paid to Metagramm’s shareholders in the form of 1,323,000 shares of common stock of the Company, representing 19.99 % of the Company’s issued and outstanding share capital immediately following the acquisition (the “Metagramm Acquisition”). In addition, the Company agreed to pay Metagramm’s shareholders cash earn-out payments on a pro rata basis of up to a cumulative sum of $ 2.0 million, contingent on achieving certain financing and revenue milestones within 3 years following the Closing Date. Fair Value of Metagramm’s Identifiable Assets and Liabilities: SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES Cash and cash equivalents 12 Other current assets 18 Property and equipment 106 Goodwill arising from the acquisition 5,125 Technology, net of deferred taxes 585 Customer Relations, net of deferred taxes 323 Total cost of the acquisition 6,169 Earn-out liability arising from the acquisition 1,010 Total liabilities 1,010 Consideration paid in Company’s shares 5,159 The total cost of the acquisition has been allocated between tangible and intangible assets acquired and liabilities assumed based on estimated fair values, with the residual of the acquisition cost recorded as goodwill. The intangible assets identified in the Metagramm Acquisition were technology and customer relations. The estimation of the fair value of these intangible assets was determined using the income approach, which is based on the present value of the future cash flows attributable to each identifiable intangible asset. The estimation of the fair value of the earn-out liability was calculated based on Monte Carlo method. Other current assets were estimated to have fair values that approximate their carrying values due to the short-term maturities of these instruments. The estimated useful lives for the acquired technology and customer relations of Metagramm Acquisition are 5 years and 2.5 years, respectively. The goodwill will not be deductible for income tax purposes. NOTE 7: LOANS A. Composition of long-term loans, short-term loans, and credit lines of the Group: The following is the composition of the balance of the Group’s loans according to their nominal value: SCHEDULE OF COMPOSITION OF BALANCE OF GROUP’S LOANS Interest rate As of March 31, 2025 As of December 31, 2024 Short-term bank loans – Gix Media SOFR + 4.60 % 1,602 1,138 Short-term bank loan – Cortex SOFR + 4.35 % 973 830 Short-term bank loan SOFR + 4.35 % 973 830 Long-term bank loan, including current maturity – Gix Media (received on October 13, 2021) SOFR + 4.12 % 2,036 2,564 Long-term bank loan, including current maturity – Gix Media (received on January 17, 2023) SOFR + 5.37 % 866 996 Long-term bank loan SOFR + 5.37 % 866 996 Short-term loan – June 2024 Facility Agreement – Viewbix Inc 12 % 353 342 Short-term convertible loan – June 2024 Facility Agreement – Viewbix Inc 12 % 660 649 Short-term convertible loan – First July 2024 Facility Agreement – Viewbix Inc 12 % 50 50 Short-term convertible loan – Second July 2024 Facility Agreement – Viewbix Inc 12 % 80 80 Short-term convertible loan 12 % 80 80 Bank Loan 6,620 6,649 - 18 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 7: LOANS (Cont.) B. Gix Media’s Loan Agreement and short-term loans: On October 13, 2021, Gix Media entered into a financing agreement with Bank Leumi Le Israel Ltd (“Leumi”), an Israeli bank, for the provision of a line of credit in the total amount of up to $ 3,500 and a long-term loan totaling $ 6,000 , which Gix Media used to finance the acquisition of Cortex (the “Financing Agreement”). The Financing Agreement included the following main terms: 1) A loan of $ 6,000 to be provided to Gix Media which will be repaid in 48 monthly payments at an annual interest rate of LIBOR + 4.12 %. 2) A renewable monthly line of credit, of up to $ 3,500 to be provided to Gix Media, which will be available for utilization for a period of two years and will be determined on a monthly basis, at 80 % of Gix Media’s accounts receivable balance (“Line of Credit”). The amounts that will be withdrawn from the Line of Credit will bear annual interest of LIBOR + 3.2 %. 3) Gix Media undertook to meet financial covenants over the life of the loans as follows: the ratio of debt to EBITDA, based on the Gix Media’s consolidated financial statements in all 4 consecutive quarters, will not exceed 2.4 in the first two years and will not exceed 1.75 in the following two years. As of December 31, 2023, Gix Media didn’t meet the financial covenants in connection with the Financing Agreement, however, Gix Media has received a waiver by Leumi to be effected until April 16, 2024, according to which, Leumi agreed to delay its right for immediate repayment of the loans. Accordingly, the Company did not reclassify long-term loan, net of current maturities item in the balance sheet as a current liability. 4) As part of the Financing Agreement, Gix Media and the Company provided several liens in favor of Leumi (see note 9). On July 25, 2022, Gix Media and Leumi entered into an addendum to the Financing Agreement, according to which, Leumi will provide Gix Media with a loan of $ 1,500 , to be withdrawn at the discretion of Gix Media no later than January 31, 2023 (the “Additional Loan”). On January 23, 2023, Gix Media acquired an additional 10% of Cortex’s capital shares (see notes 1.C and 7.A) which was financed by Gix Media’s existing cash balances and by the Additional Loan received on January 17, 2023, in the amount of $ 1,500 to be repaid in 42 monthly payments at an annual interest rate of SOFR + 5.37 %. On October 10, 2023, Gix Media and Leumi entered into a second addendum to the Financing Agreement, according to which, Leumi extended an existing monthly renewable credit line of $ 3,500 (the “Gix Media Credit Line”) by one year which will expire on October 13, 2024. The amounts that are drawn from the Gix Media Credit Line bear an annual interest of SOFR + 4.05 %. In addition, according to the Second Addendum the 2.4 ratio of debt to EBITDA was extended by nine months to June 30, 2024. On June 13, 2024, Gix Media and Leumi entered into a third addendum to the Financing Agreement between the parties which was effective from May 15, 2024, pursuant to which, inter alia: (i) the addendum will be effective until August 31, 2024; (ii) the Company is obligated to transfer to Gix Media $ 600 ; (iii) a new covenant which replaced the previous financial covenant, measured by reference to positive EBITDA was implemented; (iv) all payments due to Leumi Long-term bank loan were deferred to August 31, 2024 and from September 1, 2024, payments will be repaid as schedule until the end of the Long-term bank loan; (v) a new loan of $ 350 was granted to Gix Media on June 13, 2024 which was repaid in full on August 30, 2024, alongside the existing credit facility to Gix Media. The existing credit facility will remain equal to 80 % of Gix Media’s customer balance (“Gix Media Credit Line”); (vi) Gix Media is obligated to perform a reduction in expenses, including reduction in human capital. - 19 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 7: LOANS (Cont.) B. Gix Media’s Loan Agreement and short-term loans: Effective as of August 30, 2024, Gix Media and Leumi entered into a fourth addendum to the Financing Agreement, pursuant to which, inter alia: (i) subject to the receipt of at least $ 2,000 from the Company by no later than January 1, 2025, the existing credit facility to Gix Media will be extended until February 27, 2025 and (ii) the repayment of the outstanding principal amounts of the long-term bank loans of Gix Media under the Financing Agreement and an additional short-term loan in the amount of $ 160 , will be deferred until December 31, 2024 and from January 1, 2025, all due payments will be repaid as schedule until the end of the term of the long term bank loans. On September 16, 2024, Gix Media repaid an aggregate amount of $ 350 , consisting of the short-term bank loan in the amount of $ 160 and principal amounts of the long-term bank loans totaling $ 190 . On the same date, Gix Media received a new short-term bank loan of $ 350 which replaced the repaid amounts. The new loan bears an annual interest rate of SOFR + 4.60 % and is to be repaid in one single payment on January 2, 2025 . On September 19, 2024, Gix Media received a short-term loan of $ 75 . The loan bears an annual interest rate of SOFR + 4.60 % and was repaid in monthly installments of $25 over a 3-month period from October to December 2024. On February 4, 2025, Gix Media and Leumi entered into a fifth addendum to the Financing Agreement, which was effective from January 29, 2025, according to which, inter alia: (i) the Gix Media Credit Line was extended to March 31, 2025, (ii) the repayment the outstanding principal amounts of the long term bank loans of Gix Media under the Financing Agreement, was deferred until the actual deposit by the Company in Gix Media’s account of an investment account equal to the amounts of the deferred long term bank loans owned by Gix Media (the “Investment Amount”), which in any event shall be no later than March 31, 2025 (the “Deposit Date”), (iii) upon such Deposit Date, all deferred payments will be immediately repaid using the deposited amounts and any remaining amounts from any other sources, (iv) all remaining future due payments will be repaid as scheduled until the end of the updated terms of each long term bank loan. On March 30, 2025, Gix Media and Leumi entered into a sixth additional addendum to the Financing Agreement, which extended the Deposit Date until May 20, 2025. As of March 31, 2025, Gix Media has drawn $ 549 of the Gix Media Credit Line. C. Cortex’s Loan Agreement: On September 21, 2022, Cortex and Leumi entered into an addendum to an existing loan agreement between the parties, dated August 15, 2020 (“Cortex Loan Agreement”). As part of the addendum to the Cortex Loan Agreement, Leumi provided Cortex with a monthly renewable credit line of $ 1,500 (the “Cortex Credit Line”). The Cortex Credit Line is determined every month at the level of 70 % of Cortex’s customers’ balance. The amounts that are drawn from the Cortex Credit Line bear an annual interest of SOFR + 3.52 %. On April 27, 2023, Leumi increased the Cortex Credit Line by $ 1,000 . In September 2023, Cortex and Leumi entered into an additional addendum to the Cortex Loan Agreement, in which Leumi extended the Cortex Credit Line of $ 2,500 by one year which will expire on September 20, 2024 . The amounts that are drawn from the Cortex Credit Line bear an annual interest of SOFR + 4.08 %. On May 27, 2024, Cortex and Leumi entered into an amendment to Cortex Loan Agreement, pursuant to which, the credit line to Cortex will be 80 % of Cortex’s customer balance and up to $ 2,000 . On August 15, 2024, Cortex and Leumi entered into an additional amendment to Cortex Loan Agreement, pursuant to which, the credit line in the amount of $ 2,000 to Cortex will be extended until February 27, 2025 and bears an annual interest of SOFR + 4.35 %. On February 28, 2025, Cortex and Leumi entered into an additional amendment to Cortex’s Loan Agreement, pursuant to which: (i) the credit line of $ 1,000 for Cortex will be extended until December 12, 2025; (ii) Cortex will establish a first-ranking fixed pledge over the cash deposit held in the Cortex’s Leumi Account, up to a maximum of $ 100 , no later than April 15, 2025, or three days following Cortex’s receipt of its expected tax refund, whichever occurs first. This deposit may be released upon Cortex’s submission of a financial report demonstrating two consecutive quarters of positive EBITDA, with a minimum of $75 per quarter. As of March 31, 2025, Cortex has drawn $ 973 of the Cortex Credit Line. - 20 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 7: LOANS (Cont.) D. Long term loan and issuance of warrants: On November 15, 2023, Viewbix Israel entered into a Loan Agreement (the “2023 Loan”) with certain lenders (the “Lenders”) whereby the Lenders provided Viewbix Israel with loans in the aggregate amount of $ 480 . In connection with the 2023 Loan, the Company issued to each lender a warrant to purchase shares of common stock (the “2023 Warrants”). The 2023 Warrants are exercisable to 120,000 shares of common stock, at an exercise price of $ 2.00 per share and will expire on December 31, 2025 . The Company recorded the 2023 Warrants as an equity instrument. The terms of the 2023 Loan were substantially amended on June 18, 2024, by the June 2024 Facility Agreement (see note 7.E). These amendments represented a substantial modification in accordance with ASC Topic 470. Accordingly, the terms modification was accounted for as an extinguishment of the original financial liability and the initial recognition of new financial instruments issued at their fair value as of the effective date of the June 2024 Facility Agreement. As a result of the substantial modification of terms, the Company recognized finance expense of $ 1,914 for the year ended December 31, 2024. E. June 2024 Facility Agreement: On June 18, 2024, the Company entered into a credit facility agreement with a group of lenders including a lead lender (the “June 2024 Lead Lender”, and collectively, the “June 2024 Lenders”) for an amount of up to $ 1.0 million which was amended and restated on July 22, 2024 (the “June 2024 Facility Agreement”). The June 2024 Facility Agreement also includes $ 531 of outstanding debt owed by the Company to the June 2024 Lenders of the 2023 Loan (see note 7.D), such that the total amount of the credit line reached $ 1.53 million (the “Total Credit Facility Amount”). The Total Credit Facility Amount will be due for repayment following 12 months from the date of the June 2024 Facility Agreement (the “Initial Maturity Date”) or alternatively, in the event the completion of the Uplist (as defined in note 1.F) prior to the Initial Maturity Date, then the Total Credit Facility Amount will be due for repayment following 12 months from the Uplist date. The Total Credit Facility Amount will be available for use as follows: (a) $350 upon the date of the June 2024 Facility Agreement, (b) $150 upon submitting a prospectus for the registration of shares to be issued to the June 2024 Lenders, and (c) $500 upon the completion of the Uplist. The Total Credit Facility Amount will accrue interest at a rate of 12 % per annum, to be paid in advance. The interest for the first year of the June 2024 Facility Agreement, which was equal to $ 184 , was paid by the Company in advance in: (a) 183,679 shares of the Company’s common stock, reflecting a value of $ 1.00 per share for each dollar of interest accrued on the Total Credit Facility Amount, and (b) 183,679 warrants to purchase 183,679 shares of the Company’s common stock at an exercise price of $ 1.00 per share. The warrants will be exercisable for a three-year 3 period from the date of the June 2024 Facility Agreement. Immediately following the effectiveness of the Uplist, $ 663 of the Total Credit Facility Amount will be automatically converted into units, which will include shares of common stock at a conversion rate of $ 1.00 per share, equal to an aggregate of 662,957 shares of common stock and the same amount of warrants to purchase common stock of the Company with an exercise price of $ 1.00 per share. The warrants will be exercisable for a three-year period from the Uplist date. During the term of the June 2024 Facility Agreement, some of the June 2024 Lenders whose portion of the Total Credit Facility Amount is not automatically converted as part of the Uplist will have the right to convert their portion of the Total Credit Facility Amount within 12 months from the Uplist date into units, which will include shares of common stock of the Company at a conversion rate of $ 1.00 per share, equal to an aggregate of up to 362,004 shares of common stock and the same amount of warrants to purchase common stock of the Company with an exercise price of $ 1.00 per share. The warrants will be exercisable for a three-year period from the issuance date. In addition, the Company paid to the June 2024 Lead Lender a commission consisting of: (a) 50,000 common stock of the Company, (b) 50,000 warrants to purchase 50,000 common stock of the Company at an exercise price of $ 1.00 per share (c) 625,000 warrants for the purchase of 625,000 common stock with an exercise price of $ 4.00 per share (“June 2024 Lead Lender Fee Warrants”). The June 2024 Lead Lender Fee Warrants will be exercisable for a three-year period from the date of the June 2024 Facility Agreement. - 21 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 7: LOANS (Cont.) The June 2024 Lead Lender Fee Warrants, which were exercisable immediately after the closing of the agreement, were allocated subject to certain ownership restrictions, adjustments, and anti-dilution protections. Furthermore, the Company has committed to submitting a request for the registration of the shares and warrants issued to the June 2024 Lenders within thirty (30) days from the date of the June 2024 Facility Agreement. In July 2024, following the closing of the Private Placement (as defined in note 10.B), the exercise price of the June 2024 Lead Lender Fee Warrants was adjusted to $ 0.472 , which is equal to the effective price per share of common stock in the Private Placement, and the number of shares of common stock issuable upon the exercise of the June 2024 Lead Lender Fee Warrants was also adjusted to a total of 5,296,610 shares, such that the adjusted exercise price and number of warrants issued is equal to an aggregate amount of $ 2.5 million. The conversion related features of the June 2024 Facility Agreement were bifurcated from their host debt contract and recognized as liabilities measured at fair value at each cut-off date. The facility loan was initially recorded at its fair value and subsequently measured at cost. The shares and warrants issued as prepayment of interest and as commission to the June 2024 Lead Lender were initially recognized at fair value and classified in equity. The June 2024 Lead Lender Fee Warrants were initially recognized in fair value at the amount of $ 1,833 and classified as a liability measured at fair value at each cut-off date. Following the closing of the Private Placement and the adjustments made to the number of shares in the June 2024 Lead Lender Fee Warrants as part of the June 2024 Facility Agreement, the June 2024 Lead Lender Fee Warrants were reclassified to equity. F. First July 2024 Facility Agreement On July 4, 2024, the Company entered into a credit line agreement with a certain lender (the “First July 2024 Facility Agreement”). Under the First July 2024 Facility Agreement and amendments from July 22, 2024, and July 25, 2024, the lender will provide a total credit line of $ 2.5 million (the “First July 2024 Facility Loan Amount”), which will be available for use as follows: (a) $50 upon the date of the First July 2024 Facility Agreement, (b) $50 upon the Uplist, and (c) after the Uplist, $200 will be available for use on a quarterly basis until the total amount reaches $ 2.5 million. The First July 2024 Facility Agreement will remain available until the earliest of: (a)(1) full utilization of the First July 2024 Facility Loan Amount, (a)(2) after 36 months from the date of the First July 2024 Facility Agreement, and (b) upon such date that the Company completes a $ 2.0 million financing transaction (the “First July 2024 Facility Term”). In the event the First July 2024 Facility Term lapses, the First July 2024 Facility Loan Amount will be repaid to the lender immediately. The First July 2024 Facility Agreement Amount will accrue interest at a rate of 12 % per annum. The interest for the first year was paid in advance in: (a) 300,000 shares of the Company’s common stock at a conversion rate of $ 1.00 for each dollar of interest accrued on the total amount, and (b) 300,000 warrants to purchase 300,000 shares of the Company’s common stock an exercise price of $ 1.00 per share. The warrants are exercisable upon issuance at an exercise price of $ 1.00 per share of common stock and will be exercisable for a three-year 3 period from the date of the First July 2024 Facility Agreement. Immediately after the Uplist, $ 100 from the First July 2024 Facility Loan Amount will be automatically converted into common stock of the Company at an exercise price of $ 1.00 per share. Additionally, the Company will issue an identical number of warrants to purchase common stock of the Company at an exercise price of $ 1.00 per share. Furthermore, the Company paid the lender of the First July 2024 Facility Agreement a one-time fee consisting of: (a) 125,000 common stock of the Company, which representing a fee of five percent ( 5 %) of the First July 2024 Facility Loan Amount, at a share price of $ 1.00 per share, and (b) 250,000 warrants to purchase 250,000 common stock of the Company at an exercise price of $ 1.00 per share. The warrants are exercisable for three years 3 from the date of the First July 2024 Facility Agreement. The conversion related features of the First July 2024 Facility Agreement were bifurcated from their host debt contract and recognized as liabilities measured at fair value at each cut-off date. In connection with the First July 2024 Facility Agreement, the Company received a loan of $ 50 which was recorded as a short-term convertible loan. The fair value of this loan was substantially the same as the amount received. Warrants associated with the First July 2024 Facility Agreement were measured at fair value and recorded as equity. As of December 31, 2024, the Company incurred deferred debt issuance costs of $ 315 which were recorded in other current assets in the Company’s Balance Sheet. These costs consisted of a one-time fee to the lender of the First July 2024 Facility Agreement, an annual advance interest payment and other additional direct costs. The amortization of the deferred debt issuance costs was recorded as financial expense and amounted to $ 34 for the three months ended March 31, 2025 . - 22 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 7: LOANS (Cont.) G. Second July 2024 Facility Agreement On July 28, 2024, The Company entered into a credit line agreement with certain lenders (the “Second July 2024 Facility Agreement”) for a total amount of $ 3.0 million (the “Second July 2024 Facility Loan Amount”). The Second July 2024 Facility Agreement will remain available until the earliest of: (a) (1) full utilization of the Second July 2024 Facility Loan Amount, (a)(2) after 40 months from the date of Second July 2024 Facility Agreement, and (b) upon such date that the Company completes a $ 2.5 million financing transaction. The Second July 2024 Facility Loan Amount will accrue interest at a rate of 12 % per annum. The interest for the first year was paid in advance in: (a) 360,000 shares of the Company’s common stock, reflecting a share price of $ 1.00 per share for each dollar of interest accrued on the total amount, and (b) 360,000 warrants to purchase 360,000 common stock of the Company at an exercise price of $ 1.00 per share. The warrants are exercisable for three years from the date of Second July 2024 Facility Agreement. Starting from the second year of the Second July 2024 Facility Agreement, the interest will be paid in cash to the lenders. Immediately after the Uplist, $ 160 out of the Second July 2024 Facility Loan Amount will be automatically converted into common stock of the Company at an exercise price of $ 1.00 per share. Additionally, the Company will issue an identical number of warrants to purchase common stock of the Company at an exercise price of $ 1.00 per share. Furthermore, the Company paid the lenders of the Second July 2024 Facility Agreement a one-time fee consisting of 150,000 common stock of the Company, which represent a fee of five percent ( 5 %) of the Second July 2024 Facility Loan Amount at a share price of $ 1.00 per share. The conversion related features of the Second July 2024 Facility Agreement were bifurcated from their host debt contract and recognized as liabilities measured at fair value at each cut-off date. In connection with the Second July 2024 Facility Agreement, the Company received a loan of $ 80 which was recorded as a short-term convertible loan. The fair value of this loan was substantially the same as the amount received. Warrants associated with the Second July 2024 Facility Agreement were measured at fair value and recorded as equity. As of December 31, 2024, the Company incurred deferred debt issuance costs of $ 302 which were recorded in other current assets in the Company’s Balance Sheet. These costs consisted of a one-time fee to the lenders of the Second July 2024 Facility Agreement, an annual advance interest payment and other additional direct costs. The amortization of the deferred debt issuance costs was recorded as financial expense and amounted to $ 30 for the three months ended March 31, 2025. - 23 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 8: FINANCIAL INSTRUMENTS AT FAIR VALUE Financial instruments: The Company has financial instruments measured at level 3 arising from the June 2024 Facility Agreement, the First July 2024 Facility Agreement and the Second July 2024 Facility Agreement (see notes 7.E, 7.F, 7.G). The fair value of the financial instruments as of December 31, 2024, was calculated using the following unobservable inputs: share price: $ 0.472 , expected volatility: 148 %, exercise price: $ 1.00 , risk-free interest rate: 4.24 %- 4.32 %, expected life: 0.46 - 0.50 years. The fair value of the financial instruments as of March 31, 2025, was calculated using the following unobservable inputs: share price: $ 3.9 , expected volatility: 150 %, exercise price: $ 1.00 , risk-free interest rate: 4.32 %- 4.35 %, expected life: 0.21 - 0.34 years. The following table presents the financial instruments that were measured at fair value through profit or loss: SCHEDULE OF FINANCIAL LIABILITIES Embedded derivatives Balance as of January 1, 2025 29 Net changes at fair value recognized through profit or loss 2,723 Embedded derivatives recorded in connection with the June 2024 Facility Agreement, the First July 2024 Facility Agreement and the Second July 2024 Facility Agreement Balance as of March 31, 2025 2,752 Embedded derivatives Balance as of January 1, 2024 - Balance - Embedded derivatives recorded in connection with the June 2024 Facility Agreement, the First July 2024 Facility Agreement and the Second July 2024 Facility Agreement 40 Net changes at fair value recognized through profit or loss ( 11 ) Balance as of December 31, 2024 29 Balance 29 NOTE 9: COMMITMENTS AND CONTINGENCIES A. Liens: On September 19, 2022, as part of the Reorganization Transaction terms, the Company has provided several liens under Gix Media’s Financing Agreement with Leumi in connection with the Cortex Transaction, as follows: (1) a guarantee to Bank Leumi of all of Gix Media’s obligations and undertakings to Bank Leumi unlimited in amount; (2) a subordination letter signed by the Company to Leumi Bank; (3) A first ranking all asset charge over all of the assets of the Company; and (4) a Deposit Account Control Agreement over the Company’s bank accounts. Gix Media has provided several liens under the Financing Agreement with Leumi in connection with the Cortex Transaction, as follows: (1) a floating lien on Gix Media’s assets; (2) a lien on Gix Media’s bank account in Leumi; (3) a lien on Gix Media’s rights under the Cortex Transaction; (4) a fixed lien on Gix Media’s intellectual property; and (5) a lien on Gix Media’s full holdings in Cortex. Gix Media restricted deposits in the amount of $ 32 as of March 31, 2025, are used as a security in respect of credit cards and its leased offices. Cortex has a restricted deposit in the amount of $ 27 as of March 31, 2025, is used as a security in respect of its leased offices. B. Filing of Insolvency Petition Against Gix Media: On March 27, 2025, a petition was filed with the District Court of Tel Aviv-Jaffa for a court order to commence insolvency proceedings under the Insolvency and Economic Rehabilitation Law, 5778 - 2018, against Gix Media (the “Petition”). The Petition was filed by a primary service provider (the “Service Provider”) alleging that Gix Media owes it approximately $ 260 (excluding linkage differentials and interest) and that Gix Media is unable to repay its debts to the Service Provider. The Petition requests, among other things, that the court appoints a trustee for Gix Media to implement insolvency proceedings, vest its assets for the sole purpose of paying past debts and expenses of the insolvency proceedings, and freeze all legal proceedings against Gix Media (see note 12.A). As a result of the filing of the Petition, Leumi may demand immediate repayment of Gix Media’s long-term bank loans under the Financing Agreement. As of the date of approval of these financial statements, the Company is unable to assess the likelihood of the Petition’s success or its potential impact on the Company’s business. - 24 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 10: SHAREHOLDERS’ EQUITY A. Shares of Common Stock: Shares of Common Stock confer the rights to: (i) participate in the general meetings, to one vote per share for any purpose, to an equal part, on a share basis, (ii) in distribution of dividends and (iii) to equally participate, on a share basis, in distribution of excess of assets and funds from the Company and will not confer other privileges. On June 18, 2024, as part of the June 2024 Facility Agreement, the Company issued to the June 2024 Lenders 233,679 shares of common stock and 233,679 warrants to purchase such number of shares of common stock with an exercise price of $ 1.00 per share. In addition, the Company issued to the June 2024 Lead Lender a warrant to purchase 625,000 shares of common stock with an exercise price of $ 4.00 per share, representing an aggregate exercise amount of $ 2.5 million (see note 7.E). On July 4, 2024, as part of the First July 2024 Facility Agreement, the Company issued to the First July 2024 Lender 425,000 shares of common stock and 550,000 warrants to purchase such number of shares of common stock with an exercise price of $ 1.00 per share (see note 7.F). On July 14, 2024 and July 25, 2024, the Company entered into consulting agreements with certain consultants (the “Consultants”) pursuant to which the Consultants agreed to provide certain services to the Company in connection with the Uplist (as defined in note 1.F). In consideration with the Consultants’ services, the Company issued to the Consultants 120,000 shares of common stock in July 2024. The Company recorded a share-based compensation expense of $ 57 in other expenses in connection with the issuance of shares to the Consultants. On July 28, 2024, as part of the Second July 2024 Facility Agreement, the Company issued to the lenders of the Second July 2024 Facility Agreement 510,000 shares of common stock and 360,000 warrants to purchase such number of shares of common stock with an exercise price of $ 4.00 per share (see note 7.G). On March 24, 2025, the Company entered into a securities exchange agreement with the shareholders of Metagramm, pursuant to which the Company issued to Metagramm’s shareholders 1,323,000 of the Company’s shares representing 19.99 % of its issued and outstanding share capital in exchange for 100 % of Metagramm’s issued and outstanding share capital (see note 10.E). B. Private Placement On July 3, 2024, the Company entered into a definitive securities purchase agreement with a certain investor (the “Lead Investor”) for the purchase and sale in a private placement (the “Private Placement”) of units consisting of (i) 256,875 shares of the Company’s common stock at a purchase price of $ 1.00 per share and (ii) 385,332 warrants to purchase 385,332 shares of the Company’s common stock (the “PIPE Warrants”) to the Lead Investor and other investors acceptable to the Lead Investor and the Company. The PIPE Warrants are exercisable upon issuance at an exercise price of $ 1.00 per share and have a three-year 3 term from the issuance date. In addition, the PIPE Warrants are subject to an automatic exercise provision in the event that the Company’s shares of common stock are approved for listing on the Nasdaq Capital Market. The aggregate gross proceeds received by the Company from the Private Placement were $ 257 , of which $ 237 received in June 2024 and the $ 20 remaining received in July 2024. Upon the closing of the Private Placement, the Company agreed to pay the Lead Investor: (1) $ 10 for actual and documented fees and expenses incurred and, (2) a commission consisting of (i) a cash fee of $ 13 and (ii) 12,844 shares of the Company’s common stock. In July 2024, the Company issued 269,719 shares of common stock and 385,332 warrants in connection with the Private Placement. The Company incurred share issuance costs of $ 65 ($ 59 in cash and $ 6 in shares of common stock) which were recognized as a reduction of additional paid-in capital. - 25 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 10: SHAREHOLDERS’ EQUITY (Cont.) C. Warrants: The following table summarizes information of outstanding warrants as of March 31, 2025: SCHEDULE OF OUTSTANDING WARRANTS Warrants Warrant Term Exercise Price Exercisable Class J Warrants 32,584 July 2029 53.76 32,584 Class K Warrants 32,584 July 2029 89.60 32,584 2023 Warrants (see note 7.D) 120,000 December 2025 2.00 120,000 June 2024 Facility Agreement Warrants (see note 7.E) 233,679 June 2027 1.00 233,679 June 2024 Lead Lender Fee Warrants (see note 7.E) 5,296,610 June 2027 0.472 5,296,610 First July 2024 Facility Warrants (see note 7.F) 550,000 July 2027 1.00 550,000 Second July 2024 Facility Warrants (see note 7.G) 360,000 July 2027 1.00 360,000 PIPE Warrants (see note 10.B) 385,332 July 2027 1.00 385,332 D. Reverse Stock Split: On July 15, 2024, the Company filed an amendment to its Amended COI to effect a 1-for-4 reverse stock split of the Company’s Common Stock (the “Reverse Stock Split”). The Reverse Stock Split became effective on March 14, 2025. As a result of the Reverse Stock Split, every 4 outstanding shares of the Company’s common stock were converted into 1 share of the Company’s common stock. The Reverse Stock Split did not change the par value of the Company’s common stock or the number of its authorized shares. Share and per share data in these financial statements have been retrospectively adjusted to reflect the Reverse Stock Split for all periods presented. E. Securities Exchange Agreement On July 31, 2024, the Company entered into the 2024 SEA with Metagramm pursuant to which the Company agreed to issue to Metagramm 9.99 % of its issued and outstanding share capital in exchange for 19.99 % of Metagramm’s issued and outstanding share capital. On March 24, 2025, the Company entered into the 2025 SEA with the shareholders of Metagramm which replaced and terminated the 2024 SEA. Pursuant to the 2025 SEA, the Company issued to the shareholders of Metagramm 1,323,000 of the Company’s shares representing 19.99 % of its issued and outstanding share capital in exchange for 100 % of Metagramm’s issued and outstanding share capital. In addition, the Company agreed to pay Metagramm’s shareholders cash earn-out payments on a pro rata basis of up to a cumulative sum of $ 2.0 million, contingent on achieving certain financing and revenue milestones within 3 years following the Closing Date (see note 6). - 26 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 10: SHAREHOLDERS’ EQUITY (Cont.) F. Share option plan : In 2017, after the completion of Gix Media’s acquisition by the Parent Company, the Parent Company granted options to Gix Media’s employees. These options entitle the employees to purchase ordinary shares of the Parent Company that are traded in the Tel-Aviv Stock Exchange. On March 2, 2023, the Board approved the adoption of the 2023 Stock Incentive Plan (the “2023 Plan”). The 2023 Plan permits the issuance of up to (i) 625,000 shares of Common Stock, plus (ii) an annual increase equal to the lesser of (A) 5 % of the Company’s outstanding capital stock on the last day of the immediately preceding calendar year; and (B) such smaller amount as determined by the Board, provided that no more than 625,000 shares of Common Stock may be issued upon the exercise of Incentive Stock Options. If any outstanding awards expire, are canceled or are forfeited, the underlying shares would be available for future grants under the 2023 Plan. As of the date of approval of the financial statements, the Company had reserved 625,000 shares of Common Stock for issuance under the 2023 Plan. The 2023 Plan provides for the grant of stock options, restricted stock, restricted stock units, stock or other stock-based awards, under various tax regimes, including, without limitation, in compliance with Section 102 and Section 3(i) of the Israeli Income Tax Ordinance (New Version) 5271-1961, and for awards granted to United States employees or service providers, including those who are deemed to be residents of the United States for tax purposes, Section 422 and Section 409A of the United States Internal Revenue Code of 1986. In connection with the adoption of the 2023 Plan, on March 7, 2023, the Company entered into certain intercompany reimbursement agreements with two of its subsidiaries, Viewbix Israel and Gix Media (the “Recharge Agreements”). The Recharge Agreements provide for the offer of awards under the 2023 Plan to employees or service providers of Viewbix Israel and Gix Media (the “Affiliates”) under the 2023 Plan. Under the Recharge Agreements, the Affiliates will each bear the costs of awards granted to its employees or its service providers under the 2023 Plan and will reimburse the Company upon the issuance of shares of Common Stock pursuant to an award, for the costs of shares issued, but in any event not prior to the vesting of an award. The reimbursement amount will be equal to the lower of (a) the book expense for such award as recorded on the financial statements of one of the respective Affiliates, determined and calculated according to U.S. GAAP, or any other financial reporting standard that may be applicable in the future, or (b) the fair value of the shares of Common Stock at the time of exercise of an option or at the time of vesting of an RSU, as applicable. On July 20, 2023, the Company granted 12,756 restricted share units (the “RSUs”) under the 2023 Plan to Gix Media’s CEO, as part of his employment terms, (the “Grantee”) under the following terms and conditions: (1) 12,756 of Common Stock underlying the grant of RSUs (2) Vesting Commencement Date: July 1, 2023 (3) vesting schedule: 50% of the RSUs vested immediately upon the Vesting Commencement Date (the “First Tranche”) and the remaining 50% of the RSUs vested 12 months after the Vesting Commencement Date (the “Second Tranche”), provided, in each case, that the Grantee remains continuously as a Service Provider (as defined under the 2023 Plan) of Gix Media or its affiliates throughout each such vesting date (the “Grant”). On July 1, 2023, upon the vesting of the First Tranche, the Company issued 6,378 shares of Common Stock to the Grantee. On July 1, 2024, upon the vesting of the Second Tranche, the Company issued 6,378 shares of Common Stock to the Grantee. - 27 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 11: SEGMENT REPORTING The Group operates in two different segments in such a way that each company in the Group operates as a separate business segment. These business segments currently do not include Metagramm operations as Metagramm Acquisition consummated on the end of March 2025. Search segment - the search segment develops a variety of technological software solutions, which perform automation, optimization and monetization of internet campaigns, for the purposes of obtaining and routing internet user traffic to its customers. Digital content segment - the digital content segment is engaged in the creation and editing of content, in different languages, for different target audiences, for the purposes of generating revenues from leading advertising platforms, including Google, Facebook, Yahoo and Apple, by utilizing such content to obtain internet user traffic for its customers. The segments’ results include items that directly serve and/or are used by the segment’s business activity and are directly allocated to the segment. As such they do not include depreciation and amortization expenses for intangible assets created at the time of the purchase of those companies and financing expenses incurred on loans taken for the purpose of purchasing those companies. Therefore, these items are not allocated to the various segments. The chief executive officer, who is the Company’s chief operating decision maker (“CODM”), assesses performance for these segments and decides how to allocate resources based the segments’ operating income or loss and income or loss before tax. Segments’ assets and liabilities are not reviewed by the CODM and therefore were not reflected in the segment reporting. The significant expense categories comprising segments profit and loss regularly reviewed by the CODM for the periods ended March 31, 2025 and 2024 are set forth in the tables below. The substantial amount of non-current assets is derived from Israel and the substantial amount of revenues is derived from United States. Segments revenues and operating results: SCHEDULE OF SEGMENTS REVENUES AND OPERATING RESULTS For the three months ended March 31, 2025 Search segment Digital content segment Adjustments and eliminations (See below) Total Revenues from external customers 529 2,204 - 2,733 Traffic-acquisition and related costs 134 2,189 - 2,323 Research and development expenses 16 131 - 147 Sales and marketing expenses 20 196 - 216 General and administrative expenses 75 56 122 253 Depreciation and amortization - - 719 719 Other expenses, net 44 44 Segment operating income (loss) 284 ( 368 ) ( 885 ) ( 969 ) Financial expenses, net ( 5 ) ( 36 ) ( 2,862 ) (*) ( 2,903 ) Segment income (loss), before income taxes 279 ( 404 ) ( 3,747 ) ( 3,872 ) - 28 - VIEWBIX INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. dollars in thousands (except share data) NOTE 11: SEGMENT REPORTING (Cont.) A. Segments revenues and operating results: (Cont.) For the three months ended March 31, 2024 Search segment Digital content segment Adjustments and eliminations (See below) Total Revenues from external customers 2,472 7,530 - 10,002 Traffic-acquisition and related costs 1,258 6,957 - 8,215 Research and development expenses 417 309 4 730 Sales and marketing expenses 153 505 - 658 General and administrative expenses 182 144 330 656 Depreciation and amortization - - 734 734 Other expenses, net - - 20 20 Segment operating income (loss) 462 ( 385 ) ( 1,088 ) ( 1,011 ) Financial income (expenses), net 1 ( 14 ) ( 150 ) (**) ( 163 ) Segment income (loss), before income taxes 463 ( 399 ) ( 1,238 ) ( 1,174 ) (*) Mainly consist of financial expenses arising from changes in the fair value of financial assets measured at fair value through profit or loss (see note 8). (**) Mainly consist of interest expenses on bank loans in connection with the Financing Agreement (see note 7.A, 7.B). The “adjustments and eliminations” column for segment operating income includes unallocated selling, general, and administrative expenses and certain items which management excludes from segment results when evaluating segment performance, as follows: SCHEDULE OF RECONCILIATION BETWEEN SEGMENTS OPERATING RESULTS For the three months ended March 31, 2025 For the three months ended March 31, 2024 Depreciation and amortization expenses not attributable to segments (***) $ ( 719 ) $ ( 734 ) Research and development expenses, sales and marketing expenses, general and administrative expenses and other expenses , net not attributable to the segments (****) $ ( 166 ) $ ( 354 ) ( 885 ) ( 1,088 ) (*) Mainly consist of financial expenses arising from changes in the fair value of financial assets measured at fair value through profit or loss (see note 8). (**) Mainly consist of interest expenses on bank loans in connection with the Financing Agreement (see note 7.A, 7.B). (***) Mainly consist of technology and customer relations amortization costs from business combinations. (****) Mainly consist of general and administrative expenses such as salary and related expenses and professional consulting expenses. NOTE 12: SUBSEQUENT EVENTS On May 8, 2025, a preliminary hearing was held regarding the Petition filed by the Service Provider. The district court instructed the parties to reach a mutual settlement and scheduled a follow-up hearing for May 22, 2025. - 29 -