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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission file number: 000-15746

VIEWBIX INC.

(Exact Name Of Registrant As Specified In Its Charter)

Delaware |  | 68-0080601
(State of |  | (I.R.S. Employer
Incorporation) |  | Identification Number)

11 Derech Menachem Begin Street, Ramat Gan, Israel |  | 5268104
(Address of Principal Executive Offices) |  | (Zip Code)

Registrant’s Telephone Number, Including Area Code: +972 9-774-1505

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
N/A |  | N/A |  | N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act) or a smaller reporting company.

Large accelerated filer | ☐ | Accelerated filer | ☐
Non-accelerated filer | ☒ | Smaller reporting company | ☒
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On November 14, 2023, the Registrant had 14,920,585 shares of common stock issued and outstanding.

VIEWBIX INC.

TABLE OF CONTENTS

Item |  | Description |  | Page
|  | PART I - FINANCIAL INFORMATION |  | 3
ITEM 1. |  | FINANCIAL STATEMENTS |  | 3
ITEM 2. |  | MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS |  | 23
ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |  | 30
ITEM 4. |  | CONTROLS AND PROCEDURES |  | 30
|  | PART II - OTHER INFORMATION |  | 31
ITEM 1. |  | LEGAL PROCEEDINGS |  | 31
ITEM 1A. |  | RISK FACTORS |  | 31
ITEM 2. |  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |  | 33
ITEM 3. |  | DEFAULT UPON SENIOR SECURITIES |  | 33
ITEM 4. |  | MINE SAFETY DISCLOSURE |  | 33
ITEM 5. |  | OTHER INFORMATION |  | 33
ITEM 6. |  | EXHIBITS |  | 33
|  | SIGNATURES |  | 34

-2-

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VIEWBIX INC.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2023

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) | 7-8
Interim Condensed Consolidated Statements of Cash Flows (unaudited) | 9-8
Notes to the Interim Condensed Consolidated Financial Statements (unaudited) | 11-22

-3-

VIEWBIX INC.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

U.S. dollars in thousands (except share data)

|  | Note |  |  | 2023 |  |  | 2022 |
|  |  |  |  | As of September 30 |  |  | As of December 31 |
|  | Note |  |  | 2023 |  |  | 2022 |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |
CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  |  |  |  |  | 2,550 |  |  |  | 4,196 |
Restricted deposits |  |  |  |  |  |  | 184 |  |  |  | 185 |
Accounts receivable |  |  |  |  |  |  | 11,493 |  |  |  | 20,945 |
Loan to parent company |  |  | 3 |  |  |  | 3,718 |  |  |  | 3,542 |
Other current assets |  |  |  |  |  |  | 807 |  |  |  | 973 |
Total current assets |  |  |  |  |  |  | 18,752 |  |  |  | 29,841 |
NON-CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Severance pay funds |  |  |  |  |  |  | - |  |  |  | 52 |
Deferred taxes |  |  |  |  |  |  | 192 |  |  |  | 340 |
Property and equipment, net |  |  |  |  |  |  | 257 |  |  |  | 302 |
Operating lease right-of-use asset |  |  | 4 |  |  |  | 419 |  |  |  | 486 |
Intangible assets, net |  |  | 5 |  |  |  | 13,169 |  |  |  | 15,313 |
Goodwill |  |  | 5 |  |  |  | 17,361 |  |  |  | 17,361 |
Total non-current assets |  |  |  |  |  |  | 31,398 |  |  |  | 33,854 |
Total assets |  |  |  |  |  |  | 50,150 |  |  |  | 63,695 |

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 September 30 |  |  | As of December 31 |
|  | Note |  |  | 2023 |  |  | 2022 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |
CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  |  |  |  |  |  | 11,742 |  |  |  | 19,782 |
Short-term loans |  |  | 6 |  |  |  | 6,000 |  |  |  | 5,069 |
Current maturities of long-term loans |  |  | 6 |  |  |  | 1,879 |  |  |  | 1,500 |
Other payables |  |  |  |  |  |  | 904 |  |  |  | 2,084 |
Operating lease liabilities - short term |  |  | 4 |  |  |  | 80 |  |  |  | 87 |
Total current liabilities |  |  |  |  |  |  | 20,605 |  |  |  | 28,522 |
NON-CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Accrued severance pay |  |  |  |  |  |  | - |  |  |  | 152 |
Long-term loans, net of current maturities |  |  | 6 |  |  |  | 2,663 |  |  |  | 2,881 |
Operating lease liabilities - long term |  |  | 4 |  |  |  | 306 |  |  |  | 388 |
Deferred taxes |  |  |  |  |  |  | 1,546 |  |  |  | 1,853 |
Total non-current liabilities |  |  |  |  |  |  | 4,515 |  |  |  | 5,274 |
Commitments and Contingencies |  |  | 7 |  |  |  | - |  |  |  | - |
SHAREHOLDERS’ EQUITY |  |  | 8 |  |  |  |  |  |  |  |  |
Common stock of $0.0001 par value - Authorized: 490,000,000 shares; Issued and outstanding: 14,920,585 and 14,783,964 shares as of September 30, 2023 and December 31, 2022, respectively. |  |  |  |  |  |  | 3 |  |  |  | 3 |
Additional paid-in capital |  |  |  |  |  |  | 25,457 |  |  |  | 25,350 |
Accumulated deficit |  |  |  |  |  |  | (5,369 | ) |  |  | (3,338 | )
Equity attributed to shareholders of Viewbix Inc. |  |  |  |  |  |  | 20,091 |  |  |  | 22,015 |
Non-controlling interests |  |  |  |  |  |  | 4,939 |  |  |  | 7,884 |
Total equity |  |  |  |  |  |  | 25,030 |  |  |  | 29,899 |
Total liabilities and shareholders’ equity |  |  |  |  |  |  | 50,150 |  |  |  | 63,695 |

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)

|  |  |  |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
|  | Note |  |  | For the nine months ended September 30, |  |  | For the three months ended September 30, |
|  |  |  |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Revenues |  |  |  |  |  |  | 63,731 |  |  |  | 66,115 |  |  |  | 15,715 |  |  |  | 22,778 |
Costs and Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Traffic-acquisition and related costs |  |  |  |  |  |  | 56,557 |  |  |  | 56,912 |  |  |  | 14,526 |  |  |  | 19,647 |
Research and development |  |  |  |  |  |  | 2,213 |  |  |  | 2,445 |  |  |  | 700 |  |  |  | 804 |
Selling and marketing |  |  |  |  |  |  | 2,118 |  |  |  | 1,853 |  |  |  | 680 |  |  |  | 628 |
General and administrative |  |  |  |  |  |  | 2,119 |  |  |  | 1,326 |  |  |  | 727 |  |  |  | 450 |
Depreciation and amortization |  |  |  |  |  |  | 2,202 |  |  |  | 2,051 |  |  |  | 734 |  |  |  | 736 |
Other expenses |  |  |  |  |  |  | - |  |  |  | 121 |  |  |  | - |  |  |  | 86 |
Operating income (loss) |  |  |  |  |  |  | (1,478 | ) |  |  | 1,407 |  |  |  | (1,652 | ) |  |  | 427 |
Financial expense, net |  |  |  |  |  |  | 691 |  |  |  | 1,374 |  |  |  | 260 |  |  |  | 301 |
Income (loss) before income taxes |  |  |  |  |  |  | (2,169 | ) |  |  | 33 |  |  |  | (1,912 | ) |  |  | 126 |
Income tax expense (benefit) |  |  |  |  |  |  | 40 |  |  |  | 63 |  |  |  | (131 | ) |  |  | 55 |
Net income (loss) |  |  |  |  |  |  | (2,209 | ) |  |  | (30 | ) |  |  | (1,781 | ) |  |  | 71 |
Less: net income (loss) attributable to non-controlling interests |  |  |  |  |  |  | (178 | ) |  |  | 647 |  |  |  | (271 | ) |  |  | 217 |
Net loss attributable to shareholders of Viewbix Inc. |  |  |  |  |  |  | (2,031 | ) |  |  | (677 | ) |  |  | (1,510 | ) |  |  | (146 | )
Net loss per share – Basic and diluted attributed to shareholders |  |  |  |  |  |  | (0.14 | ) |  |  | (0.05 | ) |  |  | (0.10 | ) |  |  | (0.01 | )
Weighted average number of shares – Basic and diluted |  |  |  |  |  |  | 14,847,913 |  |  |  | 14,783,964 | (*) |  |  | 14,920,585 |  |  |  | 14,783,964 | (*)

(*) | Share and per share data in these financial statements have been retrospectively adjusted to reflect a number of shares that is equivalent to the number of shares of the Company post the Reorganization Transaction (see note 1.B).

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, 2023 |  |  | 14,783,964 |  |  |  | 3 |  |  |  | 25,350 |  |  |  | (3,338 | ) |  |  | 22,015 |  |  |  | 7,884 |  |  |  | 29,899 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,031 | ) |  |  | (2,031 | ) |  |  | (178 | ) |  |  | (2,209 | )
Share-based compensation (see note 8.A) |  |  | 111,111 |  |  |  | -(* | ) |  |  | 82 |  |  |  | - |  |  |  | 82 |  |  |  | 11 |  |  |  | 93 |
Issuance of shares upon RSUs vesting (see note 8.D) |  |  | 25,510 |  |  |  | -(* | ) |  |  | 25 |  |  |  | - |  |  |  | 25 |  |  |  | - |  |  |  | 25 |
Transaction with non-controlling interests (see note 1.C) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,625 | ) |  |  | (2,625 | )
Dividend declared to non-controlling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (153 | ) |  |  | (153 | )
Balance as of September 30, 2023 |  |  | 14,920,585 |  |  |  | 3 |  |  |  | 25,457 |  |  |  | (5,369 | ) |  |  | 20,091 |  |  |  | 4,939 |  |  |  | 25,030 |

|  | 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 July 1, 2023 |  |  | 14,895,075 |  |  |  | 3 |  |  |  | 25,417 |  |  |  | (3,859 | ) |  |  | 21,561 |  |  |  | 5,207 |  |  |  | 26,768 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,510 | ) |  |  | (1,510 | ) |  |  | (271 | ) |  |  | (1,781 | )
Share-based compensation (see note 8.A) |  |  | - |  |  |  | - |  |  |  | 15 |  |  |  | - |  |  |  | 15 |  |  |  | 3 |  |  |  | 18 |
Issuance of shares upon RSUs vesting (see note 8.D) |  |  | 25,510 |  |  |  | -(* | ) |  |  | 25 |  |  |  | - |  |  |  | 25 |  |  |  | - |  |  |  | 25 |
Balance as of September 30, 2023 |  |  | 14,920,585 |  |  |  | 3 |  |  |  | 25,457 |  |  |  | (5,369 | ) |  |  | 20,091 |  |  |  | 4,939 |  |  |  | 25,030 |

(*) | 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 CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

U.S. dollars in thousands (except share data)

|  | 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, 2022 |  |  | 14,783,964 |  |  |  | 3 |  |  |  | 16,074 |  |  |  | (2,366 | ) |  |  | 13,711 |  |  |  | 4,806 |  |  |  | 18,517 |
Net income (loss) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (677 | ) |  |  | (677 | ) |  |  | 647 |  |  |  | (30 | )
Share-based compensation |  |  | - |  |  |  | - |  |  |  | 28 |  |  |  | - |  |  |  | 28 |  |  |  | 12 |  |  |  | 40 |
Adjustment to ultimate parent’s carrying values |  |  | - |  |  |  | - |  |  |  | 9,227 |  |  |  | - |  |  |  | 9,227 |  |  |  | 4,101 |  |  |  | 13,328 |
Dividend distributed to shareholders |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,000 | ) |  |  | (1,000 | ) |  |  | - |  |  |  | (1,000 | )
Dividend declared to non-controlling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,195 | ) |  |  | (1,195 | )
Balance as of September 30, 2022 |  |  | 14,783,964 |  |  |  | 3 |  |  |  | 25,329 |  |  |  | (4,043 | ) |  |  | 21,289 |  |  |  | 8,371 |  |  |  | 29,660 |

|  | 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 July 1, 2022 |  |  | 14,783,964 |  |  |  | 3 |  |  |  | 25,306 |  |  |  | (2,897 | ) |  |  | 22,412 |  |  |  | 8,598 |  |  |  | 31,010 |
Balance |  |  | 14,783,964 |  |  |  | 3 |  |  |  | 25,306 |  |  |  | (2,897 | ) |  |  | 22,412 |  |  |  | 8,598 |  |  |  | 31,010 |
Net income (loss) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (146 | ) |  |  | (146 | ) |  |  | 217 |  |  |  | 71 |
Share-based compensation |  |  | - |  |  |  | - |  |  |  | 23 |  |  |  | - |  |  |  | 23 |  |  |  | 9 |  |  |  | 32 |
Dividend distributed to shareholders |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,000 | ) |  |  | (1,000 | ) |  |  | - |  |  |  | (1,000 | )
Dividend distributed to non-controlling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (453 | ) |  |  | (453 | )
Balance as of September 30, 2022 |  |  | 14,783,964 |  |  |  | 3 |  |  |  | 25,329 |  |  |  | (4,043 | ) |  |  | 21,289 |  |  |  | 8,371 |  |  |  | 29,660 |
Balance |  |  | 14,783,964 |  |  |  | 3 |  |  |  | 25,329 |  |  |  | (4,043 | ) |  |  | 21,289 |  |  |  | 8,371 |  |  |  | 29,660 |

(*) | Share and per share data in these financial statements have been retrospectively adjusted to reflect a number of shares that is equivalent to the number of shares of the Company post the Reorganization Transaction (see note 1.B).

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)

U.S. dollars in thousands (except share data)

|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
|  | For the nine months ended September 30, |  |  | For the three months ended September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Cash flows from Operating Activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) |  |  | (2,209 | ) |  |  | (30 | ) |  |  | (1,781 | ) |  |  | 71 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 2,202 |  |  |  | 2,051 |  |  |  | 734 |  |  |  | 736 |
Share-based compensation |  |  | 118 |  |  |  | 40 |  |  |  | 43 |  |  |  | 32 |
Deferred taxes |  |  | (159 | ) |  |  | (219 | ) |  |  | (67 | ) |  |  | (96 | )
Accrued interest, net |  |  | (13 | ) |  |  | 60 |  |  |  | (7 | ) |  |  | 28 |
Interest income |  |  | (64 | ) |  |  | (110 | ) |  |  | (21 | ) |  |  | (39 | )
Exchange rate differences on loans |  |  | - |  |  |  | 1,033 |  |  |  | - |  |  |  | 72 |
Changes in assets and liabilities items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Decrease in accounts receivable |  |  | 9,452 |  |  |  | 17 |  |  |  | 6,922 |  |  |  | 20 |
Decrease (increase) in other receivables |  |  | 166 |  |  |  | 190 |  |  |  | (114 | ) |  |  | 378 |
Decrease in operating lease right-of-use assets |  |  | 67 |  |  |  | 64 |  |  |  | 23 |  |  |  | 22 |
Decrease in severance pay, net |  |  | (100 | ) |  |  | (2 | ) |  |  | - |  |  |  | (1 | )
Increase (decrease) in accounts payable |  |  | (8,040 | ) |  |  | (532 | ) |  |  | (5,603 | ) |  |  | 535 |
Decrease in other payables |  |  | (592 | ) |  |  | (525 | ) |  |  | (374 | ) |  |  | (228 | )
Decrease in operating lease liabilities |  |  | (89 | ) |  |  | (56 | ) |  |  | (31 | ) |  |  | (19 | )
Increase in loan from parent company |  |  | - |  |  |  | 194 |  |  |  | - |  |  |  | 66 |
Net cash provided by (used in) operating activities |  |  | 739 |  |  |  | 2,175 |  |  |  | (276 | ) |  |  | 1,577 |

The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements.

-9-

VIEWBIX INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Cont.)

U.S. dollars in thousands (except share data)

|  | For the nine months ended September 30, |  |  | For the three months ended September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Cash flows from Investing Activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchase of property and equipment |  |  | (13 | ) |  |  | (52 | ) |  |  | (3 | ) |  |  | (7 | )
Capitalization of software development costs |  |  | - |  |  |  | (16 | ) |  |  | - |  |  |  | - |
Net cash used in investing activities |  |  | (13 | ) |  |  | (68 | ) |  |  | (3 | ) |  |  | (7 | )
Cash flows from Financing Activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash paid to non-controlling interests (see note 1.C) |  |  | (2,625 | ) |  |  | - |  |  |  | - |  |  |  | - |
Receipt of short-term bank loan |  |  | 1,200 |  |  |  | 1,000 |  |  |  | - |  |  |  | - |
Repayment of short-term loans |  |  | (269 | ) |  |  | (1,000 | ) |  |  | - |  |  |  | (1,000 | )
Receipt of long-term bank loan |  |  | 1,500 |  |  |  | - |  |  |  | - |  |  |  | - |
Repayment of long-term loan |  |  | (1,339 | ) |  |  | (1,060 | ) |  |  | (465 | ) |  |  | (358 | )
Payment of dividend to non-controlling interests |  |  | (598 | ) |  |  | (1,195 | ) |  |  | - |  |  |  | (453 | )
Payment of dividend to shareholders (see note 8.E.1) |  |  | (130 | ) |  |  | - |  |  |  | - |  |  |  | - |
Increase in loan to parent company |  |  | (112 | ) |  |  | (1,462 | ) |  |  | (8 | ) |  |  | (606 | )
Net cash used in financing activities |  |  | (2,373 | ) |  |  | (3,717 | ) |  |  | (473 | ) |  |  | (2,417 | )
Decrease in cash and cash equivalents and restricted cash |  |  | (1,647 | ) |  |  | (1,610 | ) |  |  | (752 | ) |  |  | (847 | )
Cash and cash equivalents and restricted cash at beginning of period |  |  | 4,381 |  |  |  | 5,442 |  |  |  | 3,486 |  |  |  | 4,679 |
Cash and cash equivalents and restricted cash at end of period |  |  | 2,734 |  |  |  | 3,832 |  |  |  | 2,734 |  |  |  | 3,832 |
Supplemental Disclosure of Cash Flow Activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash paid during the period |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Taxes paid |  |  | 575 |  |  |  | 551 |  |  |  | 63 |  |  |  | 135 |
Interest paid |  |  | 696 |  |  |  | 391 |  |  |  | 252 |  |  |  | 164 |
Total Cash paid during the period |  |  | 1,271 |  |  |  | 942 |  |  |  | 315 |  |  |  | 299 |
Substantial non-cash activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dividend declared |  |  | - |  |  |  | 1,000 |  |  |  | - |  |  |  | 1,000 |

The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements.

-10-

VIEWBIX INC.

NOTES TO INTERIM 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 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 subsidiarity, 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, hold approximately 97% of the Company’s Common Stock, and Gix Media became a wholly owned subsidiary of the Company.

-11-

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.)

As the Company and Gix Media Ltd. were consolidated both by the Parent Company and 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 Ltd. is presented in these financial statements, for all periods presented, reflecting the historical cost of the Company and Gix Media Ltd., 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.

Share and per share data in these financial statements have been retrospectively adjusted, for the nine and three months ended September 30, 2022, to reflect a number of shares that is equivalent to the number of shares of the Company post the Reorganization Transaction.

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, including Google, Facebook, Yahoo and Apple, by utilizing such content to obtain and route internet user traffic for its customers. The digital content segment activity is conducted by Cortex.

As of December 31, 2022, Gix Media held 70% of Cortex’s share capital.

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.

The Subsequent Purchase was recorded as a transaction with non-controlling interests in the Company’s statement of changes in shareholders equity for the nine month period ended September 30, 2023.

D. Reverse Stock Split

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. Share and per share data in these financial statements have been retrospectively adjusted to reflect the reverse stock split for the nine and three months ended September 30, 2022.

E. Going Concern

As a result of the decrease in user traffic during the three month period ending September 30, 2023, and the impact of the ongoing ‘Iron Swords’ war in Israel, which commenced subsequent to the balance sheet date (see note 10), the Company’s operations were adversely affected. While management expects the Company to continue to generate positive cash flows from its operations, such a decline may reasonably result in the Company’s inability to repay its debt obligations during the 12 month period following the issuance date of these financial statements. These prevailing conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in light of these uncertainties include negotiating the terms of its debt instrument with Bank Leumi (see note 6) or issuing additional equity or debt instruments in order to raise capital. However, there can be no assurance that such financing alternatives will consummate or will be available on terms acceptable to the Company.

These interim 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.

-12-

VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 2: SUMMARY OF 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, 2022.

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. 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.

E. 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 condensed consolidated financial statements.

-13-

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 FROM TO PARENT COMPANY

|  | As of September 30 2023 |  |  | As of December 31 2022 |
Loan to Parent Company |  | $ | 3,718 |  |  | $ | 3,542 |

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 November 20, 2022, the Company, Gix Media and the Parent Company agreed to restructure loan agreements between the parties (see note 15 in the 2022 annual financial statements) such that the Company fully repaid the loan to the Parent Company by offsetting its amount from the loan owed by the Parent Company to Gix Media. As a result, as of September 30, 2023, and December 31, 2022, the Company has no further obligations under the loan agreement with the Parent Company.

For the nine months ended September 30, 2023, and the year ended 2022, Gix Media recognized interest income in the amount of $64 and $143, 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 is for 36 months (the “initial lease period”) with an option by the Company to extend 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 includes renewal options that it is reasonably certain to exercise in the measurement of the lease liabilities.

Weighted-average remaining lease term and discount rate were as follows:

SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERMS AND DISCOUNT RATES

|  | As of September 30 2023 |
Operating leases weighted average remaining lease term (in years) |  |  | 4.42 |
Operating leases weighted average discount rate |  |  | 3.10 | %

|  | As of December 31 2022 |
Operating leases weighted average remaining lease term (in years) |  |  | 5.17 |
Operating leases weighted average discount rate |  |  | 3.10 | %

Operating lease expenses amounted to $82 and $31 for the nine and three months ended September 30, 2023, respectively. Operating lease expenses amounted to $77 and $26 for the nine and three months ended September 30, 2022, respectively.

-14-

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

Composition:

SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS

|  | Internal-use Software (*) |  |  | Customer Relations |  |  | Technology |  |  | Goodwill |  |  | Total |
Cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2023 |  |  | 465 |  |  |  | 6,234 |  |  |  | 11,008 |  |  |  | 17,361 |  |  |  | 35,068 |
Adjustments to Ultimate Parent company carrying values (see note 1.B) |  |  | - |  |  |  | (1,519 | ) |  |  | 3,251 |  |  |  | 4,878 |  |  |  | 6,610 |
Additions |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Balance as of September 30, 2023 |  |  | 465 |  |  |  | 6,234 |  |  |  | 11,008 |  |  |  | 17,361 |  |  |  | 35,068 |
Accumulated amortization: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2023 |  |  | 122 |  |  |  | 741 |  |  |  | 1,531 |  |  |  | - |  |  |  | 2,394 |
Adjustments to Ultimate Parent company carrying values (see note 1.B) |  |  | - |  |  |  | (4,457 | ) |  |  | (3,413 | ) |  |  | - |  |  |  | (7,870 | )
Amortization recognized during the period |  |  | 102 |  |  |  | 667 |  |  |  | 1,375 |  |  |  | - |  |  |  | 2,144 |
Balance as of September 30, 2023 |  |  | 224 |  |  |  | 1,408 |  |  |  | 2,906 |  |  |  | - |  |  |  | 4,538 |
Amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of September 30, 2023 |  |  | 241 |  |  |  | 4,826 |  |  |  | 8,102 |  |  |  | 17,361 |  |  |  | 30,530 |

|  | Internal-use Software (*) |  |  | Customer Relations |  |  | Technology |  |  | Goodwill |  |  | Total |
Cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2022 |  |  | 449 |  |  |  | 7,753 |  |  |  | 7,757 |  |  |  | 12,483 |  |  |  | 28,442 |
Beginning balance |  |  | 449 |  |  |  | 7,753 |  |  |  | 7,757 |  |  |  | 12,483 |  |  |  | 28,442 |
Adjustments to Ultimate Parent company carrying values (see note 1.B) |  |  | - |  |  |  | (1,519 | ) |  |  | 3,251 |  |  |  | 4,878 |  |  |  | 6,610 |
Additions |  |  | 16 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 16 |
Balance as of December 31, 2022 |  |  | 465 |  |  |  | 6,234 |  |  |  | 11,008 |  |  |  | 17,361 |  |  |  | 35,068 |
Ending balance |  |  | 465 |  |  |  | 6,234 |  |  |  | 11,008 |  |  |  | 17,361 |  |  |  | 35,068 |
Accumulated amortization: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2022 |  |  | - |  |  |  | 4,261 |  |  |  | 3,284 |  |  |  | - |  |  |  | 7,545 |
Beginning balance |  |  | - |  |  |  | 4,261 |  |  |  | 3,284 |  |  |  | - |  |  |  | 7,545 |
Adjustments to Ultimate Parent company carrying values (see note 1.B) |  |  | - |  |  |  | (4,457 | ) |  |  | (3,413 | ) |  |  | - |  |  |  | (7,870 | )
Amortization recognized during the year |  |  | 122 |  |  |  | 937 |  |  |  | 1,660 |  |  |  | - |  |  |  | 2,719 |
Balance as of December 31, 2022 |  |  | 122 |  |  |  | 741 |  |  |  | 1,531 |  |  |  | - |  |  |  | 2,394 |
Ending balance |  |  | 122 |  |  |  | 741 |  |  |  | 1,531 |  |  |  | - |  |  |  | 2,394 |
Amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of December 31, 2022 |  |  | 343 |  |  |  | 5,493 |  |  |  | 9,477 |  |  |  | 17,361 |  |  |  | 32,674 |

| (*) | During 2020, Gix Media engaged with a subcontractor for the development of an internal-use software (the “Software”). Gix Media capitalized its developments costs until March 1, 2022 and from this date the Software became available for use. Accordingly, Gix Media recognized amortization expenses over the estimated useful life of the Software determined to be three years. For the nine months ended September 30, 2023, and the period from March 1, 2022, until December 31, 2022, Gix Media recorded amortization expenses of $102 and $122, respectively.

-15-

VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 6: LOANS

A. Bank Financing for Cortex’s capital shares additional Purchase:

On January 23, 2023, Gix Media acquired an additional 10% of Cortex’s capital shares (see note 1.C) which 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 to be repaid in 42 monthly payments at an annual interest rate of SOFR + 5.37%.

B. Cortex’s Loan Agreement:

On September 21, 2022, Cortex and Bank Leumi Le Israel Ltd (“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% (Overnight Financing Rate Secured, guaranteed daily interest as determined in accordance with the Federal Bank in New York).

On April 27, 2023, Leumi increased the Cortex Credit Line by $1,000, which was fully withdrawn by Cortex as of September 30, 2023.

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 (from October 2024), bear an annual interest of SOFR + 4.08%.

As of September 30, 2023, the Cortex Credit Line of $2,500 was fully withdrawn by Cortex.

C. 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 THE BALANCE OF THE GROUP’S LOANS

|  | Interest rate (*) |  |  | As of September 30, 2023 |  |  | As of December 31, 2022 |
Short-term loan – the Company |  |  | 8 | % |  |  | - |  |  |  | 69 |
Short-term bank loan – Gix Media |  |  | LIBOR + 3.20 | % |  |  | 3,500 |  |  |  | 3,500 |
Short-term bank loan – Cortex |  |  | SOFR + 3.52 | % |  |  | 2,500 |  |  |  | 1,500 |
Short-term bank loan |  |  | SOFR + 3.52 | % |  |  | 2,500 |  |  |  | 1,500 |
Long-term bank loan, including current maturity – Gix Media (received on October 13, 2021) |  |  | LIBOR + 4.12 | % |  |  | 3,328 |  |  |  | 4,381 |
Long-term bank loan, including current maturity – Gix Media (received on January 17, 2023) |  |  | SOFR + 5.37 | % |  |  | 1,214 |  |  |  | - |
Long-term bank loan |  |  | SOFR + 5.37 | % |  |  | 1,214 |  |  |  | - |
Total loans |  |  |  |  |  |  | 10,542 |  |  |  | 9,450 |

(*) | The LIBOR interest rate was published until end of June 2023 and from July 2023 was replaced by the Secured Overnight Financing Rate (“SOFR”).

-16-

VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 6: LOANS (Cont.)

D. Short term loan:

On December 18, 2020, the Company entered into a loan agreement and Stock Subscription Agreement with certain Investors, pursuant to which the Investors lent an aggregate amount of $69 at an annual interest rate of 8% (the “Loan”). In January 2023, the Company reached an agreement with the investors that the Loan received will be repaid in 3 equal monthly payments. In April 2023, the Loan was fully repaid by the Company.

NOTE 7: COMMITMENTS AND CONTINGENCIES

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 Leumi of all of Gix Media’s obligations and undertakings to Leumi unlimited in amount; (2) a subordination letter signed by the Company to Leumi; (3) A first ranking all asset charge over all of the assets of the Company; and (4) a Deposit Account Control Agreement over the Company’s bank accounts.

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.

NOTE 8: 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 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 will not confer other privileges.

On May 18, 2023, the Company’s Board of Directors (the “Board”) approved to issue and grant 111,111 shares of restricted Common Stock (“Equity Grant”) to one of the Company’s directors (the “Director”). The Equity Grant was granted for consulting services provided to the Company by the Director, specifically in connection with securing favorable terms for a bank financing. The Company recorded a share-based compensation expense of $34 in general and administrative expenses with connection to the Equity Grant.

B. Warrants:

The following table summarizes information of outstanding warrants as of September 30, 2023 and December 31, 2022:

SUMMARY OF OUTSTANDING WARRANTS

|  | Warrants |  |  | Warrant Term |  | Exercise Price |  |  | Exercisable |
Class J Warrants |  |  | 130,333 |  |  | July 2029 |  |  | 13.44 |  |  |  | 130,333 |
Class K Warrants |  |  | 130,333 |  |  | July 2029 |  |  | 22.40 |  |  |  | 130,333 |

-17-

VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 8: SHAREHOLDERS’ EQUITY (Cont.)

C. Reverse Stock Split:

On August 31, 2022, the Company filed the Amended COI with the Secretary of State of Delaware to affect a 28 to 1 reverse stock split of the Company’s outstanding shares of Common Stock. All share and per share data in these financial statements have been retrospectively adjusted for the nine and three months ended September 30, 2022, to reflect the reverse stock split.

D. 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 on 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) 2,500,000 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 2,500,000 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 2,500,000 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 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 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 shall 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 51,020 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) 51,020 of Common Stock underlying the grant of RSUs (2) Vesting Commencement Date: July 1, 2023 (3) vesting schedule: 50% of the RSUs will vest immediately upon the Vesting

-18-

VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 8: SHAREHOLDERS’ EQUITY (Cont.)

D. Share option plan (Cont.)

Commencement Date (the “First Tranche”) and the remaining 50% of the RSUs will vest 12 months after the Vesting Commencement Date, 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”).

In July 2023, following the Grant and upon the vesting of the First Tranche, the Company issued 25,510 shares of Common Stock to the Grantee. The Company recorded a share-based compensation expense of $25 in general and administrative expenses with connection to the issuance of shares upon the vesting of the First Tranche.

E. Dividends:

| 1. | On September 14, 2022, Gix Media declared a dividend to its shareholders prior to the consummation of the Reorganization Transaction in the amount of $1,000, of which an amount of $83 was paid as tax to the Israeli Tax Authority. During 2022 Gix Media distributed an amount of $787 out of the remaining amount of $917, which an amount of $714 that was distributed to the Parent Company, was offset from the loan to Parent Company (see also note 3). The remaining amount of $130 was distributed by Gix Media in January 2023.
| 2. | On December 25, 2022, Cortex declared a dividend in the total amount of $445 to the non-controlling interests. The amount was distributed by Cortex to non-controlling interests in two payments of $219 and $226 in February and March 2023, respectively.
| 3. | On June 29, 2023, Cortex declared and distributed a dividend in the total amount of $153 to the non-controlling interests.

-19-

VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 9: 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.

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, financing expenses created for loans taken for the purpose of purchasing those companies, and therefore these items are not allocated to the various segments.

Segments’ assets and liabilities are not reviewed by the Group’s chief operating decision maker and therefore were not reflected in the segment reporting.

Segments revenues and operating results:

SCHEDULE OF SEGMENTS REVENUES AND OPERATING RESULTS

|  | Search segment |  |  | Digital content segment |  |  | Adjustments (See below) |  |  | Total |
|  | For the nine months ended September 30, 2023 |
|  | Search segment |  |  | Digital content segment |  |  | Adjustments (See below) |  |  | Total |
Revenues from external customers |  |  | 16,593 |  |  |  | 47,138 |  |  |  | - |  |  |  | 63,731 |
Depreciation and amortization |  |  | - |  |  |  | - |  |  |  | 2,202 |  |  |  | 2,202 |
Segment operating income (loss) |  |  | 1,053 |  |  |  | 796 |  |  |  | (3,327 | ) |  |  | (1,478 | )
Financial expenses, net |  |  | (89 | ) |  |  | (159 | ) |  |  | (*) (443 | ) |  |  | (691 | )
Segment income (loss), before income taxes |  |  | 964 |  |  |  | 637 |  |  |  | (3,770 | ) |  |  | (2,169 | )

|  | Search segment |  |  | Digital content segment |  |  | Adjustments (See below) |  |  | Total |
|  | For the nine months ended September 30, 2022 |
|  | Search segment |  |  | Digital content segment |  |  | Adjustments (See below) |  |  | Total |
Revenues from external customers |  |  | 17,600 |  |  |  | 48,515 |  |  |  | - |  |  |  | 66,115 |
Depreciation and amortization |  |  | - |  |  |  | - |  |  |  | 2,051 |  |  |  | 2,051 |
Segment operating income |  |  | 316 |  |  |  | 3,586 |  |  |  | (2,495 | ) |  |  | 1,407 |
Financial expenses, net |  |  | (99 | ) |  |  | (1 | ) |  |  | (*) (1,274 | ) |  |  | (1,374 | )
Segment Income (loss), before income taxes |  |  | 217 |  |  |  | 3,585 |  |  |  | (3,769 | ) |  |  | 33 |

-20-

VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 9: SEGMENT REPORTING (Cont.)

|  | Search segment |  |  | Digital content segment |  |  | Adjustments (See below) |  |  | Total |
|  | For the three months ended September 30, 2023 |
|  | Search segment |  |  | Digital content segment |  |  | Adjustments (See below) |  |  | Total |
Revenues from external customers |  |  | 5,641 |  |  |  | 10,074 |  |  |  | - |  |  |  | 15,715 |
Depreciation and amortization |  |  | - |  |  |  | - |  |  |  | 734 |  |  |  | 734 |
Segment operating income (loss) |  |  | 287 |  |  |  | (868 | ) |  |  | (1,071 | ) |  |  | (1,652 | )
Financial expenses, net |  |  | (8 | ) |  |  | (113 | ) |  |  | (*) (139 | ) |  |  | (260 | )
Segment Income (loss), before income taxes |  |  | 279 |  |  |  | (981 | ) |  |  | (1,210 | ) |  |  | (1,912 | )

|  | Search segment |  |  | Digital content segment |  |  | Adjustments (See below) |  |  | Total |
|  | For the three months ended September 30, 2022 |
|  | Search segment |  |  | Digital content segment |  |  | Adjustments (See below) |  |  | Total |
Revenues from external customers |  |  | 5,702 |  |  |  | 17,076 |  |  |  | - |  |  |  | 22,778 |
Depreciation and amortization |  |  | - |  |  |  | - |  |  |  | 736 |  |  |  | 736 |
Segment operating income (loss) |  |  | 147 |  |  |  | 1,265 |  |  |  | (985 | ) |  |  | 427 |
Financial expenses, net |  |  | (32 | ) |  |  | (27 | ) |  |  | (*) (242 | ) |  |  | (301 | )
Segment Income (loss), before income taxes |  |  | 115 |  |  |  | 1,238 |  |  |  | (1,227 | ) |  |  | 126 |

| (*) | Mainly consist of financial expenses from the Financing Agreement of bank loans taken for business combinations (see note 6).

-21-

VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 9: SEGMENT REPORTING (Cont.)

The “adjustment” 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 nine months ended September 30, 2023 |  |  | For the three months ended September 30, 2023 |
Depreciation and amortization expenses not attributable to segments (**) |  |  | (2,202 | ) |  |  | (734 | )
General and administrative not attributable to the segments (***) |  |  | (1,125 | ) |  |  | (337 | )
|  |  | (3,327 | ) |  |  | (1,071 | )

|  | For the nine months ended September 30, 2022 |  |  | For the three months ended September 30, 2022 |
Depreciation and amortization expenses not attributable to segments (**) |  |  | (2,051 | ) |  |  | (736 | )
General and administrative not attributable to the segments (***) |  |  | (444 | ) |  |  | (249 | )
|  |  | (2,495 | ) |  |  | (985 | )

| (**) | Mainly consist of technology and customer relations amortization costs from business combinations.
| (***) | Mainly consist of salary and related expenses and professional consulting expenses.

NOTE 10: SUBSEQUENT EVENTS

| 1. | On October 7, 2023, subsequent to the reporting period, the State of Israel suffered a surprise attack, which led to the declaration of the ‘Iron Swords’ War (the “War”). The War is on-going as of the issuance date of these financial statements. Consequently, the Company’s operations were disrupted due to the recruitment of some of the Company’s employees, including Gix Media’s CEO, to the army reserves.

Based on its assessment, the Company expects a negative effect on its results of operations in the fourth quarter of 2023 due to the War, which its extent cannot be estimated at this stage.

| 2. | On October 10, 2023, Gix Media and Leumi entered into an addendum to an existing loan agreement between the parties, dated October 13, 2021. As part of the addendum to the loan agreement, 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%.

-22-

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking Statements

The following management’s discussion and analysis section should be read in conjunction with the Company’s unaudited financial statements as of September 30, 2023 and 2022, and the related statements of statement operation, statement of changes in shareholders’ equity and statements of cash flows for the nine and three months then ended, and the related notes thereto contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”).

Forward-Looking Statements

This management discussion and analysis section contains forward-looking statements, such as statements of the Company’s plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions “will,” “may,” “could,” “should,” etc., or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

● | the continued demand of digital advertising as an integral part of corporate marketing and internal communications plans and the continued growth and acceptance of digital advertising as effective alternatives to traditional offline marketing products and service;
● | our ability to generate enough cash flow to meet our debt obligations or fund our other liquidity needs, and substantial doubt regarding our ability to continue as a going concern;
● | our need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult to obtain and could dilute out shareholders’ ownership interests;
● | our ability to adequately protect our intellectual property;
● | our ability to successfully integrate the business of Gix Media Ltd. (“Gix Media”), our wholly owned subsidiary, and Cortex Media Group Ltd. (“Cortex”), our majority owned subsidiary;
● | our subsidiaries’ future performance;
● | entry of new competitors and products, the impact of large and established internet and technology companies and potential technological obsolescence of our offered platforms; and
● | political, economic and military conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and elsewhere in the region and Israel’s war against them, as well as the war’s potential impact on our business and operations.

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with which may cause our actual results to differ from those anticipated in our forward-looking statements. For a discussion of these and other risks that relate to our business and investing in our common stock, you should carefully review the risks and uncertainties described in this Quarterly Report on Form 10-Q, and those contained in section captioned “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on March 24, 2023 (the “Annual Report”). The Company’s actual results could differ materially from those contemplated in these forward-looking statements as a result of these factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.

-23-

Overview and Background

Viewbix Inc. (the “Registrant”, “Viewbix” or the “Company”) is a digital advertising platform that develops and markets a variety of technological platforms that automate, optimize and monetize digital online campaigns. Viewbix’s operations were previously focused on analysis of the video marketing performance of its clients as well as the effectiveness of their messaging (“Video Advertising Platform”). With the Video Advertising Platform, Viewbix allowed its clients with digital video properties the ability to use its platforms in a way that allows viewers to engage and interact with the video. The Video Advertising Platform measures when a viewer performs a specific action while watching a video and collects and reports the results to the client. However, due to the Company’s failure to meet predetermined sales targets which were set pursuant to the recapitalization transaction with Gix Internet Ltd., in January 2020, the Company determined to reduce its operations and the size of its sales and R&D team in the Digital Advertising Platform.

The Company, through its subsidiaries Gix Media and Cortex, expanded its digital advertising operations across two additional main sectors: ad search and digital content (the “Search Platform” and the “Content Platform”, respectively”). Gix Media and Cortex develop and market a variety of technological software solutions that automate, optimize and monetize online campaigns. Cortex also creates, edits and markets content in various languages to different target audiences in order to generate revenues from advertisements displayed together with the content, which are posted on digital content, marketing and advertising platforms. These technological tools enable advertisers and website owners to earn more from their advertising campaigns and generate additional profits from their sites.

Through its Search Platform, the Company provides services to leading search engines worldwide (“Search Engines”) by developing, marketing and distributing software products to internet users. The operations and activity on this platform are powered by Gix Media.

Through the Content Platform, the Company provides editing and marketing services of content in different languages and to different target audiences with the goal of generating revenues from advertising employed in such content, which is based on digital content marketing and advertising platforms. The operations and activity on this platform are powered by Cortex.

Search Platform

Gix Media’s Search Platform allows for the referral of user traffic (i.e., searches that are performed by internet users) to Search Engines, such as Yahoo and Bing, where the Search Engines display the ads of their customers. The Search Engines pay Gix Media for the searches that were referred by it, based on the amount of consideration that the Search Engine receives from the advertisers for the user traffic generated, less a certain percentage from the revenues attributed to the Search Engine. Since the customers of Gix Media are the Search Engines, and not the advertisers, Gix Media recognizes revenues for the actual amount received from the Search Engines, and not from the advertisement revenue itself.

The referral of user traffic by Gix Media to the Search Engines is possible after users download Gix Media’s products, which are browser add-ons, usually from the browser stores (mostly Google Chrome browsers) and by downloading desktop software products, free of charge, for the Apple operating system (for Mac computers) and for the Microsoft operating system (for PC computers). When downloading Gix Media’s products, the users grant permission to Gix Media to refer the searches performed while using Gix Media’s products to the Search Engines.

In addition, Gix Media provides user traffic referral services to Search Engines through the referral of traffic of browsers who engage content generated by Gix Media. This content is displayed on ad spaces that are purchased by the Company by content recommendation companies (such as Yahoo!, Outbrain, Taboola and Gemini). When occasional users click on such content, Gix Media transfers user traffic to a Search Engine which contains search words that are related to the advertising content.

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Content Platform

Cortex’s Content Platform produces engaging content and marketing material in various languages to various target audiences, in order to generate revenues from advertisements displayed together with the content, which are posted on digital content, marketing and advertising platforms. Cortex acts as a digital content platform that publishes content written by creative writers and editors which it employs. The content is displayed on several different content websites owned by Cortex, covering various subjects including culture, history, trips, pets, entertainment and leisure, food, etc. (the “Cortex Websites”). Cortex developed capabilities that enable it and its customers to profit from the original content which it publishes by advertising the content on leading international third-party websites and online ad platforms (the “Third Party Platforms”). Readers are exposed to the articles on the Third-Party Platforms and may choose to read them by clicking an ad, after which readers are directed automatically to the Cortex Websites where the content is posted.

The technological tools developed by Cortex allow businesses in the digital advertising market (search engines, ad exchanges, advertisers, content owners and brand owners) to earn more from their advertising campaigns and generate additional profit from their websites, both from its content and from its advertising.

Advertisers display ads on various platforms for potential customers (internet users and readers). In order to help maximize the effectiveness of advertising, Cortex developed different advertising systems and tools for content management, content distribution and campaigns and measurement of performance on the various platforms that display the content.

Recent Developments

Reorganization Transaction with Gix Media Ltd.

On December 5, 2021, the Company entered into a certain Agreement and Plan of Merger (the “Reorganization Transaction”) with Gix Media., an Israeli company and the majority-owned subsidiary of Gix Internet, in the field of MarTech (Marketing Technology) solutions, primarily search and content monetization and Vmedia Merger Sub Ltd., an Israeli company and wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which, following the Reorganization Transaction, 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. Prior to the closing of the Reorganization Transaction, Gix Media was a majority-owned subsidiary of Gix Internet, which held approximately 58% of the common stock of the Company, par value $0.0001 per share (“Common Stock”), on a fully diluted basis.

On September 19, 2022, the Reorganization Transaction, was consummated (the “Closing”) and, as a result, all outstanding ordinary shares of Gix Media, having no par value (the “Gix Media Shares”) were exchanged for shares of the Company’s Common Stock such that Gix Media became a wholly owned subsidiary of the Company. Following the Reorganization Transaction, holders of the Gix Media Shares held 90% of the Company’s Common Stock on a fully diluted basis, with Gix Internet holding 76.67% of the Common Stock on a fully diluted basis.

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The following diagram illustrates the associated corporate structure of the Company prior to and following the Reorganization Transaction.

Following the closing of the Reorganization Transaction, the Company began to integrate Gix Media’s technology into its operations aiming to expand its growth potential in the search and content monetization space. Gix Media’s business operations include both (i) the provision of services to the world’s leading search engines through the development, marketing and distribution of free software to many Internet users, and (ii) editing and marketing of content in different languages to different target markets, for the purpose of monetizing advertisements on digital marketing and advertising platforms.

In connection with the Closing, effective as of August 31, 2022, the Company adopted an Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”), pursuant to which the Company, among other things, effected a reverse stock split of its Common Stock at a ratio of 1-for-28 (the “Reverse Split”) and an Amended and Restated Bylaws (“Bylaws”). All descriptions of our capital stock, including share amounts and per share amounts in this Quarterly Report, are presented after giving effect to the Reverse Split.

Acquisition of Cortex Media Group Ltd.

On October 13, 2021, Gix Media acquired 70% (on a fully diluted basis) of the share capital of Cortex (the “Cortex Acquisition”), an Israeli private company operating in the field of online media and advertising. In consideration for the Cortex Acquisition, Gix Media paid NIS 35 million in cash (approximately $11 million), out of which an amount of $0.5 million was deposited in trust for a period of 12 months from the closing date. The Cortex Acquisition also includes the obligation and right of Gix Media to acquire 30% of Cortex’s share capital in three equal tranches, each at the beginning of 2023, 2024 and 2025 (“Remaining Balance Shares”), such that following the acquisition of all of the Remaining Balance Shares, Gix Media will hold 100% of Cortex’s share capital on a fully diluted basis. On January 23, 2023, Gix Media purchased an additional 10% of Cortex’s share capital.

In connection with the Cortex Acquisition, on October 13, 2021, Gix Media entered into a financing agreement with Bank Leumi Le Israel Ltd (“Leumi”), for the provision of a line of credit in the total amount of up to $3.5 million and a long-term loan totaling $6 million, which Gix Media used to finance the Cortex Acquisition (the “Financing Agreement”). 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 up to $1,500,000 to be withdrawn at the discretion of Gix Media by no later than January 31, 2023 (the “Additional Loan”). The Additional Loan was withdrawn in connection with the purchase of the additional 10% of Cortex’s share capital on January 17, 2023. On October 10, 2023, Gix Media and Leumi entered into a second addendum to the Financing Agreement (the “Second Addendum”), according to which, effective as of September 26, 2023, certain provisions, including among others, the conditions of the financial covenants contained therein and the interest rate quote, were amended according to the agreed terms between the parties (see notes 6 and 10 of our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q).

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Corporate Information

We were 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.

Our principal executive offices are located at 11 Derech Menachem Begin Street, Ramat Gan, Israel, 5268104 and our telephone number is +972 9-774-1505. Our website address is www.viewbix.com.

Results of Operations

Results of Operations During the Three Months Ended September 30, 2023 as Compared to the Three Months Ended September 30, 2022

Our revenues were $15,715 thousand for the three months ended September 30, 2023, compared to $22,778 thousand during the same period in the prior year.

Our revenues from Cortex’s Content Platform were $10,074 thousand for the three months ended September 30, 2023, a decrease of $7,002 as compared to $17,076 thousand during the same period in the prior year. The reason for the decrease during the three months ended September 30, 2023 is due to a decrease of user traffic acquisition from the Third-Party Platforms, primarily resulting from technological changes and content policy changes on such Third-Party Platforms, causing a lower amount of users to reach the Cortex Websites and thus decreasing the exposures to the ads displayed on the Cortex Websites. In response to the technological and policy changes, Cortex updated and adjusted its platform to adapt to these changes, partially restoring the amount of user traffic acquisition, which mitigated the scope of the decrease.

Our revenues from Gix Media’s Search Platform were $5,641 thousand for the three months ended September 30, 2023, a slight decrease as compared to $5,702 thousand during the same period in the prior year.

Our traffic-acquisition and related costs were $14,526 thousand for the three months ended September 30, 2023, a decrease of $5,121 compared to $19,647 thousand during the same period in the prior year. The reason for the decrease in the three months ended September 30, 2023, is due to the decrease in user traffic acquisition from the main online ad platforms.

Our research and development expenses were $700 thousand for the three months ended September 30, 2023, compared to $804 thousand during the same period in the prior year. The reason for the decrease in the three months ended September 30, 2023, is due to the reduction of expenses in the Search Platform, primarily in salaries and technological services.

Our selling and marketing expenses increased to $680 thousand for the three months ended September 30, 2023, a slight increase compared to $628 thousand during the same period in the prior year.

Our general and administrative expenses increased to $727 thousand for the three months ended September 30, 2023, as compared to $450 thousand during the same period in the prior year. The reason for the increase in the three months ended September 30, 2023, is due to the increase in salary and related costs following the Reorganization Transaction with Gix Media on September 19, 2022, which led to the expansion of the Company’s management team, which included, among other things, the appointment of a chairman in June 2022 and a full-time chief financial officer in July 2022. In addition, during the three months ended September 30, 2023, there was an increase in professional services and consultant costs following the Reorganization Transaction, as compared to the three months ended September 30, 2022.

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Our depreciation and amortization expenses for the three months ended September 30, 2023, were $734 thousand as compared to $736 thousand during the same period in the prior year.

Our other expenses for the three months ended September 30, 2023 were $0 thousand, compared to $86 thousand during the three months ended September 30, 2022. The decrease in our other expenses during the three months ended September 30, 2023 is due to expenses incurred during the three months ended September 30, 2022, in connection with the Reorganization Transaction which was consummated on September 19, 2022.

Our net financial expenses were $260 thousand for the three months ended September 30, 2023, a slight decrease as compared to $301 thousand net financial expenses during the same period in the prior year.

Our income tax benefit was $131 thousand for the three months ended September 30, 2023, as compared to a $55 thousand tax expense during the same period in the prior year. The reason for the decrease in income tax expenses during the three months ended September 30, 2023, is due to the fact that during the three months ended September 30, 2023, the Company recorded a loss before tax on income from the Content Platform, which retroactively decreased the income tax expenses recorded for the previous quarters.

Results of Operations During the Nine Months Ended September 30, 2023 as Compared to the Nine Months Ended September 30, 2023

Our revenues were $63,731 thousand for the nine months ended September 30, 2023, compared to $66,115 thousand during the same period in the prior year.

Our revenues from Cortex’s Content Platform were $47,138 thousand for the nine months ended September 30, 2023, a slight decrease as compared to $48,515 thousand during the same period in the prior year.

Our revenues from Gix Media’s Search Platform were $16,593 thousand for the nine months ended September 30, 2023, a decrease of $1,007 as compared to $17,600 thousand during the same period in the prior year. The reasons for the decrease during the nine months ended September 30, 2023, are due to the decrease in the amount of search referrals conducted by users, provided by Gix Media to search engines, caused primarily by a decrease in the number of searches received from Gix Media’s third party strategic partners, including a significant strategic partner of Gix Media. In response to this decrease, Gix Media expanded its user traffic resources during the nine months ended September 30, 2023, by engaging with new strategic partners, which in turn mitigated the scope of the decrease.

Our traffic-acquisition and related costs were $56,557 thousand for the nine months ended September 30, 2023, a slight decrease compared to $56,912 thousand during the same period in the prior year.

Our research and development expenses were $2,213 thousand for the nine months ended September 30, 2023, compared to $2,445 thousand during the same period in the prior year. The reason for the decrease in the nine months ended September 30, 2023, is the reduction of expenses in the Search Platform, primarily in salaries and technological services.

Our selling and marketing expenses were $2,118 thousand for the nine months ended September 30, 2023, which is an increase of $265 thousand compared to $1,853 thousand during the same period in the prior year. The increase of selling and marketing expenses during the nine months ended September 30, 2023, is due to expenses incurred in connection with the increase in the content displayed on the Cortex Websites and an increase primarily in salaries in the Search Platform.

Our general and administrative expenses were $2,119 thousand for the nine months ended September 30, 2023, an increase of $793 as compared to $1,326 thousand during the same period in the prior year. The reason for the increase in the nine months ended September 30, 2023, is due to the increase in salary and related costs following the Reorganization Transaction with Gix Media on September 19, 2022, which led to the expansion of the Company’s management team, which included, among other things, the appointment of a chairman of the board in June 2022 and a full-time chief financial officer in July 2022. In addition, during the nine months ended September 30, 2023, there was an increase in professional services and consultant costs following the Reorganization Transaction, as compared to the nine months ended September 30, 2022.

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Our depreciation and amortization expenses increased to $2,202 thousand for the nine months ended September 30, 2023, a slight increase compared to $2,051 thousand during the same period in the prior year.

Our other expenses were $0 thousand for the nine months ended September 30, 2023, compared to $121 thousand during the nine months ended September 30, 2022. The decrease in our other expenses during the nine months ended September 30, 2023 is due to expenses incurred during the nine months ended September 30, 2022, in connection with the Reorganization Transaction which was consummated on September 19, 2022.

Our net financial expenses were $691 thousand for the nine months ended September 30, 2023, compared to $1,374 thousand during the same period in the prior year. The reason for the decrease during the nine months ended September 30, 2023, is mainly due to the decrease in financial expenses relating to the USD to NIS exchange rate, as compared to the nine months ended September 30, 2022, which was partially offset by the increase in interest expenses related to the Company’s bank loans due to increases in the market’s interest rates during the nine months ended September 30, 2023.

Our income tax expenses were $40 thousand for the nine months ended September 30, 2023, a slight decrease as compared to $63 thousand during the same period in the prior year.

Liquidity and Capital Resources

As of September 30, 2023, we had current assets of $18,752 thousand, consisting of $2,550 thousand in cash and cash equivalents, $184 thousand restricted deposits, $11,493 thousand in accounts receivable, $807 thousand in other current assets and $3,718 thousand in a loan to our Parent Company.

As of September 30, 2023, we had non-current assets of $31,398 thousand, consisting of $192 thousand in deferred taxes, $419 thousand in operating lease right-of-use asset, $257 thousand in property and equipment net, $13,169 thousand in intangible assets net and $17,361 thousand in goodwill.

As of September 30, 2023, we had $20,605 thousand in current liabilities consisting of $11,742 thousand in accounts payable, $904 thousand in other payables, $7,879 thousand in short term loans and current maturities of long-term loans and $80 thousand in operating lease liabilities – short term.

As of September 30, 2023, we had $4,515 thousand in non-current liabilities consisting of $2,663 thousand long-term loans, $306 thousand in operating lease liabilities - long term and $1,546 thousand in deferred taxes.

As of December 31, 2022, we had current assets of $29,841 thousand consisting of $4,196 thousand in cash and cash equivalents, $185 thousand restricted deposits, $20,945 thousand in accounts receivable, $973 thousand in other current assets and $3,542 thousand in loan to our Parent Company.

As of December 31, 2022, we had non-current assets of $33,854 thousand consisting of $52 thousand in severance pay funds, $340 thousand in deferred taxes, $486 thousand in operating lease right-of-use asset, $302 thousand in property and equipment net, $15,313 thousand in intangible assets net and $17,361 thousand in goodwill.

As of December 31, 2022, we had $28,522 thousand in current liabilities consisting of $19,782 thousand in accounts payable, $2,084 thousand in other payables, $6,569 thousand in short term loans and current maturities of long-term loan and $87 thousand in operating lease liabilities – short term.

As of December 31, 2022, we had $5,274 thousand in non-current liabilities consisting of $152 thousand in accrued severance pay, $2,881 thousand in long-term loan, $388 thousand in operating lease liabilities - long term and $1,853 thousand in deferred taxes.

We had a negative working capital of $1,853 thousand compared to a positive working capital of $1,319 thousand as of September 30, 2023 and December 31, 2022, respectively.

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During the three months ended September 30, 2023, we had a negative cash flow from operating activities of $276 thousand, which was the result of $1,781 thousand in net loss, $682 thousand from positive adjustments to operating activities, and $823 thousands from positive changes in assets and liabilities items.

During the nine months ended September 30, 2023, we had positive cash flow from operating activities of $739 thousand, which was the result of $2,209 thousand in net loss, $2,084 thousand from positive adjustments to operating activities, and $864 thousands from positive changes in assets and liabilities items.

There are no limitations in the Company’s Amended and Restated Certificate of Incorporation on the Company’s ability to borrow funds or raise funds through the issuance of shares of its common stock to affect a business combination.

Gix Media has provided several liens under the Financing Agreement with Leumi in connection with the Cortex Transaction, including: (1) a floating lien on Gix Media’s assets; (2) a lien on Gix Media’s bank account in Leumi; (3) a lien on Gix Media’s rights under the Cortex Transaction; (4) a fixed lien on Gix Media’s intellectual property; and (5) a lien on all of Gix Media’s holdings in Cortex.

As of September 30, 2023, the Company has also provided several liens under Financing Agreement with Leumi in connection with the Cortex Acquisition, as follows: (1) a guarantee to Leumi of all of Gix Media’s obligations and undertakings to Leumi, unlimited in amount; (2) a subordination letter on behalf of the Company to Leumi; (3) a first ranking asset charge over all of the assets of the Company; and (4) a Deposit Account Control Agreement over the Company’s bank accounts.

According to the Financing Agreement, Gix Media undertook to meet financial covenants over the life of the loans as follows: the ratio of debt to EBITDA, based on Gix Media’s consolidated financial statements in all 4 preceding consecutive quarters (in any given period during the life of the loan), will not exceed 2.4 in the first two years following the execution of the Financing Agreement, which according to the Second Addendum was extended by nine months to June 30, 2024 and thereafter, will not exceed 1.75. As of September 30, 2023, Gix Media is in compliance with the financial covenants in connection with the Financing Agreement.

Going Concern

As a result of the decrease in user traffic during the three month period ending September 30, 2023, and the impact of the ongoing ‘Iron Swords’ war in Israel, which commenced subsequent to September 30, 2023, the Company’s operations were adversely affected. While management expects the Company to continue to generate positive cash flows from its operations, such a decline may reasonably result in the Company’s inability to repay its debt obligations during the 12 month period following the issuance date of the financial statements appearing elsewhere in this Quarterly Report. These prevailing conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in light of these uncertainties include negotiating the terms of its debt instrument with Bank Leumi or issuing additional equity or debt instruments in order to raise capital. However, there can be no assurance that such financing alternatives will consummate or will be available on terms acceptable to the Company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of September 30, 2023, the Company’s chief executive officer and chief financial officer, conducted an evaluation (the “Evaluation”) regarding the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act). Based upon the Evaluation, as required by Rules 13a-15 or 15d-15, the Company’s chief executive officer and chief financial officer concluded that, and pursuant to the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013), the Company’s disclosure controls and procedures were not effective as of the end of September 30, 2023.

The Company’s disclosure controls and procedures were determined to be not effective as of the end of September 30, 2023, as the assets of the acquired businesses, Gix Media and Cortex, which constitute substantially all of the Company’s assets as of September 30, 2023 and as of December 31, 2022, were excluded from management’s assessment of internal control over financial reporting as of December 31, 2022, as Gix Media and Cortex were determined, in accordance with the SEC staff guidance, to be an acquired business for financial reporting purposes as of December 31, 2022, following completion of the Reorganization Transaction on September 19, 2022.

While the Company’s management continues to implement a compliance project, the Company’s management concluded that pursuant to the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013), the disclosure controls and procedures were not effective as of the end of September 30, 2023, as these controls have not operated and performed for a sufficient period of time to demonstrate that the Company’s disclosure controls and procedures are effective and as the Company has not completed the implementation of certain information technology controls underlying the financial information of Gix Media and Cortex.

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Changes in Internal Control Over Financial Reporting

Other than as described above, there were no changes in our internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Remediation Plan

During the quarter ended September 30, 2023, our management continued to implement a compliance project designed to assist the Company with effectively complying with the rules contemplated under the Sarbanes-Oxley Act of 2002. While we believe these measures have strengthened our internal control over financial reporting, we are required to have these controls operate and perform for a sufficient period, as well as to enhance certain information technology controls, to demonstrate that the Company’s disclosure controls and procedures are effective. We are committed to continuing to improve our internal control processes and will continue to diligently review our financial reporting controls and procedures.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

ITEM 1A. RISK FACTORS

Our business faces many risks, a number of which are described under the caption “Risk Factors” in our Annual Report. Other than as set forth below, there have been no material changes from the risk factors previously disclosed in our Annual Report. The risks described in our Annual Report and below may not be the only risks we face. Other risks of which we are not yet aware, or that we currently believe are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in our Annual Report or described below occurs, our business, financial condition or results of operations could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in our Annual Report and below, and the information contained under the caption “Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.

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Political, economic and military conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them, may impede our ability to operate and harm our financial results.

Because all of our operations are conducted in Israel and all members of our board of directors and management as well as all of our employees and consultants, including employees of our service providers, are located in Israel, our business and operations are directly affected by economic, political, geopolitical and military conditions in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and terrorist organizations active in the region. These conflicts have involved missile strikes, hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions in Israel.

In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. In the weeks since the initial attack by Hamas, hostilities along Israel’s northern border with Hezbollah located in Lebanon have accelerated, and this clash may escalate in the future into a greater regional conflict.

The intensity and duration of Israel’s current war against Hamas is difficult to predict, as are such war’s economic implications on the Company’s business and operations and on Israel’s economy in general. These events may be intertwined with wider macroeconomic indications of a deterioration of Israel’s economic standing, which may have a material adverse effect on the Company and its ability to effectively conduct its operations.

In connection with the Israeli security cabinet’s declaration of war against Hamas and possible hostilities with other organizations, several hundred thousand Israeli military reservists were drafted to perform immediate military service. Certain of our employees and consultants in Israel, including the Chief Executive Officer of Gix Media, in addition to employees of our service providers located in Israel, have been called, and additional employees may be called, for service in the current or future wars or other armed conflicts with Hamas, and such persons may be absent for an extended period of time. As a result, our operations may be disrupted by such absences, which disruption may materially and adversely affect our business, prospects, financial condition and results of operations.

Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm our results of operations.

Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial condition or the expansion of our business. A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which could also adversely impact our business.

Prior to the Hamas attack in October 2023, the Israeli government pursued extensive changes to Israel’s judicial system. In response to the foregoing developments, individuals, organizations and institutions, both within and outside of Israel, have voiced concerns that the proposed changes may negatively impact the business environment in Israel including due to reluctance of foreign investors to invest or transact business in Israel as well as to increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in security markets, and other changes in macroeconomic conditions. The risk of such negative developments has increased in light of the recent Hamas attacks and the war against Hamas declared by Israel, regardless of the proposed changes to the judicial system and the related debate. To the extent that any of these negative developments do occur, they may have an adverse effect on our business, our results of operations and our ability to raise additional funds, if deemed necessary by our management and Board of Directors.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) The following documents are filed as exhibits to this Quarterly Report.

Exhibit Number |  | Description
31.1* |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
31.2* |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32.1** |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2** |  | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS* |  | Inline XBRL Instance Document
101.INS* |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL* |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* |  | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

* | Filed herewith.
** | Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| VIEWBIX INC.
| By: | /s/ Amihay Hadad
| Name: | Amihay Hadad
| Title: | Chief Executive Officer
Date: November 14, 2023 |  | (Principal Executive Officer)

| By: | /s/ Shahar Marom
| Name: | Shahar Marom
| Title: | Chief Financial Officer
Date: November 14, 2023 |  | (Principal Financial and Accounting Officer)

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