U. S. Securities and Exchange CommissionSECURITIES 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, 20172023
☐ 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 |
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 1, 2023, 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, 20172023
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, 20172023
(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, 20172023 (Unaudited)
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, | |||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | 3,695 | 2,100 | ||||||
| Restricted cash | 72 | 263 | ||||||
| Inventory | 2,395 | 997 | ||||||
| Account receivables | 690 | 1,940 | ||||||
| Other receivables and prepaid expenses | 1,218 | 758 | ||||||
| Total current assets | 8,070 | 6,058 | ||||||
| Long term deposits | 26 | 28 | ||||||
| Property and equipment, net | 112 | 140 | ||||||
| Operating right-of-use asset | 372 | 583 | ||||||
| Intangible assets | 1,149 | 1,377 | ||||||
| Goodwill | 1,401 | 1,395 | ||||||
| Investment in JV | 47 | 99 | ||||||
| Investment in marketable securities | 26 | 47 | ||||||
| Total non-current assets | 3,133 | 3,669 | ||||||
| Total assets | 11,203 | 9,727 | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Operating lease liability | 137 | 159 | ||||||
| Bank overdraft and short-term loans | 230 | 155 | ||||||
| Trade payables | 2,617 | 2,487 | ||||||
| Liabilities to Related parties | 734 | 698 | ||||||
| Other payables | 855 | 680 | ||||||
| Total current liabilities | 4,573 | 4,179 | ||||||
| Long-term loans | 268 | 376 | ||||||
| Deferred tax liabilities | 274 | 328 | ||||||
| Operating lease liability | 156 | 308 | ||||||
| Total non-current liabilities | 698 | 1,012 | ||||||
| Total liabilities | 5,271 | 5,191 | ||||||
| COMMITMENTS AND CONTINGENCIES | - | - | ||||||
| Stockholders’ equity: | ||||||||
| Stock Capital - | ||||||||
| Common stock of $ par value - Authorized: shares; Issued and outstanding: and as of September 30, 2023 and December 31, 2022, respectively | 3 | 1 | ||||||
| Additional paid-in capital | 65,219 | 58,673 | ||||||
| Accumulated other comprehensive loss | (712 | ) | (637 | ) | ||||
| Accumulated deficit | (58,578 | ) | (53,501 | ) | ||||
| Total stockholders’ equity | 5,932 | 4,536 | ||||||
| Total liabilities and stockholders’ equity | 11,203 | 9,727 | ||||||
| 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)
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Nine-Months Ended September 30, | Three-Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | 4,166 | 1,931 | 2,156 | 726 | ||||||||||||
| Cost of revenues (*) | (2,698 | ) | (1,607 | ) | (780 | ) | (877 | ) | ||||||||
| Cost of revenues | (2,698 | ) | (1,607 | ) | (780 | ) | (877 | ) | ||||||||
| Gross profit | 1,468 | 324 | 1,376 | (151 | ) | |||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | (811 | ) | (1,152 | ) | (242 | ) | (350 | ) | ||||||||
| Sales and marketing | (2,598 | ) | (2,526 | ) | (952 | ) | (672 | ) | ||||||||
| General and administrative | (3,210 | ) | (2,378 | ) | (1,287 | ) | (802 | ) | ||||||||
| Total operating expenses | (6,619 | ) | (6,056 | ) | (2,481 | ) | (1,824 | ) | ||||||||
| Operating loss | (5,151 | ) | (5,732 | ) | (1,105 | ) | (1,975 | ) | ||||||||
| Financial income (expenses), net | (78 | ) | (198 | ) | 22 | (51 | ) | |||||||||
| Equity loss of equity method investees | (48 | ) | - | (9 | ) | - | ||||||||||
| Loss before taxes | (5,277 | ) | (5,930 | ) | (1,092 | ) | (2,026 | ) | ||||||||
| Taxes on income | 200 | - | (40 | ) | - | |||||||||||
| Net loss | (5,077 | ) | (5,930 | ) | (1,132 | ) | (2,026 | ) | ||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation differences | (75 | ) | (178 | ) | (36 | ) | (300 | ) | ||||||||
| Total comprehensive loss | (5,152 | ) | (6,108 | ) | (1,168 | ) | (2,326 | ) | ||||||||
| Basic and diluted loss per share** | ) | ) | ) | ) | ||||||||||||
| Basic and diluted weighted average number of shares outstanding** | ||||||||||||||||
| (*) | During the nine and three month ended September 30, 2023, the Company recorded an inventory write-down of $643 and $0 due to the fire that occurred in its warehouse (see Note 8(a)) |
| (**) | Adjusted to give retroactive effect of 1:25 reverse stock split, see Note 1(b) |
| 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.
| 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, 2023 | 1,464,117 | 1 | 58,673 | (637 | ) | (53,501 | ) | 4,536 | ||||||||||||||||
| Stock-based compensation related to options granted to employees and consultants | (8,000 | ) | -* | 290 | - | - | 290 | |||||||||||||||||
| Issuance of shares, net of issuance cost of $959 (**) | 432,000 | 1 | 6,257 | - | - | 6,258 | ||||||||||||||||||
| Issuance of shares, net of issuance cost | 432,000 | 1 | 6,257 | - | - | 6,258 | ||||||||||||||||||
| Exercise of warrants and prefunded warrants | 1,093,675 | 1 | (1 | ) | - | - | - | |||||||||||||||||
| Total comprehensive loss | - | - | (75 | ) | (5,077 | ) | (5,152 | ) | ||||||||||||||||
| Balance as of September 30, 2023 | 2,981,792 | 3 | 65,219 | (712 | ) | (58,578 | ) | 5,932 | ||||||||||||||||
| (*) | Represents an amount less than $1 |
| (**) | see notes 8(b) and 8(e) |
| 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 | ) | ||||||||||||||||||
| Amount** | Amount** | |||||||||||||||||||||||
| Common stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Total stockholders’ | ||||||||||||||||||||
| Number | Amount** | capital** | loss | deficit | equity | |||||||||||||||||||
| Balance as of January 1, 2022 | 959,300 | 1 | 56,453 | (406 | ) | (45,191 | ) | 10,857 | ||||||||||||||||
| Stock-based compensation related to options granted to employees and consultants | - | - | 327 | - | - | 327 | ||||||||||||||||||
| Issuance of shares in Business Combination | 69,751 | -* | 458 | - | - | 458 | ||||||||||||||||||
| Total comprehensive loss | - | - | - | (178 | ) | (5,930 | ) | (6,108 | ) | |||||||||||||||
| Balance as of September 30, 2022 | 1,029,051 | 1 | 57,238 | (584 | ) | (51,121 | ) | 5,534 | ||||||||||||||||
| (*) | Represents an amount less than $1 |
| (**) | Adjusted to give retroactive effect of 1:25 reverse stock split, see Note 1(b) |
| 5 |
| Common stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Total stockholders’ | ||||||||||||||||||||
| Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
| Balance as of July 1, 2023 | 2,438,780 | 2 | 61,553 | (676 | ) | (57,446 | ) | 3,433 | ||||||||||||||||
| Stock-based compensation related to options granted to employees and consultants | - | - | 68 | - | - | 68 | ||||||||||||||||||
| Issuance of shares, net of issuance cost of $518 (**) | 270,000 | -(*) | 3,599 | 3,599 | ||||||||||||||||||||
| Issuance of shares, net of issuance cost | 270,000 | - | 3,599 | 3,599 | ||||||||||||||||||||
| Exercise of prefunded warrants | 273,012 | 1 | (1 | ) | - | - | - | |||||||||||||||||
| Exercise of warrants and prefunded warrants | 273,012 | 1 | (1 | ) | - | - | - | |||||||||||||||||
| Total comprehensive loss | - | - | - | (36 | ) | (1,132 | ) | (1,168 | ) | |||||||||||||||
| Balance as of September 30, 2023 | 2,981,792 | 3 | 65,219 | (712 | ) | (58,578 | ) | 5,932 | ||||||||||||||||
| (*) | Represents an amount less than $1 |
| (**) | see notes 8(e) |
| Common stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Total stockholders’ | ||||||||||||||||||||
| Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
| Balance as of July 1, 2022 | 1,022,077 | 1 | 57,073 | (284 | ) | (49,095 | ) | 7,695 | ||||||||||||||||
| Balance | 1,022,077 | 1 | 57,073 | (284 | ) | (49,095 | ) | 7,695 | ||||||||||||||||
| Stock-based compensation related to options granted to employees and consultants | - | - | 165 | - | - | 165 | ||||||||||||||||||
| Issuance of shares in Business Combination (*) | 6,974 | *- | - | - | - | - | ||||||||||||||||||
| Issuance of shares in Business Combination | 6,974 | - | - | - | - | - | ||||||||||||||||||
| Total comprehensive loss | - | - | - | (300 | ) | (2,026 | ) | (2,326 | ) | |||||||||||||||
| Balance as of September 30, 2022 | 1,029,051 | 1 | 57,238 | (584 | ) | (51,121 | ) | 5,534 | ||||||||||||||||
| Balance | 1,029,051 | 1 | 57,238 | (584 | ) | (51,121 | ) | 5,534 | ||||||||||||||||
| (*) | Represents an amount less than $1 |
| 6 |
| 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 | |||||||||||||||||||
MY SIZE, INC. AND ITS SUBSIDIARIES
Condensed Consolidated Interim Statements of Cash Flows (Unaudited)
U.S. dollars in thousands
| 2023 | 2022 | |||||||
Nine-Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | (5,077 | ) | (5,930 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 27 | 32 | ||||||
| Change in operating lease right-of-use asset | 130 | 30 | ||||||
| Amortization of intangible assets | 226 | 84 | ||||||
| Change in warrants and derivatives | - | 26 | ||||||
| Change in liabilities to related parties | 36 | 32 | ||||||
| Interest of long-term liabilities | 16 | 3 | ||||||
| Interest paid | (16 | ) | (3 | ) | ||||
| Revaluation of investment in marketable securities | 21 | 28 | ||||||
| Change in Investment in JV | 52 | - | ||||||
| Stock based compensation | 290 | 327 | ||||||
| Change in inventory | (1,530 | ) | (288 | ) | ||||
| Change in deferred tax liabilities | (328 | ) | (19 | ) | ||||
| Change in account receivables | 1,165 | (281 | ) | |||||
| Changes in operating lease liabilities | (101 | ) | ||||||
| Change in other receivables and prepaid expenses | (351 | ) | 140 | |||||
| Change in trade payables | 271 | (503 | ) | |||||
| Change in account payables | 259 | 464 | ||||||
| Net cash used in operating activities | (4,910 | ) | (5,858 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Acquisition of a subsidiary, net of cash acquired | - | (300 | ) | |||||
| Purchase of property and equipment | - | (27 | ) | |||||
| Net cash used in investing activities | - | (327 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of shares, net of issuance costs | 6,257 | - | ||||||
| Loans received | 350 | 18 | ||||||
| Repayment of loans | (377 | ) | (57 | ) | ||||
| Net cash provided by (used in) financing activities | 6,230 | (39 | ) | |||||
| Effect of exchange rate fluctuations on cash and cash equivalents | 84 | (97 | ) | |||||
| Increase (decrease) in cash, cash equivalents and restricted cash (*) | 1,404 | (6,321 | ) | |||||
| Cash, cash equivalents and restricted cash at the beginning of the period | 2,363 | 10,943 | ||||||
| Cash, cash equivalents and restricted cash at the end of the period | 3,767 | 4,622 | ||||||
| Non cash activities: | ||||||||
| Shares issued in Acquisition of a subsidiary | - | 457 | ||||||
| (*) | $1,213 relates to change in cash and cash equivalents and, $191 to change in restricted cash for the nine months ended September 30, 2023. |
The accompanying notes are an integral part of the interim condensed consolidated interim financial statements.
| 7 |
My Size, Inc.MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements of Changes in Stockholders’ Equity (Deficit) (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.
Following the acquisition of Naizfit Bespoke Technologies, S.L (“Naiz” or “Naiz Fit”) in October 2022, the Company expanded its offering outreach and customer base. 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, 2023, 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, 2023, 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. On December 7, 2022, the Company’s board of directors approved a 1-for-25 reverse stock split of the Company’s issued and outstanding shares of common stock. The reverse stock split became effective on December 8, 2022. Exercise price and net loss per share amounts were adjusted retroactively for all periods presented in these financial statements. | |
| c. | In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas and other terrorist organizations in parallel to their continued rocket and terror attacks. The Company cannot currently predict the intensity or duration of Israel’s war against Hamas, nor can predict how this war will ultimately affect the Company’s business and operations or Israel’s economy in general. | |
| The war with Hamas has had an immaterial effect on its operations and financial results so far. This is attributable to its global footprint and the offices in Spain which has become a hub for the Company’s sizing solutions business. The majority of Orgad’s inventory utilizes fulfillment by Amazon rather than fulfilling directly. Inventory is now maintained and orders are shipped from regional Amazon warehouses, thereby reducing exposure to inventory risk and contributing to operating efficiencies. |
| 8 |
As of September 30, 2017, the Company entered into agreements pursuant
MY SIZE, INC. AND ITS SUBSIDIARIES
Notes to which it raised an aggregate of $8,795 of which $5,753Condensed Consolidated Interim Financial Statements (Unaudited)
U.S. dollars in thousands (except share data 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. per share data)
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 |
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 and its subsidiaries collectively referred to as 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, 2017 are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2017.
These unaudited condensed consolidated interim 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, 2016.
| 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, 2022. | ||
| b. | Significant Accounting Policies: | |
| The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements. | ||
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.
Critical accounting estimates: | ||
Due to the change of the operating segments as stated in note 7, and the reduction of the company's reporting units as a result, the company examined the need for impairment for those reporting units. The estimated fair value of the remaining reporting units was higher than their carrying amounts, and therefore there was no need to provide for impairment. |
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
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, otherrestricted cash, 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 | - | - | - | |||||||||||||||||||
| Investment in marketable securities(*) | - | |||||||||||||||||||||
| 9 |
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’d)(Cont.)
| Fair value hierarchy | ||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| ||||||||||||||||||||||
| Financial assets | - | ||||||||||||
| - | |||||||||||||
| - | - | ||||||||||||
| Derivatives (**) | | 10 | |||||||||||
| (*) | For the nine and three-month periods ended September 30, 2023 and 2022, the Company recognized gain (loss) (based on quoted market prices with a discount due to security restrictions on iMine shares) of the marketable securities was $(21), $(11), $(7) and $(22), respectively. |
| (**) | The Derivatives includes in other receivables. |
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).
| December 31, 2022 | ||||||||||||
| Fair value hierarchy | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Financial liabilities | - | - | - | |||||||||
| Derivatives | - | 9 | - | |||||||||
My Size, Inc.
Notes to Condensed Consolidated Interim Financial Statements (unaudited)
U.S. dollars in thousands (except share data and per share data)
Schedule of Stock Based Compensation Expenses
| 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 | ) | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Stock-based compensation expense – Cost of revenues | 19 | 67 | 4 | 39 | ||||||||||||
| Stock-based compensation expense - Research and development | 51 | 22 | 22 | 4 | ||||||||||||
| Stock-based compensation expense - Sales and marketing | 71 | 115 | 16 | 57 | ||||||||||||
| Stock-based compensation expense - General and administrative | 149 | 123 | 26 | 65 | ||||||||||||
| Stock-based compensation expense | 290 | 327 | 68 | 165 | ||||||||||||
|
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.
| ||
|
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.)
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 and other equity awards to officers and key employees. The total number of shares of common stock which may be granted to directors, officers, employees under this plan, is limited to shares. 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 December 7, 2022, the Company’s stockholders 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. .
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.
During the nine and three-month period ended September 30, 2023, the Company granted options to purchase shares of common stock under the 2017 Employee Plan, no options were exercised and options to purchase shares of common stock expired. In addition, 8,000 restricted shares that were granted to Ezequiel Javier Brandwain were terminated and voided.
The total stock option compensation expense for employees during the nine and three-month period ended September 30, 2023 and 2022 which was recorded was $, $ $ and $, respectively.
The total stock option compensation expense relating to the Orgad acquisition during the nine and three-month period ended September 30, 2023 and 2022 which was recorded was $, $, $ and $, respectively.
| 11 |
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
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.
| ||
On settlement. The Company The Company believes denied. |
Note 6 - Goodwill
During the third quarter of 2023, the Company merged its two SAAS segments into one segment (see Note 7), which also resulted in a change in the Company’s composition of reporting units. After the restructuring, the aggregate carrying amounts of goodwill allocated to each reporting unit are as follows:
Schedule of Aggregate Carrying Amount Of Goodwill
| September 30 | ||||||||
| 2023 | 2022 | |||||||
| SaaS Solutions | 1,273 | - | ||||||
| Fashion and equipment e-commerce platform | 128 | 268 | (*) | |||||
| Total | 1,401 | 268 | ||||||
| (*) | Based on provisional amounts revised on December 31, 2022 |
Merging a loss-making segment into other reporting units, was viewed by the Company as an indicator for impairment which required the Company to perform an interim goodwill impairment assessment.
In September 2023, the fair value of each reporting units was determined using the income approach. The income approach is a forward-looking approach for estimating fair value. Within the income approach, the method used is the discounted cash flow method. The company, using independent valuation services, starts with a forecast of all the expected net cash flows associated with the reporting unit, which includes the application of a terminal value, and then applies a discount rate to arrive at a net present value amount. Cash flow projections are based on the Company’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted average cost of capital (“WACC”), adjusted for the relevant risk associated with country-specific and business-specific characteristics. If any of these expectations were to vary materially from the Company’s assumptions, the Company may record an impairment of goodwill allocated to these reporting units in the future.
Key assumptions used in the discounted cash flow analysis of the SAAS reporting unit included, but were not limited to, a WACC of 24%, terminal growth rates of 3% and EBIT margin which is excepted to gradually increase from a negative margin of 33.1% in 2024 to a positive margin of 29.5% in 2029.
Key assumptions used in the discounted cash flow analysis of the Fashion and equipment e-commerce platform reporting unit included, but were not limited to, a WACC of 21.5%, terminal growth rates of 3% and EBIT margin which is excepted to gradually increase from a negative margin of 9.1% in 2024 to a positive margin of 6.9% in 2029.
The assumptions are deemed as Level III inputs in regard to the fair value hierarchy.
The Company concluded based on the results of the interim quantitative goodwill impairment assessment performed as of September 30, 2023, that goodwill was not impaired in both reporting units. The fair value of the SAAS reporting unit is approximately 2.7% above its carrying amount and fair value of the Fashion and equipment e-commerce platform reporting unit is approximately 9.7% above its carrying amount. While there was no impairment related to goodwill for both reporting units, a future potential impairment is possible should actual results differ from forecasted results used in the valuation analysis. Also, the valuation of goodwill can differ materially if financial projections or market inputs used to determine the WACC change significantly.
| 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 5 - Contingencies7 – Operating Segments
Effective 1 July 2023 the Company merged its two SAAS segments into one segment, hence reducing the reportable segments from three to the following two segments: (i) fashion and Commitments (cont’d)equipment e-commerce platform, and (ii) SaaS based innovative artificial intelligence driven measurement solutions. This realignment reflects the way resources are allocated and performance is assessed by the Chief Operating Decision Maker. The fashion and equipment e-commerce platform which represents Orgad’s activity that was acquired by the Company in 2022, mainly operates on Amazon. The SaaS based innovative artificial intelligence driven measurement solutions, or SaaS Solutions operating segment consists of My Size Inc, My Size Israel, My Size LLC and Naiz Fit.
In the Company’s financial reporting for September 30, 2023, comparative information for 2022 was restated to reflect the changes in reportable segments.
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 | ||||||||||
| As of the Nine month ended September 30, 2023 | ||||||||||||
| Revenues from external customers | 3,732 | 434 | 4,166 | |||||||||
| Operating (loss) income | (2,936 | ) | (2,215 | ) | (5,151 | ) | ||||||
| Fashion and equipment e-commerce platform | Saas Solution | |||||||
| As of September 30, 2023: | ||||||||
| Assets | 7,849 | 3,490 | ||||||
| Fashion and equipment e-commerce platform | SaaS Solutions | Total | ||||||||||
| For the Nine months ended September 30, 2022 | ||||||||||||
| Revenues from external customers | 1,797 | 134 | 1,931 | |||||||||
| Operating (loss) income | (215 | ) | (5,517 | ) | (5,732 | ) | ||||||
| Fashion and equipment e-commerce platform | SaaS Solutions | Total | ||||||||||
| As of Three months ended September 30, 2023 | ||||||||||||
| Revenues from external customers | 1,994 | 162 | 2,156 | |||||||||
| Operating (loss) income | (440 | ) | (665 | ) | (1,105 | ) | ||||||
| Fashion and equipment e-commerce platform | SaaS Solutions | Total | ||||||||||
| As of Three months ended September 30, 2022 | ||||||||||||
| Revenues from external customers | 685 | 41 | 726 | |||||||||
| Operating (loss) income | (286 | ) | (1,689 | ) | (1,975 | ) | ||||||
| 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 7 – Operating Segments (Cont.)
| Fashion and equipment e-commerce platform | SaaS Solutions | |||||||
| For September 30, 2022: | ||||||||
| Assets | 1,697 | 6,494 | ||||||
Fashion and | SaaS Solutions | Total | ||||||||||
| As of the year ended December 31, 2022 | ||||||||||||
| Revenues from external customers | 4,132 | 327 | 4,459 | |||||||||
| Operating (loss) income | (4,197 | ) | (3,913) | (8,110 | ) | |||||||
| Fashion and equipment e-commerce platform | Saas Solution | |||||||
| As of December 31, 2022: | ||||||||
| Assets | 6,507 | 3,220 | ||||||
Note 6 - 8 – Significant Events Duringevents during the Reporting Periodreporting period
| a. | On January 2, 2023, Orgad experienced a fire at its warehouse in Israel. The Company is not aware of any casualties or injuries associated with the During the reporting period, claims by the owners a neighboring warehouse were made of damage caused by the fire. As of the date these financial statements were authorized for | |
| b. | On January 10, 2023, the Company entered into a securities purchase agreement pursuant to which the Company sold an aggregate of of the Company’s shares of common stock and pre-funded warrants to purchase up to 278,899 shares of In addition, the Company The pre-funded warrants are immediately exercisable at an exercise price of | |
In connection with the PIPE Purchase Agreement, the Company |
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.
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 6 -8 – Significant Events Duringevents during the Reporting Period (cont’d)reporting period (Cont.)
| As of September 30, 2023, all the pre funded warrants were exercised. | ||
| The Company also entered into a letter agreement (the | ||
| c. | During May 2023, the Company initiated a transfer of the support, development and customer success operations to its Spanish entity, Naiz Fit, that is intended to improve efficiency and lower costs between the Company’s operations in Israel and Naiz Fit. As part of this, the Company reduced headcount by 13 persons in Israel, including the termination of its Chief Commercial Officer, Ezequiel Javier Brandwain. This restructuring did not have a | |
| d. | On July 13, 2023, the compensation committee of the board of directors of the Company reduced the exercise price of outstanding options of certain officers and directors of the Company for the purchase of an aggregate of shares of common stock (with exercise prices of $ per Share) to $ per share, which was the closing The incremental compensation cost resulting from the repricing is approximately $10. | |
| e. | On August 24, 2023, the Company entered into an inducement offer letter agreement (the “Inducement Letter”) with a certain holder (the “Holder”) of certain of the Company’s existing warrants to purchase up to (i) shares of the Company’s common stock | |
Pursuant to the Inducement Letter, the Holder agreed to exercise for As of September 30, 2023, the Company | ||
|
Note 7 - 9 – Subsequent Eventsevents
| a. | In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets- see note 1(c). | |
| b. | On
|
| 15 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read theThe following discussion alongand analysis provides 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. Our2022, filed with the Securities and Exchange Commission on April 14, 2023, or the Annual Report, including the consolidated annual financial statements as of December 31, 2022 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; | |
| ● | risks related to our ability to continue as a going concern; | |
| ● | the new and unproven nature of the measurement technology markets; | |
| ● | our ability to achieve customer adoption of our products; | |
| ● | our ability to realize the benefits of our acquisitions of Orgad and Naiz; | |
| ● | our dependence on assets we purchased from a related party; | |
| ● | 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; | |
| ● | current or future unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk; 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 18 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 impliedon 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. We qualify all of the information presented in this Quarterly Report on Form 10-Q, and particularly our forward-looking statements, by these forward-lookingcautionary 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 MySize, Inc., a Delaware corporation, and its subsidiaries, including MySize Israel 2014 Ltd. My Size LLC, Orgad International Marketing Ltd., or Orgad, and Naiz Bespoke Technologies, S.L, or Naiz Fit, taken as a whole.
References to “U.S. dollars” and “$” are to currency of the United States of America, and references to “NIS” are to New Israeli Shekels. Unless otherwise indicated, U.S. dollar translations of NIS amounts presented in this Quarterly Report on Form 10-Q for three months ended on September 30, 2023 are translated using the rate of NIS 3.824 to $1.00.
All information in this Quarterly Report on Form 10-Q relating to shares or price per share reflects the 1-for-25 reverse stock split effected by us on December 8, 2022.
Overview
We are an omnichannel e-commerce platform and provider of AI-driven SaaS measurement solutions, including MySizeID and our recently acquired subsidiaries, Naiz Fit, which provides SaaS technology solutions that solve size and fit issues and AI solutions for smarter design through data driven decisions for fashion ecommerce companies, and Orgad, an online retailer operating in the global markets. To date, we have generated almost all our revenue as a third-party seller on Amazon. Our advanced software and solutions assists us in supply chain, identifying products that can drive growth and provides a user-friendly experience and best customer service.
Our flagship innovative tech products, MySizeID, enables shoppers to generate highly accurate measurements of their body to find the accurate fitting apparel by using our application on their mobile phone or through the MySizeID Widget: a simple questionnaire which uses a database collected over the years.
MySizeID syncs the user’s measurement data to a sizing chart integrated through a retailer’s (or a white labeled) mobile application, and only presents items for purchase that match their measurements to ensure a correct fit.
We are positioning ourselves as a consolidator of sizing solutions and a provider of a new digital experience due to recent technological developments for the fashion industry needs. Our other product offerings include First Look Smart Mirror for physical stores and Smart Catalog to empower brand design teams, which are designed to increase end consumer satisfaction, contributing to a sustainable world and reducing operation costs.
Recent Developments
Warehouse Fire
On January 2, 2023, Orgad experienced a fire at its warehouse in Israel. We are not aware of any casualties or injuries associated with the fire. We shifted Orgad’s operation to its headquarters. The value of the inventory that was in the warehouse was approximately $640,000. We believe that this incident did not affect the future sales results of Orgad for the year of 2023. The inventory was not insured, we and the lessor signed an agreement to settle the issue in which we paid to the lessor an amount of $50,000 to cover his loss.
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January 2023 Financing
On January 10, 2023, we entered into a securities purchase agreement, or the RD Purchase Agreement, pursuant to which we agreed to sell and issue in the RD Offering an aggregate of 162,000 of our shares of common stock, or the RD Shares, and pre-funded warrants, or the Pre-funded Warrants, to purchase up to 279,899 shares of common stock and, in a concurrent private placement, unregistered warrants to purchase up to 883,798 shares of common stock, or the RD Warrants, consisting of Series A warrants, or Series A Warrants, to purchase up to 441,899 shares of common stock and Series B warrants, or Series B Warrants, to purchase up to 441,899 shares of common stock, at an offering price of $3.055 per RD Share and associated Series A and Series B Warrants and an offering price of $3.054 per Pre-funded Warrant and associated Series A and Series B Warrants.
In addition, we entered into a securities purchase agreement, or the PIPE Purchase Agreement, and together with the RD Purchase Agreement, the Purchase Agreements, pursuant to which we agreed to sell and issue in the PIPE Offering an aggregate of up to 540,098 unregistered Pre-funded Warrants and unregistered warrants to purchase up to an aggregate of 1,080,196 shares of common stock, or the PIPE Warrants and together with the RD Warrants, the Warrants, consisting of Series A Warrants to purchase up to 540,098 shares of common stock and Series B Warrants to purchase up to 540,098 shares of common stock at an offering price of $3.054 per Pre-funded Warrant and associated Series A and Series B Warrants.
The Pre-funded Warrants are immediately exercisable at an exercise price of $0.001 per share and will not expire until exercised in full. The Warrants are immediately exercisable upon issuance at an exercise price of $2.805 per share, subject to adjustment as set forth therein. The Series A Warrants have a term of five and one-half years from the date of issuance and the Series B Warrants have a term of 28 months from the date of issuance. The Warrants may be exercised on a cashless basis if there is no effective registration statement registering the shares underlying the warrants.
In connection with the PIPE Purchase Agreement, we entered into a registration rights agreement, or the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, we are required to file a resale registration statement, or the Registration Statement, with the Securities and Exchange Commission, or the SEC, to register for resale the shares issuable upon exercise of the unregistered Pre-funded Warrants and the Series A and Series B Warrants, within 20 days of the signing date of the PIPE Purchase Agreement, or the Signing Date, and to have such Registration Statement declared effective within 60 days after the Signing Date in the event the Registration Statement is not reviewed by the SEC, or 90 days of the Signing Date in the event the Registration Statement is reviewed by the SEC. we will be obligated to pay certain liquidated damages if we fail to maintain the effectiveness of the Registration Statement.
The Purchase Agreements and the Registration Rights Agreements also contain representations, warranties, indemnification and other provisions customary for transactions of this nature. In addition, subject to limited exceptions, the Purchase Agreements provide that for a period of one year following the closing of the Offerings, we will not effect or enter into an agreement to effect a “variable rate transaction” as defined in the Purchase Agreements.
Aggregate gross proceeds to the Company in respect of the Offerings was approximately $3.0 million, before deducting fees payable to the placement agent and other offering expenses payable by the Company.
We also entered into a letter agreement, or the Engagement Agreement, with H.C. Wainwright & Co., LLC, or Wainwright, pursuant to which Wainwright agreed to serve as the exclusive placement agent for the Company in connection with the Offerings. We paid Wainwright a cash placement fee equal to 7% of the aggregate gross proceeds raised in the Offerings, a management fee of 1% of the aggregate gross proceeds raised in the Offerings, a non-accountable expense allowance of $85,000 and clearing fees of $15,950. Wainwright also received placement agent warrants, or the Placement Agent Warrants, with substantially the same terms as the Series A Warrants issued in the Offering in an amount equal to 7% of the aggregate number of Shares and Pre-funded Warrants sold in the Offerings, or 68,740 shares, at an exercise price of $3.8188 per share and a term expiring on January 10, 2028.
Strategic Operational Changes
During May 2023, we initiated a transfer of the support, development and customer success operations to our recently acquired Spanish entity, Naiz Fit, that is intended to improve efficiency and lower costs between the Company’s operations in Israel and Naiz Fit. As part of this, we reduced headcount by 13 persons in Israel, including the termination of its Chief Commercial Officer, Ezequiel Javier Brandwain. This restructuring did not have a material impact on the Company’s results. The Company expects it to lower future operating costs without significant impact on revenues.
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In addition, during 2023, Orgad made a strategic shift to utilizing Fulfillment by Amazon (FBA) rather than fulfilling directly, reducing exposure to inventory risk and contributing to operating efficiencies.
Option Repricing
On July 13, 2023, the compensation committee of our board of directors reduced the exercise price of outstanding options of certain officers and directors for the purchase of an aggregate of 23,575 shares of common stock (with exercise prices of $26.00 per share) to $1.09 per share, which was the closing price for our shares of common stock on the Nasdaq Capital Market on July 13, 2023. The exercise price reduction includes options held by, among others, our named executive officers with respect to the following number of shares: (i) Ronen Luzon, the Company’s Chief Executive Officer and director: 8,001 shares, (ii) Or Kles, the Company’s Chief Financial Officer: 5,760 shares, and (iii) Billy Pardo, the Company’s Chief Operating Officer and Chief Product Officer: 6,094 shares.
Warrant Repricing
On August 24, 2023, we entered into an inducement offer letter agreement, or the Inducement Letter, with a certain holder, or the Holder, of certain of our existing warrants to purchase up to (i) 1,963,994 shares of our common stock issued on January 12, 2023 at an exercise price of $2.805 per share, or the January 2023 Warrants, (ii) 6,864 shares of our common stock issued on January 17, 2020 at an exercise price of $94.00 per share, or the January 2020 Warrants, and (ii) 47,153 shares of our common stock issued on October 28, 2021 at an exercise price of $31.50 per share, having terms ranging from 28 months to five and one-half years, or the October 2021 Warrants and together with the January 2023 Warrants and the January 2020 Warrants, the Existing Warrants.
Pursuant to the Inducement Letter, the Holder agreed to exercise for cash its Existing Warrants to purchase an aggregate of 2,018,012 shares of our common stock at a reduced exercise price of $2.09 per share in consideration of our agreement to issue new common stock purchase warrants, or the New Warrants, as described below, to purchase up to an aggregate of 5,367,912 shares of our common stock, or the New Warrant Shares, at an exercise price of $2.09 per share. We received aggregate gross proceeds of approximately $4.2 million from the exercise of the Existing Warrants by the Holder, before deducting placement agent fees and other offering expenses payable by us. The closing of the transaction contemplated by the Inducement Letter closed on August 28, 2023.
We also engaged Wainwright, or the Placement Agent, to act as our exclusive placement agent in connection with the transactions contemplated by the Inducement Letter. We also issued to the Placement Agent warrants, or the Placement Agent Warrants, to purchase up to 141,261 shares of our common stock (representing 7.0% of the Existing Warrants that were exercised), which will have the same terms as the New Warrants except the Placement Agent Warrants will have an exercise price equal to $2.6125 per share (125% of the reduced exercise price of the Existing Warrants). Similar to the New Warrants, the Placement Agent Warrants will be immediately exercisable on or after the Stockholder Approval Date (as defined in the New Warrants). The issuance of the New Warrant Shares is subject to stockholder approval under applicable rules and regulations of The Nasdaq Capital Market, or the Stockholder Approval. The Stockholder Approval has been included as an agenda item at our upcoming annual meeting of stockholders to be held on December 27, 2023, or the 2023 Annual Meeting, and is further described in our preliminary proxy statement with respect to the 2023 Annual Meeting as filed with the U.S. Securities and Exchange Commission on November 14 2023. If the event that the Stockholder Approval is not approved by our stockholders at the 2023 Annual Meeting, we have agreed to call a meeting every 90 days thereafter to seek Stockholder Approval until the earlier of the date on which Stockholder Approval is obtained or the Inducement Warrants are no longer outstanding. Upon any exercise for cash of any New Warrants, we have agreed to issue the Placement Agent warrants representing 7.0% of the shares of common stock underlying such New Warrants.
Hamas-Israel War
In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas and other terrorist organizations in parallel to their continued rocket and terror attacks. We cannot currently predict the intensity or duration of Israel’s war against Hamas, nor can we predict how this war will ultimately affect our business and operations or Israel’s economy in general.
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, mainly due to the invasion of Ukraine by Russia and the ongoing sanctions, we scaled back and we expect to close down our subsidiary operations in the near future.
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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 | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (dollars in thousands) | (dollars in thousands) | |||||||||||||||
| Revenues | $ | 2,156 | $ | 726 | $ | 4,166 | $ | 1,931 | ||||||||
| Cost of revenues | (780 | ) | (877 | ) | (2,698 | ) | (1,607 | ) | ||||||||
| Gross profit (loss) | 1,376 | (151 | ) | 1,468 | 324 | |||||||||||
| Research and development expenses | (242 | ) | (350 | ) | (811 | ) | (1,152 | ) | ||||||||
| Sales and marketing | (952 | ) | (672 | ) | (2,598 | ) | (2,526 | ) | ||||||||
| General and administrative | (1,287 | ) | (802 | ) | (3,210 | ) | (2,378 | ) | ||||||||
| Operating loss | (1,105 | ) | (1,975 | ) | (5,151 | ) | (5,732 | ) | ||||||||
| Financial income (expenses), net | 22 | (51 | ) | (78 | ) | (198 | ) | |||||||||
| Equity accounted losses | (9 | ) | - | (48 | ) | - | ||||||||||
| Tax income | (40 | ) | - | 200 | - | |||||||||||
| Net loss | $ | (1,132 | ) | $ | (2,026 | ) | $ | (5,077 | ) | $ | (5,930 | ) | ||||
Nine and Three Months Ended September 30, 2023 Compared to Nine and Three Months Ended September 30, 2022
Revenues
Our revenues for the nine months ended September 30, 2023 amounted to $4,166,000 compared to $1,931,000 for the nine months ended September 30, 2022.
Our revenues for the three months ended September 30, 20172023 amounted to $2,156,000 compared to nine and$726,000 for the three months ended September 30, 20162022. The increase in the nine months ended September 30, 2023 from the corresponding period is primarily attributable to (i) revenue generated from Orgad that was consolidated for the full nine months in 2023 as opposed to just eight months in the corresponding period in 2022, and (ii) revenue generated from Naiz Fit that was acquired in October 2022. The increase in the three months ended September 30, 2023 from the corresponding period is primarily attributable to an increase in Orgad sales and revenue generated from Naiz Fit.
From inception throughCost Of Revenues
Our cost of revenues expenses for the nine months ended September 30, 2017, we have sustained an accumulated deficit of approximately $15.1 million. From inception through2023 amounted to $2,698,000 compared to $1,607,000 for the nine months ended September 30, 2017, we have not generated any revenue from operations2022. The increase in comparison with the corresponding period was mainly due to an inventory mark-down of $643,000 due to the fire that occurred in Orgad’s warehouse during January 2023 and expectan increase in revenues as described above.
Our cost of revenues expenses for the three months ended September 30, 2023 amounted to incur additional losses$780,000 compared to perform further research and development activities and do not currently have any commercial products. Our product development efforts are still$877,000 for the three months ended September 30, 2022. The increase in their early stages and we are currently unable to estimatecomparison with the cost or time they will take to complete.corresponding period was mainly due an increase in revenues as described above.
Research and Development Expenses
Our research and development expenses for the nine months ended September 30, 20172023 amounted to $624,000$811,000 compared to $500,000$1,152,000 for the nine months ended September 30, 2016.2022. The increase betweendecrease from the corresponding periods primarily resulted from increasedperiod was mainly due to a decrease in salaries expenses relateddue to subcontractorsreduced headcount and the increased expenses associated with the hiring of new employees.a decrease in subcontractor expenses.
Our research and development expenses for the three months ended September 30, 20172023 amounted to $213,000$242,000 compared to $172,000$350,000 for the three months ended September 30, 2016.2022. The increase betweendecrease from the corresponding periodsperiod was mainly due to a decrease in salaries expenses due to reduced headcount and a decrease in subcontractor expenses.
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Sales and Marketing Expenses
Our sales and marketing expenses for the nine months ended September 30, 2023 amounted to $2,598,000 compared to $2,526,000 for the nine months ended September 30, 2022. The increase primarily resulted from increasedan increase in Amazon fees due to the increase in sales offset by a decrease in salary expenses relateddue to subcontractorsreduced headcount, consultant expenses, travel and marketing expenses.
Our sales and marketing expenses for the increasedthree months ended September 30, 2023 amounted to $952,000 compared to $672,000 for the three months ended September 30, 2022. The increase primarily resulted from an increase in Amazon fees due to the increase in sales offset by a decrease in salary expenses associated with the hiring of new employees. due to reduced headcount, consultant expenses, travel and marketing expenses.
Marketing, General and Administrative Expenses
Our marketing, general and administrative expenses for the nine months ended September 30, 20172023 amounted to $2,667,000$3,210,000 compared to $1,359,000$2,378,000 for the nine months ended September 30, 2016.2022. The increase betweencompared to the corresponding period was mainly due to an increase in expenses was derivedemployee salaries mainly from share based payments, increasesdue to the Orgad and Naiz acquisitions and an increase in public relations and investor relations expenses and from increased expenses associated with the hiring of new employees. professional expenses.
Our marketing, general and administrative expenses for the three months ended September 30, 20172023 amounted to $611,000$1,287,000 compared to $434,000$802,000 for the three months ended September 30, 2016.2022. The increase betweencompared to the corresponding period was mainly due to an increase in expenses was derivedemployee salaries mainly from share based payments, increasesdue to the Orgad and Naiz acquisitions and an increase in public relations and investor relations expenses and from increased expenses associated withprofessional expenses.
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 $228,000,2023, our operating loss was $5,151,000, a decrease of $581,000 or 10.1%, 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 revaluation2022 of $5,732,000.
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 $17,0002023, our operating loss was $1,105,000 a decrease of $870,000 or 44%, compared to financial expense of $118,000our operating loss for the three months ended September 30, 2016. The decrease between the corresponding periods in2022 of $1,975,000.
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, our net loss from continuing operations for the nine months ended September 30, 2017 was $3,519,000,2023, amounted to $78,000 compared to a net loss from continuing operationsfinancial expense of $198,000 for the nine months ended September 30, 2016 of $4,120,000.2022. The main reasons for the change betweenincrease compared to the corresponding periods isperiod was mainly due to a decrease in finance expenses mainly from the creation and revaluation of the components of the options, derivatives and investment in marketable securities in the corresponding period. This decrease was partially offset by an increase in share based payments, increases in public relations and investor relationsfinancial expenses and from increased expenses associated with the hiring of new employees.exchange rate differences.
Our financial income, net loss from continuing operations for the three months ended September 30, 2017 was $807,000, compared2023, amounted to a net loss from continuing operations$22,000 as opposed to financial expense of $51,000 for the three months ended September 30, 2016 of $724,000.2022. The decrease betweenincrease compared to the corresponding periodsperiod was mainly due to finance expenses from the revaluation of options and derivatives in the corresponding period. This decrease was partially offset by an increase in share based payments, increasesfinancial expenses exchange rate differences.
Net Loss
As a result of the foregoing, our net loss for the nine months ended September 30, 2023, was $5,077,000, compared to net loss of $5,930,000 for the nine months ended September 30, 2022.
As a result of the foregoing, our net loss for the three months ended September 30, 2023 was $1,132,000, compared to net loss of $2,026,000 for the three months ended September 30, 2022. The decrease in public relations and investor relations expenses and from increased expenses associated withnet loss was mainly due to the hiring of new employees.reasons mentioned above.
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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, 2017,2023, we had cash, and cash equivalents, and restricted cash of $14,000 as$3,767,000 compared to $34,000$2,363,000 of cash, cash equivalents and restricted cash as of December 31, 2016.2022. This increase primarily resulted from the public and private offerings that we completed in January 2023 and the offering that was completed in August 2023 offset by our operating activities, the acquisition of Orgad and Naiz Fit, and resources that were deployed to grow both businesses.
Net cashCash used in operating activities was $2,472,000amounted to $4,910,000 for the nine months ended September 30, 20172023, compared to $1,748,000$5,858,000 for the nine months ended September 30, 2016.
2022. The increasedecrease in cash used in operating activitiesactivity is derived mainly resulted from increased payments to service providersa decrease in trade payables, account receivables and Company employees. The Company has also incurred expenses nota decrease in the ordinary course of its business mainly fromnet loss offset by an increase in inventory and the registration of patents, the listing of the common stock on the NASDAQ Capital Market and legal expenses associated with lawsuits involving the Company.net loss.
Net cashedThere was no net cash used in investing activities was $8,000compared to cash used in investing activities of $327,000 for the nine months ended September 30, 2017 compared to $31,0002022.
Net cash provided by financing activities was $6,230,000 for the nine months ended September 30, 2016. The negative2023, as opposed to net cash flow resulted from purchase of equipment.
Net cash provided byused in financing activities was $2,496,000of $39,000 for the nine months ended September 30, 2017 compared to $1,018,000 for the nine months ended September 30, 2016.2022. 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 $3412023, resulted from the investmentspublic and private offerings that occurred in cash. The remaining amount of the investment is guaranteed by notes issued by an ungraded financial institution in favor of the Company. In the eventJanuary and August 2023.
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 further fund raising it2023, we believe our existing cash will not havebe sufficient resources to enable it to continue its operating activities including the development, and marketing of its productsfund operations for a period of at leastmore 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 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.
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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, weincluded herein. 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.
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, 2023. Based upon certain assumptionssuch evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2023 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.
WeNorth Empire LLC
On August 7, 2018, we commenced an action against North Empire LLC, or North Empire, in the Supreme Court of the State of New York, County of New York for breach of a Securities Purchase Agreement or Agreement in which we are not currentlyseeking 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 partySummons with Notice against us, also in the same Court, in which they allege damages in an amount of $11.4 million arising from an alleged breach of the Agreement. On September 6, 2018, North Empire filed a Notice of Discontinuance of the action it had filed on August 2, 2018. On September 27, 2018, North Empire filed an answer and asserted counterclaims in the action commenced by us against them, alleging that we failed to any material legal proceedings except as described below.
In a pre-trial hearing dated March 7, 2016, the court decided that disclosure would take place and disclosure affidavits along with copies of the documents specified therein were exchanged between the parties. Following the recommendation of the court, on March 20, 2016, the plaintiff filed a notice of deletion of certain defendants including board and management members, excluding the chairmanappeal of the Board and the CEO ofsummary judgment decision. On February 3, 2022, the Company fromfiled a motion to reargue the statement of claim.
All pre-trial preliminary proceedings as well as submission of all evidentiary affidavitsCourt’s decision denying the Company’s motion for summary judgment. On or about September 12, 2022, the Court issued its Decision and expert opinions byOrder denying the Company’s motion to reargue. North Empire filed its opposing brief on December 7, 2022. Both sides were given an opportunity to file a reply brief. We filed our reply brief on January 4, 2023 and North Empire filed its reply brief on January 13, 2023. Oral argument was held before the Appellate Court on February 7, 2023. On or about February 28, 2023, the Appellate Court filed its Decision and Order, which affirmed the lower court’s decisions regarding both parties have been completed. PursuantMy Size and North Empire’s motions for summary judgment and sent the case back to the Israeli Court’s recommendation, the case was referred to mediation by the honorable Judge (Rtd.) Hilla Gerstel, former president of the Central DistrictSupreme 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 NIS10,000On 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.
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 withabout March 13, 2023, the Supreme Court of Israel, and simultaneously, filed withreferred 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 responsecase to the Motion and on November 2, 2017 the Company filed its reply the respondents’ response. On November 8, 2017, the Supreme Court upheld the Motion to StayAlternative Dispute Program and ordered that the execution ofcases to mediate. The mediation was held on July 26, 2023 and various settlement options were explored but the Judgment will be stayed pending the outcome of the Appeal, provided that the Company will deposit in the Court’s treasury an autonomous Israeli CPI linked bank guarantee in an amount of NIS 1,700,000,mediation did not lead to cover the respondents’ potential damages should the appeal be ultimately denied.
The Company received advice from its legal counsel that the burden of proof that the Judgment is wrong and should be reversed lies with the appellant. Consequently, the Company believes thatsettlement. We intend to vigorously defend any claims made by North Empire. We believe it is more likely than not that the appealcounterclaims 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 imposed on the Company (other than legal costs which the court may order the losing side to pay).denied.
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Item 1A. Risk Factors.
Not requiredExcept as set forth below in this Item 1A and the Risk Factors included in our previous filings made with the SEC, there have been no material changes to our risk factors from those disclosed in “Part I. Item 1A. Risk Factors” in the Form 10-K filed with the SEC on April 14, 2023.
Security, political and economic instability in the Middle East may harm our business.
Our executive office is located in Tel Aviv, Israel. In addition, certain of our key employees, officers and directors are residents of Israel. Accordingly, political, economic and military conditions in the Middle East may affect our business directly. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and terrorist organizations active in the region, including Hamas (an Islamist militia and political group in the Gaza Strip) and Hezbollah (an Islamist militia and political group in Lebanon).
In particular, in October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas and these terrorist organizations in parallel continued rocket and terror attacks.
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We cannot currently predict the intensity or duration of Israel’s war against Hamas, nor can we predict how this war will ultimately affect our business and operations or Israel’s economy in general.
Additionally, political uprisings, social unrest and violence in various countries in the Middle East, including Israel’s neighbor Syria, have affected the political stability of those countries. This instability may lead to deterioration of the political relationships that exist between Israel and certain countries and have raised concerns regarding security in the region and the potential for armed conflict. In addition, Iran has threatened to attack Israel. Iran is also believed to have a strong influence among the Syrian government, Hamas and Hezbollah. These situations may potentially escalate in the future into more violent events which may affect Israel and us. These situations, including conflicts which involved missile strikes against civilian targets in various parts of Israel have in the past negatively affected business conditions in Israel.
Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners could have a material adverse effect on our business. The political and security situation in Israel may result in parties with whom we have contracts claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions. These or other Israeli political or economic factors could harm our operations and product development. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners could adversely affect our operations and could make it more difficult for us to raise capital. We could experience disruptions if acts associated with such conflicts result in any serious damage to our facilities. Furthermore, several countries, as well as certain companies and organizations, continue to restrict business with Israel and Israeli companies, which could have an adverse effect on our business and financial condition. Our business interruption insurance may not adequately compensate us for losses, if at all, that may occur as a result of an event associated with a security situation in the Middle East, and any losses or damages incurred by us could have a material adverse effect on our business.
If we fail to comply with the continued listing requirements of the Nasdaq Capital Market, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.
Nasdaq has established certain standards for the continued listing of a security on the Nasdaq Capital Market. The standards for continued listing include, among other things, that the minimum bid price for the listed securities not fall below $1.00 per share for a smaller reporting company.period of 30 consecutive trading days and that we maintain a minimum of $2,500,000 in shareholders’ equity.
On November 3, 2023, we were notified, or the Notification Letter, by the Nasdaq Listing Qualifications that we are not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2), or the Rule, for continued listing on The Nasdaq Capital Market. The Notification Letter provides that the Company has 180 calendar days, or until May 1, 2024, to regain compliance with the Rule. To regain compliance, the bid price of our common stock must have a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days. In the event we do not regain compliance by July 5, 2022, we may then be eligible for additional 180 days if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of our intention to cure the deficiency during the second compliance period. If we do not qualify for the second compliance period or fail to regain compliance during the second compliance period, then Nasdaq will notify us of its determination to delist our common stock, at which point we will have an opportunity to appeal the delisting determination to a Hearings Panel.
No assurance can be given that we will be able to regain compliance with the Rule. Failure to meet applicable Nasdaq continued listing standards could result in a delisting of our common stock. A delisting of our common stock from Nasdaq could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and fewer business development opportunities.
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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.During the quarter ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).
Item 6. Exhibits.
| * | Filed herewith |
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| 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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