U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-Q
☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172022
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File No. 001-37370
MY SIZE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 51-0394637 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer I.D. No.) |
3 Arava St.HaYarden 4, pobPOB 1026, Airport City, Israel, 7010000
(Address of principal executive offices)
+972-3-600-9030972-3-600-9030
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, $0.001 par value per share | MYSZ | Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files.) files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| 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 ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 18,394,817as of November 8, 2022, shares of common stock, par value $0.001 as of November 12, 2017.per share were issued and outstanding.
MY SIZE, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q FILING
FOR THE THREE MONTHSQUARTER ENDED SEPTEMBER 30, 20172022
TABLE OF CONTENTS
| i |
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
My Size Inc. and Subsidiaries
Condensed Consolidated Interim
Interim
Financial Statements
As of September 30, 20172022
(unaudited)
U.S. Dollars in Thousands
| 1 |
My Size, Inc.
MY SIZE, INC. AND ITS SUBSIDIARIES
Condensed Consolidated Interim Financial Statements as of September 30, 20172022 (Unaudited)
Contents
Contents
| 2 |
My Size, Inc.
MY SIZE, INC. AND ITS SUBSIDIARIES
Condensed Consolidated Interim Balance Sheets (Unaudited)
U.S. dollars in thousands (except share data and per share data)
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | 4,360 | 10,670 | ||||||
| Restricted cash | 262 | 273 | ||||||
| Inventory, net | 1,059 | - | ||||||
| Account receivables | 386 | 40 | ||||||
| Other receivables and prepaid expenses | 651 | 579 | ||||||
| Total current assets | 6,718 | 11,562 | ||||||
| Long term deposit | 28 | - | ||||||
| Property and equipment, net | 144 | 112 | ||||||
| Right-of-use asset | 659 | 776 | ||||||
| Intangible asset | 294 | - | ||||||
| Goodwill | 268 | - | ||||||
| Investment in marketable securities | 80 | 108 | ||||||
| Total non-current assets | 1,473 | 996 | ||||||
| Total assets | 8,191 | 12,558 | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Account payables | 596 | 453 | ||||||
| Right of use liability | 177 | 138 | ||||||
| Bank overdraft and short-term loans | 195 | - | ||||||
| Trade payables | 749 | 635 | ||||||
| Other payables | 390 | - | ||||||
| Derivatives | 28 | 2 | ||||||
| Total current liabilities | 2,135 | 1,228 | ||||||
| Long term loans | 86 | - | ||||||
| Deferred tax liabilities | 68 | - | ||||||
| Long term right of use liability | 368 | 473 | ||||||
| Total non-current liabilities | 522 | 473 | ||||||
| Total liabilities | 2,657 | 1,701 | ||||||
| COMMITMENTS AND CONTINGENCIES | - | - | ||||||
| Stockholders’ equity: | ||||||||
| Stock Capital - | ||||||||
| Common stock of $ par value - Authorized: shares; Issued and outstanding: and as of September 30, 2022 and December 31, 2021, respectively | 26 | 24 | ||||||
| Additional paid-in capital | 57,213 | 56,430 | ||||||
| Accumulated other comprehensive loss | (584 | ) | (406 | ) | ||||
| Accumulated deficit | (51,121 | ) | (45,191 | ) | ||||
| Total stockholders’ equity | 5,534 | 10,857 | ||||||
| Total liabilities and stockholders’ equity | 8,191 | 12,558 | ||||||
| September 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ thousands | $ thousands | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | 14 | 34 | ||||||
| Other receivables and prepaid expenses | 304 | 1,401 | ||||||
| Restricted cash | 69 | 62 | ||||||
| Total current assets | 387 | 1,497 | ||||||
| Investment in marketable securities | 246 | 579 | ||||||
| Property and equipment, net | 67 | 74 | ||||||
| 313 | 653 | |||||||
| Total assets | 700 | 2,150 | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Trade payable | 315 | 229 | ||||||
| Accounts payable | 442 | 316 | ||||||
| Warrants, Derivative and share based liabilities | 435 | 80 | ||||||
| Total current liabilities | 1,192 | 625 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| Stockholders’ equity (Deficit): | ||||||||
| Capital stock - | ||||||||
| Common stock of $ 0.001 par value - Authorized: 50,000,000 shares; Issued and outstanding: 18,078,218 and 17,405,359 As of September 30, 2017 and December 31, 2016, respectively | 18 | 17 | ||||||
| Additional paid-in capital | 14,740 | 13,347 | ||||||
| Available for sale reserve | - | (93 | ) | |||||
| Accumulated other comprehensive loss | (87 | ) | (102 | ) | ||||
| Accumulated deficit | (15,163 | ) | (11,644 | ) | ||||
| Total stockholders’ equity (Deficit) | (492 | ) | 1,525 | |||||
| Total liabilities and stockholders’ equity | 700 | 2,150 | ||||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
| 3 |
My Size, Inc.
MY SIZE, INC. AND ITS SUBSIDIARIES
Condensed Consolidated Interim Statements of Comprehensive Loss (Unaudited)
U.S. dollars in thousands (except share data and per share data)
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Nine-Months Ended September 30, | Three-Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Revenues | 1,931 | 88 | 726 | 31 | ||||||||||||
| Cost of revenues | (1,607 | ) | - | (877 | ) | - | ||||||||||
| Gross profit | 324 | 88 | (151 | ) | 31 | |||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | (1,152 | ) | (3,842 | ) | (350 | ) | (462 | ) | ||||||||
| Sales and marketing | (2,526 | ) | (1,798 | ) | (672 | ) | (521 | ) | ||||||||
| General and administrative | (2,378 | ) | (2,303 | ) | (802 | ) | (1,074 | ) | ||||||||
| Total operating expenses | (6,056 | ) | (7,943 | ) | (1,824 | ) | (2,057 | ) | ||||||||
| Operating loss | (5,732 | ) | (7,855 | ) | (1,975 | ) | (2,026 | ) | ||||||||
| Financial income (expenses), net | (198 | ) | 50 | (51 | ) | 18 | ||||||||||
| Net loss | (5,930 | ) | (7,805 | ) | (2,026 | ) | (2,008 | ) | ||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation differences | (178 | ) | (8 | ) | (300 | ) | 8 | |||||||||
| Total comprehensive loss | (6,108 | ) | (7,813 | ) | (2,326 | ) | (2,000 | ) | ||||||||
| Basic and diluted loss per share | (0.23 | ) | (0.62 | ) | (0.08 | ) | (0.13 | ) | ||||||||
| Basic and diluted weighted average number of shares outstanding | 25,300,239 | 12,546,022 | 25,639,095 | 15,044,184 | ||||||||||||
| Nine-Months Ended September 30, | Three-Months Ended September 30, | Year ended December 31, | ||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2016 | ||||||||||||||||
$ thousands (Unaudited) | $ thousands (Unaudited) | $ thousands (Unaudited) | $ thousands (Unaudited) | $ thousands (Audited) | ||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Research and development | 624 | 500 | 213 | 172 | 727 | |||||||||||||||
| Marketing, General and administrative | 2,667 | 1,359 | 611 | 434 | 1,859 | |||||||||||||||
| Total operating expenses | 3,291 | 1,859 | 824 | 606 | 2,586 | |||||||||||||||
| Operating loss | (3,291 | ) | (1,859 | ) | (824 | ) | (606 | ) | (2,586 | ) | ||||||||||
| Financial (expenses) income, net | (228 | ) | (2,261 | ) | 17 | (118 | ) | (1,748 | ) | |||||||||||
| Net loss from continuing operations | (3,519 | ) | (4,120 | ) | (807 | ) | (724 | ) | (4,334 | ) | ||||||||||
| Other comprehensive loss: | ||||||||||||||||||||
| Gain (loss) on available for sale securities | 93 | 67 | 67 | (527 | ) | (24 | ) | |||||||||||||
| Foreign currency translation differences | 15 | (49 | ) | 16 | 35 | 2 | ||||||||||||||
| Total comprehensive loss | (3,411 | ) | (4,102 | ) | (724 | ) | (1,216 | ) | (4,356 | ) | ||||||||||
| Basic and diluted loss per share | (0.19 | ) | (0.26 | ) | (0.04 | ) | (0.04 | ) | (0.27 | ) | ||||||||||
| Basic and diluted weighted average number of shares outstanding | 17,599,340 | 15,741,967 | 17,625,440 | 16,584,354 | 16,345,499 | |||||||||||||||
The accompanying notes are an integral part of the interim condensed consolidated interim financial statements.statements
| 4 |
My Size, Inc.
MY SIZE, INC. AND ITS SUBSIDIARIES
Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity (Deficit) (Unaudited)
U.S. dollars in thousands (except share data and per share data)
| Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
| Common stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Total stockholders’ | ||||||||||||||||||||
| Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
| Balance as of January 1, 2022 | 23,982,503 | 24 | 56,430 | (406 | ) | (45,191 | ) | 10,857 | ||||||||||||||||
| Stock-based compensation related to options granted to employees and consultants | - | - | 327 | - | - | 327 | ||||||||||||||||||
| Issuance of shares in Business Combination (*) | 1,743,781 | 2 | 456 | - | - | 458 | ||||||||||||||||||
| Total comprehensive loss | - | - | - | (178 | ) | (5,930 | ) | (6,108 | ) | |||||||||||||||
| Balance as of September 30, 2022 | 25,726,284 | 26 | 57,213 | (584 | ) | (51,121 | ) | 5,534 | ||||||||||||||||
| (*) | See note 6 a. |
| Common stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Total stockholders’ | ||||||||||||||||||||
| Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
| Balance as of January 1, 2021 | 7,232,836 | 7 | 37,164 | (424 | ) | (34,671 | ) | 2,076 | ||||||||||||||||
| Stock-based compensation related to options granted to employees and consultants | - | - | 350 | - | - | 350 | ||||||||||||||||||
| Exercise of options granted to employees (*) | 4,458 | -* | - | - | - | - | ||||||||||||||||||
| Restricted shares issued to shareholder | 2,500,000 | 3 | 2,615 | - | - | 2,618 | ||||||||||||||||||
| Issuance of shares, net of issuance cost of $768 | 4,580,491 | 4 | 5,031 | - | - | 5,035 | ||||||||||||||||||
| Exercise of warrants | 751,802 | 1 | 821 | - | - | 822 | ||||||||||||||||||
| Total comprehensive loss | - | - | - | (8 | ) | (7,805 | ) | (7,813 | ) | |||||||||||||||
| Balance as of September 30, 2021 | 15,069,587 | 15 | 45,981 | (432 | ) | (42,476 | ) | 3,088 | ||||||||||||||||
| (*) | Represents an amount less than $1 |
| Common stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Total stockholders’ | ||||||||||||||||||||
| Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
| Balance as of July 1, 2022 | 25,551,906 | 26 | 57,048 | (284 | ) | (49,095 | ) | 7,695 | ||||||||||||||||
| Stock-based compensation related to options granted to employees and consultants | - | - | 165 | - | - | 165 | ||||||||||||||||||
| Issuance of shares in Business Combination (*) (**) | (**) | 174,378 | - | - | - | - | - | |||||||||||||||||
| Issuance of shares in Business Combination | (**) | 174,378 | -* | -* | -* | -* | -* | |||||||||||||||||
| Total comprehensive loss | - | - | - | (300 | ) | (2,026 | ) | (2,326 | ) | |||||||||||||||
| Balance as of September 30, 2022 | 25,726,284 | 26 | 57,213 | (584 | ) | (51,121 | ) | 5,534 | ||||||||||||||||
| (*) | See note 6 a. |
| (**) | Represents an amount less than $1 |
| Common stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Total stockholders’ | ||||||||||||||||||||
| Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
| Balance as of July 1, 2021 | 15,038,327 | 15 | 45,838 | (440 | ) | (40,468 | ) | 4,945 | ||||||||||||||||
| Stock-based compensation related to options granted to employees and consultants | - | - | 118 | - | - | 118 | ||||||||||||||||||
| Exercise of options granted to employees * | 4,458 | -* | - | - | - | - | ||||||||||||||||||
| Exercise of warrants | 26,802 | -* | 25 | - | - | 25 | ||||||||||||||||||
| Total comprehensive loss | - | - | - | 8 | (2,008 | ) | (2,000 | ) | ||||||||||||||||
| Balance as of September 30, 2021 | 15,069,587 | 15 | 45,981 | (432 | ) | (42,476 | ) | 3,088 | ||||||||||||||||
| (*) | Represents an amount less than $1 |
| Additional | Available | Foreign | Total Stockholders’ | |||||||||||||||||||||||||
| Common stock | paid-in | for sale | currency | Accumulated | Equity | |||||||||||||||||||||||
| Number | Amount | capital | reserve | transaction | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance as of January 1, 2017 | 17,405,359 | 17 | 13,347 | (93 | ) | (102 | ) | (11,644 | ) | 1,525 | ||||||||||||||||||
| Total comprehensive loss | - | - | - | 93 | 15 | (3,519 | ) | (3,411 | ) | |||||||||||||||||||
| Stock-based compensation related to options granted to consultants | - | - | 126 | - | - | - | 126 | |||||||||||||||||||||
| Warrants converted and exercised into equity | 80,359 | (*) | 60 | - | - | 60 | ||||||||||||||||||||||
| Issuance and receipts on account of shares | 592,500 | 1 | 1,207 | - | - | - | 1,208 | |||||||||||||||||||||
| Balance as of September 30, 2017 | 18,078,218 | 18 | 14,740 | - | (87 | ) | (15,163 | ) | (492 | ) | ||||||||||||||||||
| Common stock | Additional paid-in | Available for sale | Foreign currency | Accumulated | Total stockholders’ | |||||||||||||||||||||||
| Number | Amount | capital | reserve | transaction | Deficit | Equity | ||||||||||||||||||||||
| Balance as of January 1, 2016 | 15,313,793 | 15 | 4,853 | (67 | ) | (104 | ) | (7,310 | ) | (2,613 | ) | |||||||||||||||||
| Total comprehensive loss | - | - | - | 67 | (49 | ) | (4,120 | ) | (4,102 | ) | ||||||||||||||||||
| Stock-based compensation related to options granted to consultants | - | - | (33 | ) | - | - | - | (33 | ) | |||||||||||||||||||
| Convertible loans converted to equity | 2,091,566 | 2 | 6,728 | - | - | - | 6,730 | |||||||||||||||||||||
| Warrants reclassified to equity as a result of amended exercise price currency | - | - | 1,041 | - | - | - | 1,041 | |||||||||||||||||||||
| Balance as of September 30, 2016 | 17,405,359 | 17 | 12,589 | - | (153 | ) | (11,430 | ) | 1,023 | |||||||||||||||||||
The accompanying notes are an integral part of the interim condensed consolidated interim financial statements.statements
| 5 |
My Size, Inc.
MY SIZE, INC. AND ITS SUBSIDIARIES
Condensed Consolidated Interim Statements of ChangesCash Flows (Unaudited)
U.S. dollars in Stockholders’ Equity (Deficit)thousands
| 2022 | 2021 | |||||||
Nine-Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | (5,930 | ) | (7,805 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 116 | 31 | ||||||
| Noncash lease expenses | 30 | 32 | ||||||
| Revaluation of derivatives | 26 | (1 | ) | |||||
| Revaluation of investment in marketable securities | 28 | (46 | ) | |||||
| Expenses arising from restricted shares issued to compensate waiver by a shareholder | - | 2,618 | ||||||
| Financing expenses | 32 | - | ||||||
| Stock based compensation | 327 | 350 | ||||||
| (Increase) in account receivables | (281 | ) | (9 | ) | ||||
| Decrease in other receivables and prepaid expenses | 140 | 359 | ||||||
| (Increase) in inventory | (288 | ) | - | |||||
| Increase in other payables | 390 | - | ||||||
| (Decrease) in deferred tax liabilities | (19 | ) | - | |||||
| (Decrease) Increase in trade payables | (503 | ) | 176 | |||||
| Increase in account payables | 74 | 311 | ||||||
| Net cash used in operating activities | (5,858 | ) | (3,984 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Acquisition of a subsidiary, net of cash acquired | (300 | ) | - | |||||
| Change in restricted deposits | - | 184 | ||||||
| Purchase of property and equipment | (27 | ) | (12 | ) | ||||
| Net cash provided by (used in) investing activities | (327 | ) | 172 | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of shares, net of issuance costs | - | 5,035 | ||||||
| Short term loans | 18 | - | ||||||
| Repayment of short-term loans | (15 | ) | - | |||||
| Repayment of long-term loans | (42 | ) | ||||||
| Proceeds from Exercise of warrants | - | 822 | ||||||
| Net cash provided by (used in) financing activities | (39 | ) | 5,857 | |||||
| Effect of exchange rate fluctuations on cash and cash equivalents | (97 | ) | (10 | ) | ||||
| Increase (decrease) in cash, cash equivalents and restricted cash (*) | (6,321 | ) | 2,035 | |||||
| Cash, cash equivalents and restricted cash at the beginning of the period | 10,943 | 1,774 | ||||||
| Cash, cash equivalents and restricted cash at the end of the period | 4,622 | 3,809 | ||||||
| Non cash activities: | ||||||||
| Shares issued in Acquisition of a subsidiary | 457 | - | ||||||
| Restricted shares issued to shareholder | - | 2,618 | ||||||
| (*) | $6,310 relates to change in cash and cash equivalents and $11 to change in restricted cash. |
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
| 6 |
MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S. dollars in thousands (except share data and per share data)
| Additional | Available | Foreign | Total Stockholders’ | |||||||||||||||||||||||||
| Common stock | paid-in | for sale | currency | Accumulated | Equity | |||||||||||||||||||||||
| Number | Amount | capital | reserve | transaction | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance as of July 1, 2017 | 17,605,359 | 17 | 14,052 | (67 | ) | (103 | ) | (14,356 | ) | (457 | ) | |||||||||||||||||
| Total comprehensive loss | - | - | - | 67 | 16 | (807 | ) | (724 | ) | |||||||||||||||||||
| Stock-based compensation related to options granted to consultants | - | - | 53 | - | - | - | 53 | |||||||||||||||||||||
| Warrants converted and exercised into equity | 80,359 | (*) | 60 | 60 | ||||||||||||||||||||||||
| Issuance and receipts on account of shares | 392,500 | 1 | 575 | - | - | - | 576 | |||||||||||||||||||||
| Balance as of September 30, 2017 | 18,078,218 | 18 | 14,740 | - | (87 | ) | (15,163 | ) | (492 | ) | ||||||||||||||||||
(*) Less than $1.
| Common stock | Additional paid-in | Available for sale | Foreign currency | Accumulated | Total stockholders’ | |||||||||||||||||||||||
| Number | Amount | capital | reserve | transaction | Deficit | equity | ||||||||||||||||||||||
| Balance as of July 1, 2016 | 15,313,793 | 15 | 11,155 | 527 | (187 | ) | (10,706 | ) | 804 | |||||||||||||||||||
| Total comprehensive loss | - | - | - | (527 | ) | 34 | (724 | ) | (1,217 | ) | ||||||||||||||||||
| Stock-based compensation related to options granted to consultants | - | - | (39 | ) | - | - | - | (39 | ) | |||||||||||||||||||
| Convertible loans converted to equity | 2,091,566 | 2 | 1,473 | - | - | - | 1,475 | |||||||||||||||||||||
| Balance as of September 30, 2016 | 17,405,359 | 17 | 12,589 | - | (153 | ) | (11,430 | ) | 1,023 | |||||||||||||||||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
My Size, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Audited)
U.S. dollars in thousands (except share data and per share data)
| Common stock | Additional paid-in | Available for sale | Foreign currency | Accumulated | Total stockholders’ equity | |||||||||||||||||||||||
| Number | Amount | capital | reserve | transaction | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance as of December 31, 2015 | 15,313,793 | 15 | 4,855 | (69 | ) | (104 | ) | (7,310 | ) | (2,613 | ) | |||||||||||||||||
| Total comprehensive loss | - | - | - | (24 | ) | 2 | (4,334 | ) | (4,356 | ) | ||||||||||||||||||
| Stock-based compensation related to options granted to consultants | - | - | (23 | ) | - | - | - | (23 | ) | |||||||||||||||||||
| Convertible loans converted to equity | 2,091,566 | 2 | 7,528 | - | - | - | 7,530 | |||||||||||||||||||||
| Warrants reclassified to equity as a result of amended exercise price currency | - | - | 987 | - | - | - | 987 | |||||||||||||||||||||
| Balance as of December 31, 2016 | 17,405,359 | 17 | 13,347 | (93 | ) | (102 | ) | (11,644 | ) | 1,525 | ||||||||||||||||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
My Size, Inc.
Condensed Consolidated Interim Statements of Cash Flows
| Nine-Months Ended September 30, | Three-Months Ended September 30, | Year ended December 31, | ||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2016 | ||||||||||||||||
$ thousands (Unaudited) | $ thousands (Unaudited) | $ thousands (Unaudited) | $ thousands (Unaudited) | $ thousands (Audited) | ||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net loss | (3,519 | ) | (4,120 | ) | (807 | ) | (724 | ) | (4,334 | ) | ||||||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||||||
| Depreciation | 22 | 17 | 7 | 6 | 24 | |||||||||||||||
| Amortization of warrant, convertible loans and derivative | (251 | ) | 2,260 | (101 | ) | 117 | (182 | ) | ||||||||||||
| Revaluation of PUT options | - | - | - | - | 776 | |||||||||||||||
| Revaluation of investment in marketable securities | 472 | - | 132 | - | 1,233 | |||||||||||||||
| Stock based compensation- equity | 126 | (33 | ) | 53 | (39 | ) | (23 | ) | ||||||||||||
| Stock based compensation- liability | 265 | - | 88 | - | - | |||||||||||||||
| Decrease (increase) in receivables and prepaid expenses | 115 | (43 | ) | 61 | (39 | ) | (27 | ) | ||||||||||||
| Increase in derivative liabilities | 126 | - | (27 | ) | - | 80 | ||||||||||||||
| Increase (decrease) in trade payable | 64 | 44 | 127 | (62 | ) | 86 | ||||||||||||||
| Increase (decrease) in other accounts payable | 108 | 127 | (60 | ) | 57 | 208 | ||||||||||||||
| Net cash used in operating activities | (2,472 | ) | (1,748 | ) | (527 | ) | (684 | ) | (2,159 | ) | ||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Purchase of property and equipment | (8 | ) | (31 | ) | (1 | ) | (8 | ) | (36 | ) | ||||||||||
| Net cash used in investing activities | (8 | ) | (31 | ) | (1 | ) | (8 | ) | (36 | ) | ||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Repayment of a loan | (10 | ) | (25 | ) | - | - | (25 | ) | ||||||||||||
| Proceeds from issuance of shares, warrants and convertible loans | 2,506 | 1,043 | 491 | 739 | 1,339 | |||||||||||||||
| Net cash provided by financing activities | 2,496 | 1,018 | 491 | 739 | 1,314 | |||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (36 | ) | (15 | ) | (77 | ) | (2 | ) | (4 | ) | ||||||||||
| Increase (Decrease) in cash and cash equivalents | (20 | ) | (776 | ) | (114 | ) | 45 | (885 | ) | |||||||||||
| Cash and cash equivalents at the beginning of the period | 34 | 919 | 128 | 98 | 919 | |||||||||||||||
| Cash and cash equivalents at the end of the period | 14 | 143 | 14 | 143 | 34 | |||||||||||||||
| Non cash transactions | ||||||||||||||||||||
| Warrants reclassified to equity as a result of amended exercise price currency | - | 987 | - | - | 987 | |||||||||||||||
| Conversion of loan to equity | - | 4,939 | - | - | 4,846 | |||||||||||||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
My Size, Inc.
Notes to Condensed Consolidated Interim Financial Statements (unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 1 - General
| a. | My Size, Inc.
The Company has five subsidiaries, My Size Israel 2014 Ltd (“My Size Israel”), Topspin Medical (Israel) | |
| b. | During the nine-month period ended September 30, 2022, the Company has incurred significant losses and negative cash flows from operations and The Company’s management expects that the Company will continue to generate losses and negative cash flows from operations for the foreseeable future. Based on the projected cash flows and cash balances as of September 30, 2022, management is of the opinion that its existing cash will be sufficient to fund operations for a period less than 12 months. As a result, there is substantial doubt about the Company’s ability to continue as a going concern. Management’s plans include the continued commercialization of the Company’s products and securing sufficient financing through the sale of additional equity securities, debt or capital inflows from strategic partnerships. Additional funds may not be available when the Company needs them, on terms that are acceptable to it, or at all. If the Company is unsuccessful in commercializing its products and securing sufficient financing, it may need to cease operations. The financial statements include no adjustments for measurement or presentation of assets and liabilities, which may be required should the Company fail to operate as a going concern. | |
| c. | In late 2019, a novel strain of COVID-19, also known as coronavirus, was reported in Wuhan, China. While initially the outbreak was largely concentrated in China, it spread globally. Many countries around the world, including Israel, have from time to time implemented significant governmental measures to control the spread of the virus, including temporary closure of businesses, severe restrictions on travel and the movement of people, and other material limitations on the conduct of business. While the COVID-19 pandemic did not materially adversely affect the Company’s consolidated financial results and operations during the three and nine months ended September 30, 2022, the COVID-19 pandemic affected the Company’s operations in 2020 and 2021. The pandemic may continue to have an impact on the Company’s business, operations, and financial results and conditions, directly and indirectly, including, without limitation, impacts on the health of the Company’s management and employees, its operations, marketing and sales activities, and on the overall economy. The extent to which COVID-19 impacts the Company’s operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, and the actions that may be required to contain COVID-19 or treat its impact. |
As of September 30, 2017, the Company entered into agreements pursuant to which it raised an aggregate of $8,795 of which $5,753 and $1,410 were received in cash and marketable securities, respectively. The marketable securities are shares of common stock of Diamante Minerals Inc (“DIMN”), which are accounted as a financial asset available for sale and presented in the Company’s balance sheet under investment in marketable securities.
As of September 30, 2017, the Company has $1,177 and $455 in guaranteed notes and checks, respectively as remaining balance from the amounts described above. The guarantee has been provided by an ungraded financial institution. Subsequent to September 30, 2017, $236 of the guarantee notes have been redeemed in cash.
Based on the projected cash flows and cash balances as of September 30, 2017, the Company’s Management is of the opinion that without further fund raising it will not have sufficient resources to enable it to continue its operating activities including the development, and marketing of its products for a period of at least 12 months from the date of approval of these financial statements. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans include the continued commercialization of the Company’s products and securing sufficient financing through the sale of additional equity securities, debt or capital inflows from strategic partnerships, see also note 7. There can be no assurances however, that the Company will be successful in obtaining the level of financing needed for its operations. If the Company is unsuccessful in commercializing its products and securing sufficient financing, it may need to cease operations.
The financial statements include no adjustments for measurement or presentation of assets and liabilities, which may be required should the Company fail to operate as a going concern.
Note 2 - Significant Accounting Policies
| a. | Unaudited condensed consolidated financial statements: | |
| The accompanying unaudited condensed consolidated interim financial statements included herein have been prepared by the Company in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements are comprised of the financial statements of the Company. In management’s opinion, the interim financial data presented includes all adjustments necessary for a fair presentation. All intercompany accounts and transactions have been eliminated. Certain information required by U.S. generally accepted accounting principles (“GAAP”) has been condensed or omitted in accordance with rules and regulations of the SEC. Operating results for the nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2022. | ||
These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021. |
| 7 |
MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 2 - Significant Accounting Policies (cont.)
| The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated |
| 1. | Inventories |
Inventories are measured at the lower of cost or net realizable value. The accompanying unaudited condensed consolidated interim financial statements included herein have been preparedcost of inventories comprises of the costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business. At the point of the loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
| 2. | Revenue Recognition |
Since the acquisition of Orgad (see note 6 - Business combination), the Company’s revenues are comprised of two main categories: (1) selling products to customers, and (2) licensing cloud-enabled software subscriptions, associated software maintenance and support.
Revenue from sale of products
Revenue from sale of products is recognized at the time the related performance obligation is satisfied by transferring a promised good to a customer. Revenue is recognized net of allowances for refunds and any taxes collected from customers, which are subsequently remitted to governmental authorities. Refunds are estimated at contract inception and updated at the end of each reporting period if additional information becomes available. Revenue is recognized when control of the product is transferred to the customer.
The Company maintains a returns policy that allows its customers to return product within a specified period of time. The estimate of the provision for returns is based upon historical experience with actual returns.
Revenue from licensing
The Company recognizes revenue in accordance with ASC Topic 606, Revenues from Contracts with Customers (“ASC 606”). A contract with a customer exists only when: the rulesparties to the contract have approved it and regulationsare committed to perform their respective obligations, the Company can identify each party’s rights regarding the distinct goods or services to be transferred (“performance obligations”), the Company can determine the transaction price for the goods or services to be transferred, the contract has commercial substance and it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.
| 8 |
MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 2 - Significant Accounting Policies (cont.)
Principal versus Agent Considerations
The Company follows the guidance provided in ASC 606 for determining whether it is a principal or an agent in arrangements with customers, by assessing whether the nature of the United States SecuritiesCompany’s promise is a performance obligation to provide the specified goods (principal) or to arrange for those goods to be provided by the other party (agent). With regard to products being sold by Orgad through Amazon, this determination involves judgment. The Company determined it is a principal, as it has determined that it controls the promised product before it is transferred to the end customers, it is primarily responsible for fulfilling the promise to provide the goods, and Exchange Commission (“SEC”). it has discretion in establishing prices. Therefore, the revenues are recorded on a gross basis.
| 3. | Business combinations |
The unaudited condensed consolidated financial statements are comprisedCompany applies the provisions of ASC 805, “Business Combination” and allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the financial statementsfair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, the Company estimated the future expected cash flows from acquired platform from a market participant perspective, useful lives and discount rates. In addition, management makes significant estimates and assumptions, which are uncertain, but believed to be reasonable.
Significant estimates in valuing certain intangible assets include but are not limited to future expected cash flows from acquired platforms from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.
| 4. | Goodwill |
Goodwill represents the excess of the Company and its subsidiaries collectively referred to aspurchase price over the Company. In management’s opinion, the interim financial data presented includes all adjustments necessary for a fair presentation. All intercompany accounts and transactions have been eliminated. Certain information required by U.S. generally accepted accounting principles (“GAAP”) has been condensed or omitted in accordance with rules and regulationsvalue of the SEC. Operating resultsnet tangible and intangible assets acquired in a business combination. Under ASC 350, “Intangible - Goodwill and Other”, goodwill is not amortized, but rather is subject to an annual impairment test.
ASC 350 requires goodwill to be tested for impairment at the nine months ended September 30, 2017 are not necessarily indicativereporting unit level at least annually, the fourth quarter, or between annual tests in certain circumstances, and written down when impaired. Goodwill is tested for impairment by comparing the fair value of the results that may be expectedreporting unit with it carrying value.
ASC 350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the two-step impairment test is performed. Goodwill is not deductible for income tax purposes. Goodwill is allocated to the fashion and equipment e-commerce platform segment.
Alternatively, ASC 350 permits an entity to bypass the qualitative assessment for any futurereporting unit and proceed directly to performing the first step of the goodwill impairment test. There were no impairment charges to goodwill during the period or for the year ending December 31, 2017.presented.
| 9 |
These unaudited condensed consolidated interim financial statements should be read
MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S. dollars in conjunction with the Company’s audited consolidated financial statementsthousands (except share data and the notes thereto for the year ended December 31, 2016.per share data)
Note 2 - Significant Accounting Policies (cont.)
| Intangible assets |
Intangible assets consist of identifiable intangible assets that the Company has acquired from previous business combinations. Intangible assets are recorded at costs, net of accumulated amortization. The Company amortizes its intangible assets reflecting the pattern in which the economic benefits of the intangible assets are consumed. When a pattern cannot be reliably determined, the Company uses a straight-line amortization method.
The estimated useful lives of the company’s intangible assets are as follows:
Schedule of Intangible Assets Estimated Useful Lives
| years | ||
| Selling Platform | 3 |
Each period the Company evaluates the estimated remaining useful lives of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization
| c. | Use of estimates: |
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates.
| 10 |
My Size, Inc.
MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements (unaudited)(Unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 3 - Financial Instruments
Fair value of financial instruments:
ASC 820, “Fair Value Measurements and Disclosures”, defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.
In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
The expected volatility of the share prices reflects the assumption that the historical volatility of the share prices is reasonably indicative of expected future trends.
The carrying amounts of cash and cash equivalents, other accounts receivable, accounts payableother receivables, trade payables and other accounts payable approximate their fair value due to the short-term maturities of such instruments.
The Company holds share certificates in iMine Corporation (“iMine”) formerly known as Diamante Minerals, Inc., a publicly traded company on the OTCQB.
Due to sales restrictions on the sale of the iMine shares, the fair value of the shares was measured on the basis of the quoted market price for an otherwise identical unrestricted equity instrument of the same issuer that trades in a publicly-traded company - Diamante Minerals, Inc. which are classified as available-for-sale equity securities. The marketable securities have readily determinable fairpublic market, values that are calculated based onadjusted to reflect the share price oneffect of the measurement datesales restrictions and is therefore, ranked as Level 12 assets.
Schedule of Significant Assets and Liabilities Measured at Fair Value on Recurring Basis
| September 30, | ||||||||||||||||||||||
| Fair value hierarchy | ||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Financial assets | ||||||||||||||||||||||
My Size, Inc.
Notes to Condensed Consolidated Interim Financial Statements (unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 3 - Financial Instruments (cont’d)
| |||||||||||||
| - | - | ||||||||||||
| Fair value hierarchy | ||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Financial liabilities | |||||||||||||||||||
| Derivatives | - | 28 | - | ||||||||||||||||
At September 30, 2017, the fair value (based on quoted market prices) of these securities was $246. During the nine month period ended September 30, 2017 the recognized loss was $472 (At December 31, 2016, gross unrecognized loss, recognized loss and fair value (based on quoted market prices) of these securities were $24, $1,233 and $579, respectively).
| 11 |
My Size, Inc.
MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements (unaudited)(Unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 3 - Financial Instruments (Cont.)
| December 31, 2021 | ||||||||||||
| Fair value hierarchy | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Financial assets | ||||||||||||
| Investment in marketable securities (*) | - | 108 | - | |||||||||
| (*) | For the nine and three-month periods ended September 30, 2022 and 2021, the recognized gain (loss) (based on quoted market prices with a discount due to security restrictions on iMine shares) of the marketable securities was ($28) and $(17), and $46 and $24 respectively. |
| December 31, 2021 | ||||||||||||
| Fair value hierarchy | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Financial liabilities | ||||||||||||
| Derivatives | - | 2 | - | |||||||||
| Nine months ended September 30, | Three months ended September 30, | Year ended December 31, | |||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2016 | |||||||||||||||||
| Stock-based compensation expense - equity awards | 126 | (33 | ) | 53 | (39 | ) | (23 | ) | |||||||||||||
| Stock-based compensation expense - liability awards | 265 | - | 88 | - | - | ||||||||||||||||
| 391 | (33 | ) | 141 | (39 | ) | (23 | ) | ||||||||||||||
Schedule of Stock Based Compensation Expenses
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Stock-based compensation expense – Cost of revenues | 67 | - | 39 | - | ||||||||||||
| Stock-based compensation expense - Research and development | 22 | 103 | 4 | 33 | ||||||||||||
| Stock-based compensation expense - Sales and marketing | 115 | 164 | 57 | 71 | ||||||||||||
| Stock-based compensation expense - General and administrative | 123 | 83 | 65 | 14 | ||||||||||||
| Stock-based compensation expense | 327 | 350 | 165 | 118 | ||||||||||||
Options issued to consultants:
In
|
In addition, the Company undertook to pay the balance of the consideration for the sale of the shares by Consultant1 up to the sum of NIS500,000. If the consideration for the sale of the shares falls below 90% of the shares’ price on the stock exchange on the date of sale, the Company shall pay Consultant1 the difference. The Company may decide at its own discretion whether to make such payment in cash or shares of common stock.
On March 21, 2017, the shareholders of the Company approved the adoption of the 2017 Consultant Equity Incentive Plan at the Company’s Annual Meeting of Stockholders. The approval was required for the issuance of the options and shares of common stock of the Company issued to Consultant1.
During the nine-month period ended September 30, 2017, costs in the sum of $(4) ($90 during 2016) were recorded by the Company and an undertaking to pay the balance of the consideration was recognized in the sum of $124 ($80 during 2016) according to the fair value of the undertaking.
| ||
|
| 12 |
My Size, Inc.
MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements (unaudited)(Unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 4 - Stock Based Compensation (Cont.)
| In addition, the Company agreed to issue to Consultant14 options to purchase up to shares of the Company’s common stock upon execution of the agreement. The options are exercisable at $ per share and shall vest in 4 equal instalments every six months starting September 2020. Unexercised options shall expire years from the effective date. |
During the nine and three-month period ended September 30,2022 and 2021, an amount of $and $, and and $respectively, were recorded by the Company as stock-based equity awards with respect to Consultant 14.
Stock Option Plan for Employees:
In March 2017, the Company adopted the My Size, Inc. 2017 Equity Incentive Plan (the “2017 Employee Plan”) pursuant to which the Company’s Board of Directors may grant stock options to officers and key employees. The total number of options which may be granted to directors, officers, employees under this plan, is limited to options. Stock options can be granted with an exercise price equal to or less than the stock’s fair market value at the date of grant.
On May 25, 2020, the compensation committee of the Board of Directors of the Company reduced the exercise price of outstanding options of employees and directors of the Company for the purchase of an aggregate of shares of common stock of the Company (with exercise prices ranging between $and $) to $per share, which was the closing price for the Company’s common stock on May 22, 2020, and extended the term of the foregoing options for an additional one year from the original date of expiration. The incremental compensation cost resulting from the repricing was $53, and the expenses during the nine-month period ended September 30, 2022 and 2021 were $and $.
On August 10, 2020, the Company’s shareholders approved an increase in the shares available for issuance under the 2017 Employee Plan from to shares. As a result, and pursuant to approval of the Company’s compensation committee that was contingent on the foregoing shareholder approval, the number of shares available for issuance under the Company’s 2017 Consultant Incentive Plan was reduced from to shares. On December 30, 2021, the Company’s shareholders approved an increase in the shares available for issuance under the 2017 Equity Incentive Plan from shares to shares.
On September 29, 2022, the Compensation Committee of the Company approved grants of restricted share awards under the Company’s 2017 Equity Incentive Plan to Ronen Luzon (CEO), Or Kles (CFO), Billy Pardo (COO), Ilia Turchinsky (CTO) and Ezequiel Javier Brandwain (CCO), pursuant to which were issued restricted shares, restricted shares, restricted shares, restricted shares and restricted shares, respectively. Each restricted share awarded under section 102 Capital Gain Restricted Stock Award Agreement (the “Agreement”).
On the same day, the Company granted options to purchase up to ordinary shares to other employees of the Company at an exercise price of $ per share. The options vest in over three years in three equal portions from the vesting commencement date.
The fair value of each option award is estimated on the date of grant using the Binomial option-pricing model that used the weighted average assumptions in the following table. The risk free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
| 2022 grants | ||||
| Dividend yield | 0 | % | ||
| Expected volatility | 96.52 | % | ||
| Risk-free interest | 4.06 | % | ||
| Contractual term of up to (years) | 5 | |||
| Suboptimal exercise multiple (NIS) | 5 | |||
During the nine and three-month period ended September 30, 2022, the Company granted restricted stock and stock options under the 2017 Employee Plan, no options were exercised and options to purchase shares of common stock, expired.
The total stock option compensation expense during the nine and three-month period ended September 30, 2022 and 2021 which was recorded was $53 and $234, and $9 and $312, respectively.
| 13 |
MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 5 - Contingencies and Commitments
| a. |
On December 27, 2015, the Company received a legal complaint (the “Complaint”). The defendants named in the Complaint were the Company, all the members of the Board of Directors of the Company, the officers of the Company, Mrs. Shoshana Zigdon, a shareholder and related party of the Company, as well as two additional defendants who are not shareholders of the Company. The plaintiff alleged that the Company violated its obligation to register shares purchased by the plaintiff on July 3, 2014 (the “Original Shares”) for trade with the Tel Aviv Stock Exchange.
The Company and plaintiff entered into a settlement agreement (the “Settlement”) dated June 20, 2017 following a mediation process. Pursuant to the Settlement, the Company agreed to make a payment to the plaintiff of NIS325,000 (the “Down Payment”) within 30 days of the date of the Settlement. Additionally, the Company is obligated to register the Original Shares within a specified time frame. Moreover, pursuant to the Settlement, the Company agreed to issue, within 60 days, 80,358 additional shares of common stock to the plaintiff (the “New Shares”), which New Shares shall be registered, to be deposited in escrow and sold for the benefit of plaintiff. To the extent the Company will not issue the unrestricted New Shares within 60 days of the Settlement, the plaintiff has a right, at his sole discretion, to resume the legal proceedings pursuant to the Complaint, provided he deposits the Down Payment in an escrow account, pending the Court’s final adjudication of the Complaint. Additionally, the Settlement provides that to the extent the aggregate proceeds from the sale of the Original Shares and the New Shares is less than NIS1,600,000, the Company will either complement the difference in cash or shall issue to the plaintiff additional shares of common stock in lieu thereof, at the Company’s sole discretion.
During the three month period ended September 30 2017, the Company issued shares and recorded an amount of $60 in equity and paid the plaintiff the Down Payment. As of September 30, 2017, The Company recorded a derivative liability in the amount of $176.
| ||
The Company | ||
| b. | On July 5, 2021, the Company was served with a legal complaint filed by Fidelity Venture Capital Ltd. and Dror Atzmon in the Magistrate’s Court in Tel Aviv for a monetary award in an amount of NIS 1,436,679 (approximately $450) and a declaratory relief. The plaintiffs allege that the Company breached its contractual obligations to pay them for services allegedly rendered to the Company by the plaintiffs under a certain consulting agreement dated July 2, 2014, in an amount of NIS 819,000 (approximately $256). Additionally, the plaintiffs allege that the Company should compensate them for losses allegedly incurred by them following their investment in the Company’s shares issued under a certain private offering. In the |
| 14 |
My Size, Inc.
MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements (unaudited)(Unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 5 - Contingencies6 – Business Combination
Acquisition of Orgad
On February 7, 2022, the Companyacquired 100% of the shares and Commitments (cont’d)voting interests in Orgad an omnichannel e-commerce platform. The acquisition was designed to create an additional revenue stream for the Company by becoming a direct e-commerce seller while leveraging the synergies between MySizeID and Orgad’s e-commerce platform.
The results of operations of Orgad have been included in the consolidated financial statements since the acquisition date of February 7, 2022. Orgad revenues included in the Company’s consolidated statement of operations from February 7, 2022 through September 30, 2022 were $1,797 and for the three-month period ended September 30, 2022 were $685. If the acquisition had occurred on January 1, 2021, management estimates that the consolidated pro forma revenues for the year would have been $2,768, and the net loss would have been $2,272.
| (a) | Consideration transferred |
The following table summarizes the acquisition date fair value of each major class of consideration:
Schedule of Fair value of the Acquisition
| USD | ||||
| Thousands | ||||
| Cash (*) | (*) | 300 | ||
| Issuance of shares of common stock ( shares) (**) | (**) | 457 | ||
| Total consideration transferred | 757 | |||
| ||
| (**) | Quoted price as of the |
In addition, the Company agreed to pay to the former owners of Orgad, on the two-year and the three-year anniversary of the closing, $350,000 in each of these years provided that in the case of the second and third instalments certain revenue targets are met and subject further to certain downward post-closing adjustment. Furthermore, shares of common stock will be issued in eight equal quarterly instalments until the lapse of two years from closing. Additional earn-out payments of 10% of the operating profit of Orgad for the years 2022 and 2023 will also be paid. All of these payments are subject to the former owners being actively engaged with Orgad at the date such payment is due, and therefore were not taken as part of the consideration for the business combination.
During the nine and three-month period ended September 30, 2022 an amount of $328 and $201 was recorded in respect of the cash instalments respectively, and $267 and $156 in respect of stocks issuance, respectively.
| (b) | Identifiable assets acquired and liabilities assumed |
Under the preliminary purchase price allocation, the Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of the acquisition. Such estimates are subject to change during the measurement period which is not expected to exceed one year. The purchase price allocation was not finalized duo to examination of the net working capital of Orgad at the acquisition date. Any adjustments to the preliminary purchase price allocation identified during the measurement period will be recognized in the period in which the adjustments are determined.
| 15 |
MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 6 – Business Combination (Cont.)
The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date:
Schedule of Fair Value of Assets Acquired and Liabilities
| Thousands USD | ||||
| Cash and Cash Equivalent | 0 | |||
| Trade receivables | 89 | |||
| Other receivables | 239 | |||
| Inventory | 864 | |||
| Fixed assets | 55 | |||
| Long-term deposits | 31 | |||
| Selling platform (*) | 378 | |||
| Goodwill | 268 | |||
| Short-term credit | (181 | ) | ||
| Trade payables | (660 | ) | ||
| Other payables | (101 | ) | ||
| Long-term loan | (138 | ) | ||
| Deferred Taxes | (87 | ) | ||
| Total net assets acquired | 757 | |||
| (*) | The |
| (c) | Acquisition-related costs |
The Company incurred transaction costs of approximately $55 and none during the nine-month and three-month period ended September 30, 2022 which were included in general and administrative expenses in the consolidated statements of income (loss), (the total amount recorded during the first quarter of the year).
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MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 7 – Operating Segments
As a result of the business combination in the reporting period (see note 6), the Company has two reportable segments: (i) fashion and equipment e-commerce platform, and (ii) SaaS based innovative artificial intelligence driven measurement solutions. The fashion and equipment e-commerce platform which represent Orgad’s activity that was acquired by the Company, mainly operates on Amazon. The SaaS based innovative artificial intelligence driven measurement solutions, or SaaS Solutions operating segment consists of My Size Inc and My Size Israel.
Information related to the operations of the Company’s reportable operating segments is set forth below:
Schedule of Reportable Operating Segments
| Fashion and equipment e-commerce platform | SaaS Solutions | Total | ||||||||||
| For the nine months ended September 30, 2022 | ||||||||||||
| Revenue | 1,797 | 134 | 1,931 | |||||||||
| Operating (loss) income | (215 | ) | (5,517 | ) | (5,732 | ) | ||||||
| For the three months ended September 30, 2022 | ||||||||||||
| Revenue | 685 | 41 | 726 | |||||||||
| Operating (loss) income | (286 | ) | (1,689 | ) | (1,975 | ) | ||||||
| Fashion and equipment e-commerce platform | SaaS Solutions | |||||||
| For September 30, 2022: | ||||||||
| Assets | 1,697 | 6,494 | ||||||
Note 6 - 8 – Significant Events Duringevents during the Reporting Periodreporting period
| In | ||
| 2. | In August 2022, the Company established a joint venture (“JV”) in Brazil with | |
In accordance with NASDAQ Listing Rule 5810(c)(3)(C), the Company has a grace period of 180 calendar days, or until December 4, 2017, to regain compliance with NASDAQ Listing Rule 5550(b)(2). The Company will endeavor to rectify the situation and to meet the MVLS Requirement.
During August and September 2017, the Company received $341 from the investments in cash. The remaining amount of the investment is guaranteed by notes. Subsequent to September 30 2017, $236 was received in cash.
My Size, Inc.
Notes to Condensed Consolidated Interim Financial Statements (unaudited)
U.S. dollars in thousands (except share data and per share data)
Note 6 - Significant Events During the Reporting Period (cont’d)
| ||
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Note 7 - Subsequent Events
Note 9 – Subsequent events
On October 7, 2022, the Company entered into Share Purchase Agreement (the “Agreement”) with the five shareholders of Naiz Fit (the “Sellers”), pursuant to which the Sellers agreed to sell to the Company all of the issued and outstanding shares of Naiz Bespoke Technologies, S.L., a limited liability company incorporated under the laws of Spain (“Naiz”). The acquisition of Naiz was completed on October 11, 2022.
|
In consideration of the purchase of the shares of Naiz, the agreement provides that the Sellers are entitled to receive (i) an aggregate amount of shares (the “Equity Consideration”) of the Company’s common stock (the “Shares”), representing in the aggregate, immediately prior to the issuance of such shares at the closing of the transaction, not more than % of the issued and outstanding Shares and (ii) up to US$ in cash (the “Cash Consideration”).
The Company shall make an additional cash payment (the “Shortfall Value”) of $ to the Sellers within 45 days of the Company’s receipt of Naiz’s 2025 audited financial statements; provided that certain revenue targets are met.
The payment of the second, third, fourth and fifth cash installments are further subject to the continuing employment or involvement of two of the shareholders which holds key position by or with Naiz at the date such payment is due (except if a Key Person is terminated from Naiz due to a Good Reason (as defined in the Agreement).
The required information for purchase price allocation in accordance with the FASB ASC Topic 805 is not fully presented because the initial accounting of the business combination not yet completed as of the date of the financial statements, due to the short period since acquisition and since the acquiree accounting records are not yet final.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read theThe following discussion alongand analysis provide information that we believe to be relevant to an assessment and understanding of our results of operations and financial condition for the periods described. This discussion should be read together with our condensed consolidated interim financial statements and the related notes to the financial statements, which are included in this report. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions, including those discussed under “Risk Factors”Quarterly Report on Form 10-Q. This information should also be read in conjunction with the information contained in our annual reportAnnual Report on Form 10-K for the year ended December 31, 2016. Our2021, filed with the Securities and Exchange Commission on March 31, 2022, or the Annual Report, including the consolidated annual financial statements as of December 31, 2021, and their accompanying notes included therein.
This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements in this Quarterly Report on Form 10-Q about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan” and “would.” For example, statements concerning financial condition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management, markets for our common stock and future management and organizational structure are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement.
Any forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout this Quarterly Report on Form 10-Q. Some of the risks, uncertainties and achievementsassumptions that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include but are not limited to:
| ● | our history of losses and needs for additional capital to fund our operations and our inability to obtain additional capital on acceptable terms, or at all; | |
| ● | our ability to continue as a going concern; | |
| ● | risks related to the COVID-19 pandemic; | |
| ● | the new and unproven nature of the measurement technology markets; | |
| ● | our ability to achieve customer adoption of our products; | |
| ● | our dependence on assets we purchased from a related party and the risk that such assets may in the future be repurchased; | |
| ● | our ability to enhance our brand and increase market awareness; | |
| ● | our ability to introduce new products and continually enhance our product offerings; | |
| ● | the success of our strategic relationships with third parties; | |
| ● | information technology system failures or breaches of our network security; | |
| ● | competition from competitors; | |
| ● | our reliance on key members of our management team; | |
| ● | current or future litigation; and | |
| ● | the impact of the political and security situation in Israel on our business. |
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The foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any forward-looking statements. You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed as exhibits to the Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. You should assume that the information appearing in this Quarterly Report on Form 10-Q is accurate as of the date hereof. Because the risk factors referred to on page 12 of our Annual Report, could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or implied by, theseon our behalf, you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Unless the context otherwise requires, all references to “we,” “us,” “our” or “the Company” in this Quarterly Report on Form 10-Q are to My Size, Inc. a Delaware corporation, and its subsidiaries, including MySize Israel 2014 Ltd, Topspin Medical (Israel) Ltd, Orgad International Marketing Ltd., or Orgad, My Size LLC and Naiz Bespoke Technologies, S.L taken as a whole.
Overview
We are a creator of mobile device measurement solutions that has developed innovative solutions designed to address shortcomings in multiple verticals, including the e-commerce fashion/apparel, shipping/parcel and do it yourself, or DIY, industries. Utilizing our sophisticated algorithms within our proprietary technology, we can calculate and record measurements in a variety of novel ways, and most importantly, increase revenue for businesses across the globe.
Our solutions can be utilized to accurately take measurements of a variety of items via a mobile device. By downloading the application to a smartphone, the user is then able to run the mobile device over the surface of an item the user wishes to measure. The information is then automatically sent to a cloud-based server where the dimensions are calculated through our proprietary algorithms, and the accurate measurements (+ or - 2 centimeters) are then sent back to the user’s mobile device. We believe that the commercial applications for this technology are significant in many areas.
Currently, we are mainly focusing on the e-commerce fashion/apparel industry. In addition, our solutions address the shipping/parcel and DIY uses markets.
While we rollout our products to major retailers and apparel companies, there is a lead time for new customers to ramp up before we can recognize revenue. This lead time varies between customers, especially when the customer is a tier 1 retailer, where the integration process may take longer. Generally, first we integrate our product into a customer’s online platform, which is followed by piloting and implementation, and, assuming we are successful, commercial roll-out, all of which takes time before we expect it to impact our financial results in a meaningful way. While we have begun generating initial sales revenue, we do not expect to generate meaningful revenue during the upcoming quarters. Because of the numerous risks and uncertainties associated with the success of our market penetration and our dependence on the extent to which MySizeID is adopted and utilized, we are unable to predict the extent to which we will recognize revenue. We may be unable to successfully develop or market any of our current or proposed products or technologies, those products or technologies may not generate any revenues, and any revenues generated may not be sufficient for us to become profitable or thereafter maintain profitability.
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Orgad Acquisition
On February 7, 2022, My Size Israel 2014 Ltd, or My Size Israel, entered into a Share Purchase Agreement, or the Orgad Agreement, with Amar Guy Shalom and Elad Bretfeld, or the Orgad Sellers, pursuant to which the Orgad Sellers agreed to sell to My Size Israel all of the issued and outstanding equity of Orgad.
Orgad operates an omnichannel e-commerce platform engaged in online retailing in the global market. It operates as a third-party seller on Amazon.com, eBay and others. Orgad currently manages more than 1,000 stock-keeping units, or SKUs, mainly in fashion, apparel and shoes, but is capable of managing tens of thousands of SKUs.
The Orgad Sellers are the sole title and beneficial owners of 100% of the shares of Orgad. In consideration of the shares of Orgad, the Orgad Sellers are entitled to receive (i) up to $1,000,000 in cash, or the Orgad Cash Consideration, (ii) an aggregate of 2,790,049 shares, or the Orgad Equity Consideration, of our common stock, and (iii) earn-out payments of 10% of the operating profit of Orgad for the years 2022 and 2023. The transaction closed on the same day.
The Orgad Cash Consideration is payable to the Orgad Sellers in three installments, according to the following payment schedule: (i) $300,000 which we paid upon closing, (ii) $350,000 payable on the two-year anniversary of the closing, and (iii) $350,000 payable on the three-year anniversary of the closing, provided that in the case of the second and third installments certain revenue targets are met and subject further to certain downward post-closing adjustment.
The Equity Consideration is payable to the Orgad Sellers according to the following payment schedule: (i) 1,395,025 shares were issued at closing, and (ii) 1,395,024 shares will be issued in eight equal quarterly installments until the lapse of two years from closing, subject to certain downward post-closing adjustment.
The payment of the second and third cash installments, the equity installments and the earn out are further subject in each case to the Orgad Sellers being actively engaged with Orgad at the date such payment is due (except if the Orgad Sellers resign due to reasons relating to material reduction of salary or adverse change in their position with Orgad or its affiliates).
In connection with the Orgad Agreement, each of the Orgad Sellers entered into employment agreements with Orgad and six-month lock-up agreements with us.
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Naiz Bespoke Technologies Acquisition
On October 7, 2022, My Size, Inc., or My Size, entered into a Share Purchase Agreement, or the Naiz Agreement, with Borja Cembrero Saralegui, or Borja, Aritz Torre Garcia, or Aritz, Whitehole, S.L., or Whitehole, Twinbel, S.L., or Twinbel and EGI Acceleration, S.L., or EGI. Each of Borja, Aritz, Whitehole, Twinbel and EGI shall be referred to as the Naiz Sellers herein. Pursuant to the Naiz Agreement, the Naiz Sellers agreed to sell to My Size all of the issued and outstanding equity of Naiz, a limited liability company incorporated under the laws of Spain. The acquisition of Naiz was completed on October 11, 2022.
In consideration of the purchase of the shares of Naiz, the Naiz Agreement provided that the Naiz Sellers are entitled to receive (i) an aggregate of 6,000,000 shares, or the Naiz Equity Consideration, of My Size common stock, or the Shares, representing in the aggregate, immediately prior to the issuance of such shares at the closing of the transaction, not more than 19.9% of the issued and outstanding Shares and (ii) up to US$2,050,000 in cash, the Naiz Cash Consideration.
The Naiz Equity Consideration was issued to the Naiz Sellers at closing of the transaction of which 2,365,800 shares of My Size common stock were issued to Whitehole constituting 6.6% of our outstanding shares following such issuance. The Naiz Agreement also provides that, in the event that the actual value of the Naiz Equity Consideration (based on the average closing price of the Shares on the Nasdaq Capital Market over the 10 trading days prior to the closing of the transaction, or the Equity Value Averaging Period) is less than US$1,650,000, My Size shall make an additional cash payment, or the Shortfall Value to the Naiz Sellers within 45 days of our receipt of Naiz’s 2025 audited financial statements; provided that certain revenue targets are met. Following the Equity Value Averaging Period, it was determined that the Shortfall Value is US$459,240.
The Naiz Cash Consideration is payable to the Naiz Sellers in five installments, according to the following payment schedule: (i) US$500,000 at closing, (ii) up to US$500,000 within 45 days of My Size’s receipt of Naiz’s 2022 audited financial statements, (iii) up to US$350,000 within 45 days of My Size’s receipt of Naiz’s unaudited financial statements for the six months ended June 30, 2023, (iv) up to US$350,000 within 45 days of My Size’s receipt of Naiz’s unaudited financial statements for the six months ended December 31, 2023, and (v) up to US$350,000 within 45 days of My Size’s receipt of Naiz’s 2024 audited financial statements; provided that in the case of the second, third, fourth and fifth installments certain revenue targets are met.
The payment of the second, third, fourth and fifth cash installments are further subject to the continuing employment or involvement of Borja and Aritz, or the Key Persons, by or with Naiz at the date such payment is due (except if a Key Person is terminated from Naiz due to a Good Reason (as defined in the Naiz Agreement).
The Naiz Agreement contains customary representations, warranties and indemnification provisions. In addition, the Naiz Sellers will be subject to non-competition and non-solicitation provisions pursuant to which they agree not to engage in competitive activities with respect to My Size’s business.
In connection with the Naiz Agreement, (i) each of the Naiz Sellers entered into six-month lock-up agreements, or the Lock-Up Agreement, with My Size, (ii) Whitehole, Twinbel and EGI entered into a voting agreement, or the Voting Agreement, with My Size and (iii) each of the Key Persons entered into employment agreements and services agreements with Naiz.
The Lock-Up Agreement provides that each Naiz Seller will not, for the six-month period following the closing of the transaction, (i) offer, pledge, sell, contract to sell, sell any option, warrant or contract to purchase, purchase any option, warrant or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Shares or any securities convertible into or exercisable or exchangeable for Shares in each case, that are currently or hereafter owned of record or beneficially (including holding as a custodian) by such Naiz Seller, or publicly disclose the intention to make any such offer, sale, pledge, grant, transfer or disposition; or (ii) enter into any swap, short sale, hedge or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of such Naiz Seller’s Shares regardless of whether any such transaction described in clause (i) or this clause (ii) is to be settled by delivery of Shares or such other securities, in cash or otherwise. The Lock-Up Agreement also contains an additional three-month “dribble-out” provision that provides following the expiration of the initial six-month lock-up period, without My Size’s prior written consent (which My Size shall be permitted to withhold at its sole discretion), each Naiz Seller shall not sell, dispose of or otherwise transfer on any given day a number of Shares representing more than the average daily trading volume of the Shares for the rolling 30 day trading period prior to the date on which such Seller executes a trade of the Shares.
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The Voting Agreement provides that the voting of any Shares held by each of Whitehole, Twinbel and EGI, or the Naiz Acquisition Stockholders, will be exercised exclusively by a proxy designated by My Size’s board of directors from time to time, or the Proxy, and that each Naiz Acquisition Stockholder will irrevocably designate and appoint the then-current Proxy as its sole and exclusive attorney-in-fact and proxy to vote and exercise all voting right with respect to the Shares held by each Naiz Acquisition Stockholder. The Voting Agreement also provides that, if the voting power held by the Proxy, taking into account the proxies granted by the Naiz Acquisition Stockholders and the Shares owned by the Proxy, represents 20% or more of the voting power of My Size’s stockholders that will vote on an item, or the Voting Power, then the Proxy shall vote such number of Shares in excess of 19.9% of the Voting Power in the same proportion as the Shares that are voted by My Size’s other stockholders. The Voting Agreement will terminate on the earliest to occur of (i) such time that such Naiz Acquisition Stockholder no longer owns the Shares, (ii) the sale of all or substantially all of the assets of My Size or the consolidation or merger of My Size with or into any other business entity pursuant to which stockholders of My Size prior to such consolidation or merger hold less than 50% of the voting equity of the surviving or resulting entity, (iii) the liquidation, dissolution or winding up of the business operations of My Size, and (iv) the filing or consent to filing of any bankruptcy, insolvency or reorganization case or proceeding involving My Size or otherwise seeking any relief under any laws relating to relief from debts or protection of debtors.
Operations in Russia
In addition to our Israel operations, we have operations in Russia through our wholly owned subsidiary, My Size LLC. Specifically, we undertake some of our sales and marketing using personnel located in Russia. To date, the invasion of Ukraine by Russia has not had a material impact on our business.
Results of Operations
The table below provides our results of operations for the periods indicated.
Three months ended September 30 | Nine months ended September 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (dollars in thousands) | (dollars in thousands) | |||||||||||||||
| Revenues | $ | 726 | $ | 31 | $ | 1,931 | $ | 88 | ||||||||
| Cost of revenues | (877 | ) | - | (1,607 | ) | - | ||||||||||
| Gross profit | (151 | ) | 31 | 324 | 88 | |||||||||||
| Research and development expenses | (350 | ) | (462 | ) | (1,152 | ) | (3,842 | ) | ||||||||
| Sales and marketing | (672 | ) | (521 | ) | (2,526 | ) | (1,798 | ) | ||||||||
| General and administrative | (802 | ) | (1,074 | ) | (2,378 | ) | (2,303 | ) | ||||||||
| Operating loss | (1,975 | ) | (2,026 | ) | (5,732 | ) | (7,855 | ) | ||||||||
| Financial income (expenses), net | (51 | ) | 18 | (198 | ) | 50 | ||||||||||
| Net loss | $ | (2,026 | ) | $ | (2,008 | ) | $ | (5,930 | ) | $ | (7,805 | ) | ||||
Nine and Three Months Ended September 30, 2022 Compared to Nine and Three Months Ended September 30, 2021
Revenues
We started to generate revenue in 2019 and we expect to incur additional losses to increase our sales and marketing efforts and to perform further research and development activities. Our revenues for the nine months ended September 30, 2022 amounted to $1,931,000 compared to $88,000 for the nine months ended September 30, 2021. Our revenues for the three months ended September 30, 20172022 amounted to $726,000 compared to $31,000 for the three months ended September 30, 2021. The increase was primarily attributable to $1,797,000 in revenue generated from Orgad from February 7, 2022, the date of closing of the Orgad acquisition, or the Acquisition Date, through to the end of the third quarter 2022 and to $685,000 in revenue generated from Orgad for the three months ended September 30, 2022.
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Cost Of Revenues
Our cost of revenues expenses for the nine and three months ended September 30, 2016
From inception through2022 amounted to $1,607,000 and $877,000, respectively, compared to none for the nine and three months ended September 30, 2017, we have sustained an accumulated deficit2021. The cost of approximately $15.1 million. From inception throughrevenues includes cash and equity liabilities expenses in the amount of $149,000 and $89,000 for the nine and three months ended September 30, 2017, we have not generated any revenue from operations and expect2022 respectively. The increase in comparison with the corresponding period was due to incur additional losses to perform further research and development activities and do not currently have any commercial products. Our product development efforts are still in their early stages and we are currently unable to estimate the cost or time they will take to complete.of goods of the revenues generated from Orgad’s operations.
Research and Development Expenses
Our research and development expenses for the nine months ended September 30, 20172022 amounted to $624,000$1,152,000 compared to $500,000$3,842,000 for the nine months ended September 30, 2016.2021. The increase betweendecrease in comparison with the corresponding periodsperiod primarily resulted from increasedshare-based payment in the amount of $2,618,000 that was recorded in the corresponding period attributed to the share issuance to Shoshana Zigdon under the Amendment to Purchase Agreement dated May 26, 2021, and a decrease in shared based expenses related to subcontractors and the increased expenses associated with the hiring of new employees.
Our research and development expenses for the three months ended September 30, 20172022 amounted to $213,000$350,000 compared to $172,000$462,000 for the three months ended September 30, 2016.2021. The increase betweendecrease in comparison with the corresponding periodsperiod primarily resulted from increasedshare-based payment to employees.
Sales and Marketing Expenses
Our sales and marketing expenses relatedfor the nine months ended September 30, 2022 amounted to subcontractors and$2,526,000 compared to $1,798,000 for the increased expenses associatednine months ended September 30, 2021. The increase in comparison with the corresponding period was mainly due to the hiring of new employees. employees and expenses associated with Orgad activities, offset by a reduction in share-based payment expenses to employees and consultants.
Our sales and marketing expenses for the three months ended September 30, 2022 amounted to $672,000 compared to $521,000 for the three months ended September 30, 2021. The increase in comparison with the corresponding period was mainly due to expenses associated with Orgad activities, offset by a reduction in share-based payment expenses to employees and consultants.
Marketing, General and Administrative Expenses
Our marketing, general and administrative expenses for the nine months ended September 30, 20172022 amounted to $2,667,000$2,378,000 compared to $1,359,000$2,303,000 for the nine months ended September 30, 2016.2021. The increase betweenin comparison with the corresponding period in expenses was derived mainly from share based payments, increases in public relations and investor relations expenses and from increaseddue to expenses associated with the hiring of new employees. Orgad activities offset by a decrease in insurance expenses and professional services expenses.
Our marketing, general and administrative expenses for the three months ended September 30, 20172022 amounted to $611,000$802,000 compared to $434,000$1,074,000 for the three months ended September 30, 2016.2021. The increase betweendecrease in comparison with the corresponding period was mainly due to a decrease in expenses was derived mainly from share based payments, increasesinsurance offset by an increase in public relations and investor relations expenses and from increased expenses associated with Orgad activities.
Operating Loss
As a result of the hiring of new employees.
Financial income and expense, net
Our financial expensesforegoing, for the nine months ended September 30, 2017 amounted to $228,000,2022, our operating loss was $5,732,000 a decrease of $2,123,000 compared to financial expense of $2,261,000our operating loss for the nine months ended September 30, 2016. The decrease between the corresponding periods in financial expenses was derived mainly from the creation and revaluation2021 of $7,855,000.
As a result of the components of the options, derivatives and investment in marketable securities.
Our financial incomeforegoing, for the three months ended September 30, 2017 amounted to $17,0002022, our operating loss was $1,975,000 a decrease of $51,000 compared to financial expense of $118,000our operating loss for the three months ended September 30, 2016. The decrease between the corresponding periods in2021 of $2,026,000.
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Financial Income (Expenses), Net
Our financial expenses was derived mainly from the creation and revaluation of the components of the options, derivatives and investment in marketable securities.
Net Loss from continuing operations
As a result of the foregoing research and development, marketing general and administrative expenses, and financial expenses, ourexpense, net loss from continuing operations for the nine months ended September 30, 2017 was $3,519,000,2022 amounted to $198,000 compared to a net loss from continuing operationsfinancial income of $50,000 for the nine months ended September 30, 2016 of $4,120,000. The main reasons for2021. During the change between the corresponding periods is due to a decrease in financenine months ended September 30, 2022, we had financial expenses mainly from the creationexchange rate differences and revaluation of the components of the options, derivatives and investment in marketable securities whereas in the corresponding period. This decrease was partially offset by an increaseperiod we had financial income primarily due revaluation of investment in share based payments, increases in public relations and investor relations expenses and from increased expenses associated with the hiring of new employees.marketable securities.
Our financial expense, net loss from continuing operations for the three months ended September 30, 2017 was $807,000,2022 amounted to $51,000 compared to a net loss from continuing operationsfinancial income of $18,000 for the three months ended September 30, 20162021. During the three months ended September 30, 2022, we had financial income mainly from exchange rate differences and revaluation of $724,000.investment in marketable securities whereas in the corresponding period we had financial expenses primarily due revaluation of investment in marketable securities and exchange rate differences offset in income from revaluation of derivative.
Net Loss
As a result of the foregoing, our net loss for the nine months ended September 30, 2022 was $5,930,000, compared to a net loss of $7,805,000 for the nine months ended September 30, 2021. The decrease betweenin the corresponding periodsnet loss was mainly due to finance expenses from the revaluationreasons mentioned above.
As a result of options and derivativesthe foregoing, our net loss for the three months ended September 30, 2022 was $2,026,000, compared to a net loss of $2,008,000 for the three months ended September 30, 2021. The decrease in the corresponding period. This decreasenet loss was partially offset by an increase in share based payments, increases in public relations and investor relations expenses and from increased expenses associated withmainly due to the hiring of new employees.reasons mentioned above.
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through public and private offerings of ourdebt and equity securities.in the State of Israel and in the U.S.
As of September 30, 2017,2022, we had cash, and cash equivalents, and restricted cash of $14,000 as$4,622,000 compared to $34,000$10,943,000 of cash, cash equivalents and restricted cash as of December 31, 2016.2021. This decrease primarily resulted from our operating activities, the acquisition of Orgad, and resources that were deployed to grow Orgad’s business.
Net cashCash used in operating activities was $2,472,000amounted to $5,858,000 for the nine months ended September 30, 20172022, compared to $1,748,000$3,984,000 for the nine months ended September 30, 2016.
2021. The increase in cash used in operating activities was mainly resulted from increased paymentsdue to service providersthe acquisition of Orgad and Company employees. The Company has also incurred expenses not in the ordinary course of its business mainly from the registration of patents, the listing of the common stock on the NASDAQ Capital Market and legal expenses associated with lawsuits involving the Company.working capital.
Net cashedcash used in investing activities was $8,000$327,000 for the nine months ended September 30, 20172022, compared to $31,000cash provided by investing activities of $172,000 for the nine months ended September 30, 2016.2021. The negative cash flow resultedincrease from purchasethe corresponding period was mainly due to the acquisition of equipment.Orgad offset by changes in restricted deposits that occurred in the nine months ended September 30, 2022.
Net cash provided byused in financing activities was $2,496,000$39,000 for the nine months ended September 30, 20172022, compared to $1,018,000cash provided by financing activities of $5,857,000 for the nine months ended September 30, 2016.2021. The cash flowsflow from financing activities for the nine months ended September 30, 2017 was mainly due to realization of guarantees.
On August 16, 2017, the Board of Directors approved agreements with three private investors who will provide an investment totaling $780 in exchange for $780,000 shares of common stock of the Company.
During August and September 2017, the Company received $3412021 resulted from the investmentspublic offerings that occurred in cash. The remaining amount ofJanuary 2021 and March 2021 and from proceeds that were received from an investor for warrants that were exercised.
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We do not have any material commitments for capital expenditures during the investment is guaranteed by notes issued by an ungraded financial institution in favor of the Company. In the eventnext twelve months.
We expect that the investor does not fulfill its obligation to purchase the shares of the Company’s Common Stock with respect to which the guarantee note has been issued, then the Company may call the guarantee note; provided, however, the existing guarantee note currently expires on November 14, 2017. As of the date of this report, the Company is in discussions with the investor regarding the extension of the guarantee note, however, an extended guarantee note has not yet been approved or put in place. Subsequent to September 30 2017, $236 was received in cash.
On October 26, 2017, the Company entered into a securities purchase agreement to sell original issue discount non-convertible notes (the “Notes”) and warrants (the “Warrants”) to certain accredited investors in a private placement transaction (the “Offering”). In connection with such Offering, the Company issued (i) Notes with a principal amount of $1.33 million and (ii) 888,888 Warrants. The Offering resulted in gross proceeds to the Company of approximately $1.2 million, before deducting placement agent and other offering expenses.
The Notes are due on the earlier of the four month anniversary from the date of their issuance or the completion of another equity offering. The Warrants have a five-year term andwe will have an exercise price of $0.75 per share.
As of September 30, 2017, the Company has $1,177 and $455 in guaranteed notes and checks, respectively as remaining balance from the amounts described above. The guarantee has been provided by an ungraded financial institution. As previously disclosed, the checks have not been honored, continue to remain outstanding,generate losses and no shares will be issued on these funds untilnegative cash flows from operations for the entire outstanding amount of the checks has been fully paid.
Subsequent to September 30, 2017, the sum of $236 of the guarantee notes has been redeemed in cash.
foreseeable future. Based on the projected cash flows and its cash balances as of September 30, 2017, the Company’s Management is of the opinion that without further2022, we believe our existing cash will be sufficient to fund raising it will not have sufficient resources to enable it to continue its operating activities including the development, and marketing of its productsoperations for a period of at leastless than 12 months from the date of approval of these financial statements.months. As a result, there areis substantial doubt about the Company’sour ability to continue as a going concern. We will need to raise additional capital, which may not be available on reasonable terms or at all. Additional capital would be used to accomplish the following:
| ● | finance our current operating expenses; | |
| ● | pursue growth opportunities; | |
| ● | hire and retain qualified management and key employees; | |
| ● | respond to competitive pressures; | |
| ● | comply with regulatory requirements; and | |
| ● | maintain compliance with applicable laws. |
Management’s plans includeCurrent conditions in the continued commercializationcapital markets are such that traditional sources of their productscapital may not be available to us when needed or may be available only on unfavorable terms. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets, economic conditions, the impact of the COVID-19 pandemic, the Russian invasion of Ukraine, and securing sufficient financinga number of other factors, many of which are outside our control, and on our financial performance. Accordingly, we cannot assure you that we will be able to successfully raise additional capital at all or on terms that are acceptable to us. If we cannot raise additional capital when needed, it may have a material adverse effect on our business, results of operations and financial condition.
To the extent that we raise additional capital through the sale of additional equity securities,or convertible debt or capital inflows from strategic partnerships. There are no assurances however, that the Company will be successful in obtaining the level of financing needed for its operations. If the Company is unsuccessful in commercializing its products and securing sufficient financing, it may need to cease operations.
The financial statements include no adjustments for measurement or presentation of assets and liabilities, which may be required should the Company fail to operate as a going concern.
A downturn in the United States stock and debt markets could make it more difficult to obtain financing throughsecurities, the issuance of such securities could result in substantial dilution for our current stockholders. The terms of any securities issued by us in future capital transactions may be more favorable to new investors, and may include preferences, superior voting rights and the issuance of warrants or other derivative securities, which may have a further dilutive effect on the holders of any of our securities then-outstanding. We may issue additional shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock in connection with hiring or retaining personnel, option or warrant exercises, future acquisitions or future placements of our securities for capital-raising or other business purposes. The issuance of additional securities, whether equity or debt, securities. Even ifby us, or the possibility of such issuance, may cause the market price of our common stock to decline and existing stockholders may not agree with our financing plans or the terms of such financings. In addition, we are ablemay incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to raise the funds required, it is possiblerecognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial condition. Furthermore, any additional debt or equity financing that we could incur unexpected costs and expenses, fail to collect significant amounts owedmay need may not be available on terms favorable to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our shares of common stock or the debt securities may cause us to be subject to restrictive covenants. Even ifat all. If we are ableunable to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek additional financing. Ifobtain such additional financing is not available or is not available on acceptable terms,a timely basis, we willmay have to curtail our operations.development activities and growth plans and/or be forced to sell assets, perhaps on unfavorable terms, or we may have to cease our operations, which would have a material adverse effect on our business, results of operations and financial condition.
Off-Balance Sheet Arrangements
We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.
Application of Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. GAAP.generally accepted accounting principles issued by the Financial Accounting Standards Board, or FASB. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.
While ourOur significant accounting policies were revenue from contracts with customers which are more fully described in the notes to our financial statements appearing elsewhere in this report, weQuarterly Report on Form 10-Q. We believe that thethese accounting policies discussed below are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate; and (2) changes in the estimate could have a material impact on our financial condition or results of operations.
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Equity-based compensation
The Company applies ASC 505-50, “Equity-Based Payments to Non-Employees” with respect to options and warrants issued to non-employees.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Not required for a smaller reporting company.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
We carried out an evaluationmaintain disclosure controls and procedures that are designed to ensure that information required byto be disclosed in our reports under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), under the supervision and with the participation of the Company’s management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) ofor the Exchange Act, as ofand the end of the period covered by this report. Based on this evaluation, our principal executive officerrules and principal financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Actregulations thereunder, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure.
Our In designing and evaluating the disclosure controls and procedures, are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however,management recognizes that our disclosureany controls and procedures, will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is basedrequired to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by Rule 13a-15(b) under the Exchange Act, our management, under the supervision and with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2022. Based upon certain assumptionssuch evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2022 were effective.
Our Chief Executive Officer and Chief Financial Officer do not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that itsthe objectives willof the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be met. Further,considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
Changes in Internal Controls
During the most recent fiscal quarter, thereno change has not occurred any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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Part II – Other Information
Item 1. Legal Proceedings.
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
We are not currently a party to any material legal proceedings except as described below. North Empire LLC
In a pre-trial hearing dated MarchOn August 7, 2016,2018, we commenced an action against North Empire LLC (“North Empire”) in the court decided that disclosure would take place and disclosure affidavits along with copiesSupreme Court of the documents specified therein were exchanged betweenState of New York, County of New York for breach of a Securities Purchase Agreement (the “Agreement”) in which we are seeking damages in an amount to be determined at trial, but in no event less than $616,000. On August 2, 2018, North Empire filed a Summons with Notice against the parties. FollowingCompany, also in the recommendationsame Court, in which they allege damages in an amount of $11.4 million arising from an alleged breach of the court,Agreement. On September 6, 2018 North Empire filed a Notice of Discontinuance of the action it had filed on March 20, 2016,August 2, 2018. On September 27, 2018, North Empire filed an answer and asserted counterclaims in the plaintiffaction commenced by us against them, alleging that we failed to deliver stock certificates to North Empire causing damage to North Empire in the amount of $10,958,589. North Empire also filed a third-party complaint against our CEO and now former Chairman of the Board asserting similar claims against them in their individual capacities. On October 17, 2018, we filed a reply to North Empire’s counterclaims. On November 15, 2018, our CEO and now former Chairman of the Board filed a motion to dismiss North Empire’s third-party complaint. On January 6, 2020, the Court granted the motion and dismissed the third-party complaint. Discovery has been completed and both parties have filed motions for summary judgment in connection with the claims and counterclaims. On December 30, 2021, the Court denied both My Size and North Empire’s motions for summary judgment, arguing there were factual issues to be determined at trial. On January 26, 2022, we filed a notice of deletion of certain defendants including board and management members, excluding the chairmanappeal of the Board and the CEO of the Company from the statement of claim.
All pre-trial preliminary proceedings as well as submission of all evidentiary affidavits and expert opinions by both parties have been completed. Pursuant to the Israeli Court’s recommendation, the case was referred to mediation by the honorable Judge (Rtd.) Hilla Gerstel, former president of the Central District Court.
The mediation has been completed and the Company and the plaintiff entered into a settlement agreement (the “Settlement”) dated June 20, 2017. Pursuant to the Settlement, the Company agreed to make a payment to the plaintiff of NIS325,000 (as of the date hereof, approximately USD$92,000) (the “Down Payment”) within 30 days of the date of the Settlement. Additionally, the Company is obligated to register the Original Shares within a specified time frame. Additionally, pursuant to the Settlement, the Company agreed to issue, within 60 days, 80,358 additional shares of common stock to the plaintiff (the “New Shares”), which New Shares shall be registered, to be deposited in escrow and sold for the benefit of plaintiff. Such New Shares shall be sold at a maximum aggregate price of NIS10,000 or an amount constituting not more than 2% of the average volume of trades within the last 90 days, whichever higher, in one single trading day. To the extent the Company does not issue the unrestricted New Shares within 60 days, the Plaintiff has a right, at his exclusive discretion, to resume the proceedings pursuant to the complaint, provided he will deposits the Down Payment in an escrow account, pending the Court’s final adjudication of the complaint. Additionally, the Settlement provides that to the to the extent the aggregate proceeds from the sale of the Original Shares and the New Shares is less than NIS1,600,000, the Company will either complement the difference in cash or shall issue to the plaintiff additional shares of common stock in lieu thereof, at the Company’s sole discretion.
On September 5, 2017, the court rendered a judgment in the case (the “Judgement”), under which the complaint against the Company was accepted, the complaint against the CEO Mr. Ronen Luzon was rejected and the Company’s counter-claim was rejected.
decision. The Judgment included: (1) A declaratory remedy, under which the Company breached its contractual undertakings toward the plaintiffs, to list their shares both on the Tel Aviv Stock Exchange and on NASDAQ; (2) An order that the Company take any and all actions required for the listing of the plaintiffs shares, including instructing the Company’s transfer agent to remove the legend or any other restriction from the plaintiffs stock certificate and to issue them with new stock certificates free and clear from any restriction; (3) An order that the registration company of Bank Hapoalim electronically list all of the plaintiffs’ shares detailed in the complaint on the electronic trading system; (iv) The rejection of the complaint against the Company’s CEO, Mr. Luzon, and (4) An order that the Company pay the plaintiffs costs in the amount of NIS 70,000 (which amount is linked to the Israeli CPI and bearing legal interest from the Judgement date until actual payment if effected). Other than the payment of costs the Judgment bears no financial liability on the Company. On October 3 2017, the Company appealed the Judgment with the Supreme Court of Israel, and simultaneously, filed with the Supreme Court a Motion for Stay of Execution of the Judgement, pending the outcome of the appeal.
On October 19, 2017, the respondents filed their response to the Motion and on November 2, 2017 the Company filed its reply the respondents’ response.appellant brief on or about October 26, 2022. On November 8, 2017, the Supreme Court upheld the MotionFebruary 3, 2022, we filed a motion to Stay and ordered that the execution of the Judgment will be stayed pending the outcome of the Appeal, provided that the Company will deposit inreargue the Court’s treasury an autonomous Israeli CPI linked bank guaranteedecision denying our motion for summary judgment. On or about March 31, 2022, North Empire filed its opposition papers to our motion to reargue. On or about May 20, 2022, we filed our reply papers, in an amountfurther support of NIS 1,700,000,its motion to coverreargue. On or about September 12, 2022 the respondents’ potential damages should the appeal be ultimately denied.
The Company received advice fromCourt issued its legal counsel that the burden of proof that the Judgmentdecision and order denying our motion to reargue. North Empire is wrong and should be reversed lies with the appellant. Consequently, the Company believes that it is more likely that the appeal will be denied rather than being accepted. In the event that the appeal is the Appeal will be denied, no direct financial liability will be imposeddue to file its opposing brief on the Company (other than legal costs which the court may order the losing side to pay).or about December 7, 2022.
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Item 1A. Risk Factors.
Not required for a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
On August 16, 2017, the Company entered into a securities purchase agreement (the “SPA”) with two investors. Pursuant to the SPA, the Company sold an aggregate of 250,000 shares of common stock, par value $0.001 per share (the “Common Stock”), at a purchase price of $1.00 per share to one investor.
On August 16, 2017, the Company entered into a securities purchase agreement (the “Installment SPA”) with an investor pursuant to which the investor will purchase $530,000 shares of the Company’s Common Stock at $1.00 per share in separate installments.
In connection with the foregoing, the Company relied upon the exemption from securities registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
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None.
Item 6. Exhibits.
| * | Filed herewith |
* Filed herewith.
** Furnished herewith.
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SIGNATURES
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.
| My Size, Inc. | ||
| Date: November | By: | /s/ Ronen Luzon |
| Ronen Luzon | ||
Chief Executive Officer (Principal Executive Officer) | ||
| Date: November | By: | /s/ Or Kles |
| Or Kles | ||
Chief Financial Officer (Principal Financial and Accounting Officer) |
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