What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2021-03-29 compared with 2020-03-19 · 267 added, 261 removed, 57 unchanged (90% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

stock currently is listed on the Tel Aviv Stock Exchange and the Nasdaq Capital Market under the symbol “MYSZ”.

stock has been traded on the Nasdaq Capital Market since July 25, 2016.

of March 1, 2020, we had 57 shareholders of record.

The actual number of stockholders is greater than this number of record

holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.

have never declared or paid cash dividends on our common stock.

We intend to retain our future earnings, if any, in order to reinvest

in the development and growth of our business and, therefore, do not intend to pay dividends on our common stock for the foreseeable

Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial

condition, results of operations, capital requirements, and such other factors as our board of directors deems relevant.

Authorized for Issuance under Equity Compensation Plans

about our equity compensation plans is incorporated herein by reference to “Item 12.

MARKET FOR REGISTRANT’S

COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our stock currently

is listed on the Tel Aviv Stock Exchange and the Nasdaq Capital Market under the symbol “MYSZ”.

Our stock has been

traded on the Nasdaq Capital Market since July 25, 2016.

As of March 26, 2021, we had 56 shareholders of record.

actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners

but whose shares are held in street name by brokers and other nominees.

Dividend Policy

We have never declared

or paid cash dividends on our common stock.

We intend to retain our future earnings, if any, in order to reinvest in the development

and growth of our business and, therefore, do not intend to pay dividends on our common stock for the foreseeable future.

future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition,

results of operations, capital requirements, and such other factors as our board of directors deems relevant.

Securities Authorized for Issuance

under Equity Compensation Plans

Information about

our equity compensation plans is incorporated herein by reference to “Item 12.

Security Ownership of Certain Beneficial

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SELECTED FINANCIAL DATA

a “smaller reporting company”

As a “smaller

reporting company”

as defined by Item 10 of Regulation S-K, we are not required to provide this information.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULT OF OPERATIONS

should read the following discussion along with our financial statements and the related notes included elsewhere in this Annual

Report on Form 10-K.

The following discussion contains forward-looking statements that are subject to risks, uncertainties and

assumptions, including those discussed under “Risk Factors.”

Our actual results, performance and achievements may

differ materially from those expressed in, or implied by, these forward-looking statements.

are a creator of mobile device measurement solutions that has developed innovative solutions designed to address shortcomings

in multiple verticals, including the e-commerce fashion/apparel, shipping/parcel and do it yourself, or DIY, industries.

our sophisticated algorithms within our proprietary technology, we can calculate and record measurements in a variety of novel

ways, and most importantly, increase revenue for businesses across the globe.

solutions can be utilized to accurately take measurements of a variety of items via a mobile device.

By downloading the application

to a smartphone, the user is then able to run the mobile device over the surface of an item the user wishes to measure.

The information

is then automatically sent to a cloud-based server where the dimensions are calculated through our proprietary algorithms, and

the accurate measurements (+ or - 2 centimeters) are then sent back to the user’s mobile device.

We believe that the commercial

applications for this technology are significant in many areas.

we are mainly focusing on the e-commerce fashion/apparel industry.

In addition, our solutions address the shipping/parcel and

DIY uses markets.

We are in the commercialization

phase of our products, although we have only generated minimal revenues to date.

In recent months, Isay, a Danish fashion brand,

selected MySizeID as a measuring solution, we announced the planned launch of MySizeID in Australia with a global retail marketplace

operator that is set to introduce an integrated, technology-based app for the custom apparel and merchandise industry, we entered

into a license agreement for MySizeID with Penti, a leading multi-category retail fashion underwear brand, we successfully integrated

and launched the MySizeID smart measurement solution software development kit (SDK) for DeMoulin, a music performance group apparel

company, and we are proceeding with the global integration of MySizeID into the e-commerce platform of one of the largest apparel

companies in the world, which has since been expanded worldwide.

In addition, we have also executed agreements with a number of

additional retailers either directly or through our collaborations with WooCommerce, Shopify and Lightspeed.

We also recently announced

that BoxSize has been approved for Honeywell’s global vendor program and are continuing to make progress with Katz Corporation,

one of the largest package delivery companies in Israel, as they have started rolling out BoxSize within the organization.

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULT OF OPERATIONS

You should read

the following discussion along with our financial statements and the related notes included elsewhere in this Annual Report on

The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions,

including those discussed under “Risk Factors.”

Our actual results, performance and achievements may differ materially

from those expressed in, or implied by, these forward-looking statements.

We are a creator of

mobile device measurement solutions that has developed innovative solutions designed to address shortcomings in multiple verticals,

including the e-commerce fashion/apparel, shipping/parcel and do it yourself, or DIY, industries.

Utilizing our sophisticated

algorithms within our proprietary technology, we can calculate and record measurements in a variety of novel ways, and most importantly,

increase revenue for businesses across the globe.

Our solutions can

be utilized to accurately take measurements of a variety of items via a mobile device.

By downloading the application to a smartphone,

the user is then able to run the mobile device over the surface of an item the user wishes to measure.

The information is then

automatically sent to a cloud-based server where the dimensions are calculated through our proprietary algorithms, and the accurate

measurements (+ or - 2 centimeters) are then sent back to the user’s mobile device.

We believe that the commercial applications

for this technology are significant in many areas.

Currently, we are

mainly focusing on the e-commerce fashion/apparel industry.

In addition, our solutions address the shipping/parcel and DIY uses

While we rollout our

products to major retailers and apparel companies, there is a lead time for new customers to ramp up before we can recognize revenue.

This lead time varies between customers, especially when the customer is a tier 1 retailer, where the integration process may take

Generally, first we integrate our product into a customer’s online platform, which is followed by piloting and implementation,

and, assuming we are successful, commercial roll-out, all of which takes time before we expect it to impact our financial results

in a meaningful way.

While we have begun generating initial sales revenue, we do not expect to generate meaningful revenue during

the upcoming quarters.

Because of the numerous risks and uncertainties associated with the success of our market penetration and

our dependence on the extent to which MySizeID is adopted and utilized, we are unable to predict the extent to which we

will recognize revenue.

We may be unable to successfully develop or market any of our current or proposed products or technologies,

those products or technologies may not generate any revenues, and any revenues generated may not be sufficient for us to become

profitable or thereafter maintain profitability.

of Operations

table below provides our results of operations for the periods indicated.

ended December 31

in thousands)

This lead time varies between customers, especially when the customer is a tier 1 retailer, where the integration process may

Generally, first we integrate our product into a customer’s online platform, which is followed by piloting

and implementation, and, assuming we are successful, commercial roll-out, all of which takes time before we expect it to impact

our financial results in a meaningful way.

While we have begun generating initial sales revenue, we do not expect to generate

meaningful revenue during the upcoming quarters.

Because of the numerous risks and uncertainties associated with the success of

our market penetration and our dependence on the extent to which MySizeID is adopted and utilized, we are unable to predict

the extent to which we will recognize revenue.

We may be unable to successfully develop or market any of our current or proposed

products or technologies, those products or technologies may not generate any revenues, and any revenues generated may not be

sufficient for us to become profitable or thereafter maintain profitability.

Results of Operations

The table below provides

our results of operations for the periods indicated.

Year ended December 31

(dollars in thousands)

Cost of revenues

Research and development

Selling and marketing

Research and development expenses

Sales and marketing

General and administrative

Operating loss

income (expenses), net

Ended December 31, 2019 Compared to Year Ended December 31, 2018

inception through December 31, 2018, we did not generate any revenue from operations and we continue to expect to incur additional

losses to perform further research and development activities.

Financial income (expenses), net

Year Ended December 31, 2020 Compared to Year Ended December

From inception through

December 31, 2018, we did not generate any revenue from operations and we continue to expect to incur additional losses to perform

further research and development activities.

We started to generate revenues only in 2019.

Our revenues for

the year ended December 31, 2019 amounted to $63,000 compared to none for year ended December 31, 2018.

The increase from the

corresponding period primarily resulted from pilot and Software-as-a-service agreements.

Our revenues for the year ended December

31, 2020 amounted to $142,000 compared to $63,000 for year ended December 31, 2019.

The increase from the corresponding period

primarily resulted from increase in traffic, as measured by the MySizeID engine under the license agreements with customers and

from fees from customer projects.

and Development Expenses

research and development expenses for the year ended December 31, 2019 amounted to $1,516,000, an increase of $411,000, or approximately

37%, compared to $1,105,000 for the year ended December 31, 2018.

The increase resulted primarily from increased expenses associated

with hiring new employees and from stock-based payments, which were offset by a decrease in subcontractor expenses.

that research and development expenses will continue to increase in 2020 and that we will recruit additional employees.

and Marketing Expenses

Our research and development

expenses for the year ended December 31, 2020 amounted to $1,523,000 an increase of $7,000, or approximately 0.5%, compared to

$1,516,000 for the year ended December 31, 2019.

The increase resulted primarily from increased expenses associated with hiring

new employees and from stock-based payments, which were offset by a decrease in subcontractor expenses.

We expect that research

and development expenses will continue to increase in 2021 and that we will recruit additional employees.

Marketing Expenses

Our sales and marketing

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for the year ended December 31, 2019.

The increase primarily resulted from increased expenses associated with hiring new employees,

increase in subcontractor and marketing expenses and from stock-based payments which were offset by a decrease in travel expenses.

The increase primarily resulted from an increase in subcontractor and marketing expenses

which were offset by a decrease in travel expenses and from stock-based payments.

and Administrative Expenses

and administrative expenses for the year ended December 31, 2019 amounted to $2,587,000, a decrease of $584,000, or 18%, compared

to $3,171,000 for the year ended December 31, 2018.

The decrease compared to the corresponding period was mainly due to a reduction

in stock-based payment expenses, payroll expenses and professional services which were offset by an increase in rent and office

maintenance related and insurance expenses.

During 2019, we had an expense of $352,000 in respect of stock-based payments, compared

to an expense of $949,000 in 2018.

As a result of the foregoing, for the year ended December 31,

2019, our operating loss was $5,990,000, an increase of $815,000, or 16%, compared to our operating loss for the year ended December

31, 2018 of $5,175,000.

Our general and administrative

expenses for the year ended December 31, 2020 amounted to $2,567,000, a decrease of $20,000, or 0.8%, compared to $2,587,000 for

the year ended December 31, 2019.

The decrease compared to the corresponding period was mainly due to a reduction in stock-based

payment expenses, payroll expenses which were offset by an increase in rent and office maintenance related and insurance expenses.

During 2020, we had an expense of $276,000 in respect of stock-based payments, compared to an expense of $352,000 in 2019.

Operating Loss

As a result of the

foregoing, for the year ended December 31, 2020, our operating loss was $6,146,000, an increase of $156,000, or 2.6%, compared

to our operating loss for the year ended December 31, 2019 of $5,990,000.

Income (Expenses), net

financial income, net for the year ended December 31, 2019 amounted to $493,000 as opposed to financial expenses, net of $794,000

financial expenses, net for the year ended December 31, 2020 amounted to $11,000 as opposed to financial income, net of $493,000

for the year ended December 31, 2019.

In 2019, we had financial income from the fair value revaluation of warrants offset by expenses

from exchange rate differences and expenses from fair value revaluation of investment in marketable securities whereas in 2018

we had financial income primarily due to exchange rate differences, revaluation of derivatives and financial income related to

the revaluation of warrants which were offset by financial expenses from the fair value revaluation of warrants.

a result of the foregoing, research and development, marketing general and administrative expenses, and initial revenues, our

net loss for the year ended December 31, 2019 was $5,497,000 compared to net loss of $5,969,000 for the year ended December 31,

The decrease in net loss was mainly due to the income with respect to the revaluation of warrants as opposed to an expense

in the corresponding period and the increase in sales and marketing expenses.

The increase in net loss is offset by a decrease

in the stock-based payments and public and investor relations services expenses, income with respect to the exchange rate differences

and income from revaluation of investment in marketable securities as opposed to expenses in the corresponding period.

and Capital Resources

our inception, we have funded our operations primarily through public and private offerings of debt and equity in Israel and in

In 2020, we had financial expenses exchange rate differences offset by an income from fair

value revaluation of investment in marketable securities whereas in 2019 we had financial income from the fair value revaluation

of warrants offset by expenses from exchange rate differences and expenses from fair value revaluation of investment in marketable

As a result of the foregoing, research and development, marketing

general and administrative expenses, and initial revenues, our net loss for the year ended December 31, 2020 was $6,157,000 compared

to net loss of $5,497,000 for the year ended December 31, 2019.

The increase in net loss was mainly due increase in sales and marketing

expenses and financial expenses as opposed to financial income in the corresponding period.

Liquidity and Capital Resources

Since our inception,

we have funded our operations primarily through public and private offerings of debt and equity in Israel and in the U.S.

As of December 31,

2019, we had cash, cash equivalents and restricted cash of $1,466,000 with no deposits compared to $5,230,000 cash, cash equivalents,

restricted cash as of December 31, 2018 and short-term deposit and short-term restricted deposit of $1,390,000 as of December 31,

This decrease primarily resulted from financing our operating activities.

2020, we had cash, cash equivalents and restricted cash of $1,774,000 and short-term restricted deposit of $184,000 compared to

$1,466,000 cash, cash equivalents, restricted cash as of December 31, 2019 and short-term deposit and no short-term restricted

deposit as of December 31, 2019.

This increase primarily resulted from the public offerings that we completed in January and May

2020 both of which are further described below.

In addition, on March 25, 2021, we completed an underwritten

public offering of our common stock pursuant to which we issued 2,618,532 shares of our common stock at a public offering price

of $1.28 per share for gross proceeds of $3,300,000.

We received net proceeds of approximately $2,904,000, after deducting the

underwriting discounts and commissions and estimated offering expenses.

Prior to that, on January 8, 2021, we completed an underwritten

public offering of our common stock pursuant to which we issued 1,569,179 shares of our common stock at a public offering price

of $1.28 per share for gross proceeds of $2,008,000.

We received net proceeds of approximately $1,700,000, after deducting the

underwriting discounts and commissions and estimated offering expenses.

Furthermore, in January and February 2021, a holder of

warrants exercised warrants to purchase 725,000 of our ordinary shares in exchange for $0.8 million.

On May 8, 2020, we

completed a public offering of (i) 1,925,001 units, each unit consisting of one share of common stock, and one warrant to purchase

one share of common stock at a price of $1.10, and (ii) 2,620,453 pre-funded units, each pre-funded unit consisting of one pre-funded

warrant to purchase one share of common stock and one warrant, at a price of $1.099 per pre-funded unit.

We received net proceeds

of approximately $4.3 million, after deducting placement agent’s fees and other offering expenses payable by us.

to purchase an aggregate of 4,545,454 shares of common stock are immediately exercisable and may be exercised at a consideration

of $1.10 per share.

The term of the warrants are five and a half years.

Pre-funded warrants were immediately exercisable and were

exercisable at a nominal consideration of $0.001 per share.

During May 2020, the pre-funded warrants were exercised in full and

therefore are no longer outstanding.

On January 15, 2020,

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of the warrants are five and a half years.

We received net proceeds of $1,700,000 after deducting placement agent fees and other offering

We received net proceeds of $1,700,000 after deducting placement agent fees and other

offering expenses.

On September 13, 2019,

2019, we entered into an At the Market Offering Agreement with HC Wainwright.

According to the agreement, we may offer and

sell, from time to time, our shares of common stock having an aggregate offering price of up to $5.5 million through HC

Wainwright or the ATM Prospectus Supplement.

From September 13, 2019 until December 31, 2019, we issued 87,756 shares

of common stock at an average price of $4.77 per share through the ATM Prospectus Supplement, resulting in net proceeds of

We paid a commission equal to 3% of the gross proceeds from the sale of our shares of common stock under the ATM

Prospectus Supplement.

On January 15, 2020, we terminated the ATM Prospectus Supplement, but the offering agreement remains in full

force and effect.

cash used in operating activities was $5,418,000 for the year ended December 31, 2019 compared to $3,597,000 for the year ended

December 31, 2018.

The increase in cash used in operating activity is derived mainly from an increase in revaluation of warrants

as opposed to decrease in the corresponding period.

Net cash provided

by investing activities for the year ended December 31, 2019 was $1,073,000 as opposed to net cash used in investing activities

of $1,421,000 for the year ended December 31, 2018.

The net cash provided by investing activities for the year ended December

31, 2019 was mainly from proceeds from short-term deposits and restricted deposits compared to investment in short term deposits

and restricted deposits during the year ended December 31, 2018.

had positive cash flow from financing activities of $266,000 for the year ended December 31, 2019 compared to $9,040,000 for the

year ended December 31, 2018.

The cash flow from financing activities for the year ended December 31, 2019 was due to the proceeds

from the ATM compared to public offering of our securities, proceeds from the exercise of the warrants as described above and

repayment of short-term loan during the year ended December 31, 2018.

we entered into an At the Market Offering Agreement with H.C.

According to the agreement, we may offer and sell, from

time to time, our shares of common stock having an aggregate offering price of up to $5.5 million through H.C.

Wainwright or the

ATM Prospectus Supplement.

From September 13, 2019 until December 31, 2020, we issued 87,756 shares of common stock at an average

price of $4.77 per share through the ATM Prospectus Supplement, resulting in net proceeds of $418,524.

We paid a commission equal

to 3% of the gross proceeds from the sale of our shares of common stock under the ATM Prospectus Supplement.

On January 15, 2020,

we terminated the ATM Prospectus Supplement, but the offering agreement remains in full force and effect.

Net cash used in operating

activities was $5,679,000 for the year ended December 31, 2020 compared to $5,418,000 for the year ended December 31, 2019.

increase in cash used in operating activity is derived mainly from increase in the net loss.

Net cash used in investing

activities for the year ended December 31, 2020 was $211,000 as opposed to net cash provided by investing activities of $1,073,000

for the year ended December 31, 2019.

The net cash used in investing activities for the year ended December 31, 2020 was mainly

from investment in restricted deposits as opposed to proceeds from short-term deposits and restricted deposits during the year

ended December 31, 2019.

We had positive cash

flow from financing activities of $6,094,000 for the year ended December 31, 2020 compared to $266,000 for the year ended December

The cash flow from financing activities for the year ended December 31, 2020 was due to the proceeds from public offerings

of our securities and proceeds from the exercise of outstanding warrants.

We do not have any

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Based on our projected cash flows and the cash balances

as of the date of this Annual Report on Form 10-K, we believe we have sufficient cash to fund our obligations through August 2020.

as of the date of this Annual Report on Form 10-K, we believe we have sufficient cash to fund our obligations through January 2022.

As a result, there is substantial doubt about our ability to continue as a going concern.

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Additional capital would be used to accomplish the following:

our current operating expenses;

growth opportunities;

and retain qualified management and key employees;

to competitive pressures;

with regulatory requirements;

compliance with applicable laws.

finance our current

operating expenses;

pursue growth opportunities;

hire and retain

qualified management and key employees;

respond to competitive

comply with regulatory

requirements;

maintain compliance

with applicable laws.

Current conditions

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Our ability to raise additional capital, if needed, will depend on conditions in the capital markets,

economic conditions, the impact of the coronavirus outbreak and a number of other factors, many of which are outside our control,

economic conditions, the impact of the COVID-19 pandemic and a number of other factors, many of which are outside our control,

and on our financial performance.

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effect on our business, results of operations and financial condition.

the extent that we raise additional capital through the sale of equity or convertible debt securities, 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,

by 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 may 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.

To the extent that

we raise additional capital through the sale of equity or convertible debt securities, 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.

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, by 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 may 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 recognize non-cash expenses in connection with certain securities

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on our business, results of operations and financial condition.

Issued Accounting Pronouncements

recently issued accounting pronouncements are discussed in Note 2, Significant Accounting Policies, to the consolidated financial

statements included in “Item 8.

Recently Issued Accounting Pronouncements

Certain recently issued

accounting pronouncements are discussed in Note 2, Significant Accounting Policies, to the consolidated financial statements included

in “Item 8.

Financial Statements and Supplementary Data”

of this Annual Report on Form 10-K.

Sheet Arrangements

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.

Functional Currency

From our inception

through December 31, 2019, our functional currency was the NIS.

Management conducted a review of our functional currency and decided

to change our functional currency to the USD from the NIS effective January 1, 2020.

The change in functional currency will be

accounted for prospectively from such date.

In 2019, we went through a strategic shift which involved a significant change in our

business model that clearly indicates that the functional currency has changed, beginning January 2020.

In previous years the Company

acted as a platform to fund its operational subsidiary, My Size Israel, which conducts its research and development activities

Accordingly, the Company has not been substantially focused on its operating activities for that period.

By the end of

2018, we transitioned to a new business model (B2B2C) and concluded that the main market that we should focus on would be the apparel

market in the US.

Consequently, we established marketing and distribution channels in the US along with having a new pricing model

denominated in USD.

Throughout 2019, the Company itself hired sales personnel which are based in the US and signed agreements with

customers for which it began generating revenue in USD for the first time since it began its operations.

Accordingly, by the end

of 2019, the Company is no longer considered a ‘holding company’

for the matter of determining its functional currency

under ASC 830 based on the currency of its operating entities.

As a result of being an operational company that enters into operational

agreements and generates revenues on an ongoing basis, the management concluded that as of January 1 2020, the currency that most

faithfully portrays the economic results of the Company's operations is the U.S.

dollar beginning January 1 2020.

My Size Israel functional currency remains the NIS.

Our presentation currency

of the financial statements was and will remain U.S.

of Critical Accounting Policies and Estimates

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.

generally accepted accounting principles issued by the Financial Accounting Standards

Board, or FASB.

Off-Balance Sheet Arrangements

We have not entered

into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative

instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other

obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit

risk support.

Application of Critical Accounting

Policies and Estimates

Our management’s

discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have

prepared in accordance with U.S.

generally accepted accounting principles issued by the Financial Accounting Standards Board,

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported

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assumptions or conditions.

our significant accounting policies are more fully described in the notes to our financial statements appearing elsewhere in this

Annual Report on Form 10-K, we believe that the 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.

While our significant

accounting policies are more fully described in the notes to our financial statements appearing elsewhere in this Annual Report

on Form 10-K, we believe that the 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.

Fair value of financial instruments

recognized a liability on behalf of warrants that are exercisable into shares of common stock.

These warrants were issued to investors

in public offerings and in private placements and were measured at fair value based on ASC 820.

Changes in fair value were recorded

in the statements of comprehensive loss.

We estimate the share option value using the Monte Carlo option pricing model.

volatility of the share price reflects the assumption that the historical volatility of the share price is reasonably indicative

of expected future trends.

risk-free interest rate for grants with exercise price denominated in NIS is based on the yield from Israel treasury zero-coupon

bonds with an equivalent term.

The risk-free interest rate for grants with exercise price denominated in USD is based on the yield

from US treasury zero-coupon bonds with an equivalent term.

have historically not paid dividends and have no foreseeable plans to pay dividends.

and development expenses

Research expenses are

recognized as expenses when incurred.

Costs incurred on development projects are recognized as intangible assets as of the date

at which it can be established that it is probable that future economic benefits attributable to the asset will flow to us considering

its commercial feasibility.

This is generally the case when regulatory approval for commercialization is achieved and costs can

be measured reliably.

Due to lack of materiality of costs and ability to separate these costs from other development costs, no

development expenditures have been capitalized.

We account for our

employees’

stock-based compensation as an expense in the financial statements based on ASC 718.

All awards are equity classified

and therefore the cost is measured at the grant date fair value of the award.

We estimate share option grant date fair value using

the Binomial option-pricing model.

We recorded stock options

issued to non-employees at fair value, remeasured to reflect the current fair value at each reporting period and recognized expenses

over the service period.

The Company elected to early implement ASU 2018-07, Stock Compensation:

Improvements to Nonemployee stock-Based

Payment Accounting, from October 1, 2018

In accordance with

ASU 2018-07, we measured stock options at the implementation date and reclassified the stock based payments from a liability stock-based

payments awards to equity stock-based payments awards.

The fair value as of the implementation date will be recognized over the

remaining service period.

We estimate share option grant date fair value using the Binomial option-pricing model.

expected volatility of the share price reflects the assumption that the historical volatility of the share price is reasonably

indicative of expected future trends.

risk-free interest rate for grants with exercise price denominated in NIS is based on the yield from Israel treasury zero-coupon

bonds with an equivalent term.

The risk-free interest rate for grants with exercise price denominated in USD is based on the yield

from US treasury zero-coupon bonds with an equivalent term.

have historically not paid dividends and have no foreseeable plans to pay dividends.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

a “smaller reporting company”

(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;

changes in the estimate could have a material impact on our financial condition or results of operations.

Revenue from contracts with customers

The Company implemented ASC 606, Revenue

from Contract with Customers.

To recognize revenue under ASC 606, the Company applies the

following five steps:

Identify the contract with a customer.

A contract with a customer exists when the Company enters into an enforceable contract

with a customer and the Company determines that collection of substantially all consideration for the services is probable.

Identify the performance obligations in the contract.

Determine the transaction price.

The transaction price is determined based on the consideration to which the Company will be

entitled in exchange for providing the service to the customer.

Allocate the transaction price to performance obligations in the contract.

If a contract contains a single performance obligation,

the entire transaction price is allocated to the single performance obligation.

Recognize revenue when or as the Company satisfies a performance obligation.

When the Company provides a service, revenue is

recognized over the service term.

The Company’s revenue is derived from License cloud-enabled

software subscriptions, associated software maintenance and support.

Revenue is recognized when a contract exists

between the Company and a customer (business) and upon transfer of control of promised products or services to customers in an

amount that reflects the consideration we expect to receive in exchange for those products or services.

The Company enters into

contracts that can include various combinations of products and services, which may be capable of being distinct and accounted

for as separate performance obligations.

In case of offerings such as cloud-enabled license services, other service elements in

the contract are generally delivered concurrently with the subscription services and therefore revenue is recognized in a similar

manner as the subscription services.

Product, Subscription and Services Offerings

Such performance obligations includes cloud-enabled subscriptions,

software maintenance and technical support.

Fully hosted subscription services (SaaS) allow customers to

access hosted software during the contractual term without taking possession of the software.

Cloud-hosted subscription services

are sold on a fee-per-subscription that is based on consumption or usage (per fit recommendation).

We recognize revenue ratably over the contractual service term for hosted services that are priced based

on a committed number of transactions where the delivery and consumption of the benefit of the services occur evenly over time,

beginning on the date the services associated with the committed transactions are first made available to the customer and continuing

through the end of the contractual service term.

Over-usage fees and fees based on the actual number of transactions are billed

in accordance with contract terms as these fees are incurred and are included in the transaction price of an arrangement as variable

consideration.

Fees based on a number of transactions or impressions per month, are allocated to the period in which the transactions

Revenue for subscriptions sold as a fee per period is recognized ratably over the contractual term as the customer simultaneously

receives and consumes the benefit of the underlying service.

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK.

As a “smaller

reporting company”

as defined by Item 10 of Regulation S-K, we are not required to provide this information.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity