What changed in this filing

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Item 1. Financial Statements

2021-08-16 compared with 2021-05-14 · 172 added, 387 removed, 223 unchanged (71% of the section changed)

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and Subsidiaries

of March 31, 2021

of June 30, 2021

Dollars in Thousands

AND ITS SUBSIDIARIES

Consolidated Interim Financial Statements as of March 31, 2021 (Unaudited)

Consolidated Interim Financial Statements as of June 30, 2021 (Unaudited)

Condensed Consolidated Interim Balance Sheets

Condensed Consolidated Interim Statements of Comprehensive Loss

Condensed Consolidated Interim Statements of Changes in Stockholders’

Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity

Condensed Consolidated Interim Statements of Cash flows

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Total non-current assets

Liabilities and stockholders’

Liabilities and stockholders’ equity

Current liabilities:

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COMMITMENTS AND CONTINGENCIES

Stockholders’

Stockholders’ equity:

Stock Capital -

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Issued and outstanding:

12,145,547 and 7,232,836 as of March 31, 2021 and December 31, 2020, respectively

15,038,327 and 7,232,836 as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

1 unchanged sentence

Accumulated deficit

Total stockholders’

Total liabilities and stockholders’

Total stockholders’ equity

Total liabilities and stockholders’ equity

accompanying notes are an integral part of the condensed consolidated interim financial statements.

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dollars in thousands (except share data and per share data)

Six-Months Ended

Three-Months Ended

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Operating loss

Financial income, net

Other comprehensive loss:

Financial income (expenses), net

Other comprehensive income (loss):

Foreign currency translation differences

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AND ITS SUBSIDIARIES

Consolidated Interim Statements of Changes in Stockholders’

Consolidated Interim Statements of Changes in Stockholders’ Equity

dollars in thousands (except share data and per share data)

comprehensive

stockholders’

Balance as of January 1, 2021

Stock-based compensation related to options granted to employees and consultants

Restricted shares issued to shareholder (*)

Issuance of shares, net of issuance cost of $ 768

Exercise of warrants

Exercise of warrants and pre funded warrants

Exercise of warrants and pre funded warrants, shares

Liability reclassified to equity

Total comprehensive loss

Balance as of March 31, 2021

Balance as of June 30, 2021

comprehensive

stockholders’

Balance as of January 1, 2020

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Issuance of shares, net of issuance cost of $ 1,000

Exercise of warrants and pre funded warrants

Liability reclassified to equity

Total comprehensive loss

Balance as of March 31, 2020

Balance as of June 30, 2020

comprehensive

stockholders’

Balance as of April 1, 2021

Stock-based compensation related to options granted to employees and consultants

Restricted shares issued to shareholder (*)

Issuance of shares, net of issuance cost of $ 32

Total comprehensive loss

Balance as of June 30, 2021

an amount less than $1

comprehensive

stockholders’

Balance as of April 1, 2020

Stock-based compensation related to options granted to employees and consultants

Issuance of shares, net of issuance cost of $ 642

Issuance of shares, net of issuance cost

Exercise of warrants and pre funded warrants

Total comprehensive loss

Balance as of June 30, 2020

AND ITS SUBSIDIARIES

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dollars in thousands

Three-Months Ended

Six-Months Ended

Cash flows from operating activities:

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Amortization of operating lease right-of-use asset

Revaluation of warrants and derivatives

Revaluation of derivatives

Revaluation of investment in marketable securities

Expense arising from restricted shares issued to compensate waiver by a shareholder

Stock based compensation

Decrease in accounts receivables

(Increase) decrease in accounts receivables

Decrease in other receivables and prepaid expenses

Decrease in trade payable

(Decrease) Increase in accounts payable

Increase (decrease) Increase in accounts payable

Net cash used in operating activities

Cash flows from investing activities:

Change in restricted deposits

Investment in right-of-use asset

Purchase of property and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

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Cash, cash equivalents and restricted cash at the end of the period

Non cash activities:

Restricted shares issued to shareholder

accompanying notes are an integral part of the interim condensed consolidated financial statements.

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driven by proprietary algorithms which are able to calculate and record measurements in a variety of novel ways.

Company has three subsidiaries, My Size Israel 2014 Ltd.

and Topspin Medical (Israel) Ltd., both of which are incorporated in Israel

and My Size LLC which was incorporated in Russian Federation.

References to the Company include the subsidiaries unless the context

indicates otherwise.

the three month period ended March 31, 2021, the Company has incurred significant losses and negative cash flows from operations

and has an accumulated deficit of $36,128.

Company has three subsidiaries, My Size Israel 2014 Ltd (“My Size Israel”).

and Topspin Medical (Israel) Ltd., both of

which are incorporated in Israel and My Size LLC which was incorporated in Russian Federation.

References to the Company include

the subsidiaries unless the context indicates otherwise.

the six month period ended June 30, 2021, the Company has incurred significant losses and negative cash flows from operations and

has an accumulated deficit of $ 40,468 .

The Company has financed its operations mainly through fundraising from various investors.

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 March 31, 2021, management is of the opinion that

Based on the projected cash flows and cash balances as of June 30, 2021, management is of the opinion that

its existing cash will be sufficient to fund operations until the end of March 2022.

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

As a result, there is substantial doubt about

the Company’s ability to continue as a going concern.

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.

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the Company fail to operate as a going concern.

to Note 1b of the Company’s Annual Report on Form 10-K for the year ended December

On May 26, 2021, The Company,

My Size Israel and Shoshana Zigdon entered into an Amendment to Purchase Agreement (the “Amendment”) which made certain

amendments to a Purchase Agreement between the parties dated February 16, 2014 (the “Purchase Agreement”).

the Amendment, Ms.

Zigdon agreed to irrevocably waive the right to repurchase certain assets related to the collection of data for

measurement purposes that My Size Israel acquired from Ms.

Zigdon under the Purchase Agreement and upon which the Company’s

business is substantially dependent, and all past, present and future rights in any of the intellectual property rights sold, transferred

and assigned to My Size Israel under the Purchase Agreement and any modifications, amendments or improvements made thereto, including,

without limitation, any compensation, reward or any rights to royalties or to receive any payment or other consideration whatsoever

in connection with such intellectual property rights (the “Waiver”).

In consideration of the Waiver, the Company issued

2,500,000 shares of common stock to Ms.

Zigdon in a private placement.

Company measured the fair value of the shares based on the quoted market price of common stock adjusted to reflect the effect of

the sales restrictions.

the six and three month period ended June 30, 2021, an amount of $ 2,618 was recorded in research and development expense.

2 - Significant Accounting Policies

condensed consolidated financial statements:

Unaudited condensed consolidated financial statements :

accompanying unaudited condensed consolidated interim financial statements included herein have been prepared by the Company in accordance

with the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

The unaudited condensed consolidated

financial statements are comprised of the financial statements of the Company.

In management’s opinion, the interim financial data

presented includes all adjustments necessary for a fair presentation.

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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 three months ended March 31, 2021 are not necessarily indicative of

the results that may be expected for any future period or for the year ending December 31, 2021.

unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial

Operating results for the six months ended June 30, 2021 are not necessarily indicative of the

results that may be expected for any future period or for the year ending December 31, 2021.

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, 2020.

of estimates:

Use of estimates :

preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the

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value of financial instruments:

Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, relating to fair value measurements, defines

fair value and established a framework for measuring fair value.

ASC 820 fair value hierarchy distinguishes between market participant

assumptions developed based on market data obtained from sources independent of the reporting entity and the reporting entity’s

own assumptions about market participant assumptions developed based on the best information available in the circumstances.

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In addition, the fair value of assets and liabilities should

include consideration of non-performance risk, which for the liabilities described below includes the Company’s own credit risk.

accordance with ASC 820 when measuring the fair value, an entity shall take into account the characteristics of the asset or liability

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their fair value due to the short-term maturities of such instruments.

Company holds share certificates in iMine Corporation (“iMine”) formerly known as Diamante Minerals, Inc., a publicly-traded

company on the OTCQB.

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effect of the sales restrictions and is therefore, ranked as Level 2 assets.

March 31, 2021

Schedule of Fair value of Financial Assets and Liabilities

June 30, 2021

Fair value hierarchy

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Investment in marketable securities (*)

March 31, 2021

Fair value hierarchy

Financial liabilities

value hierarchy

AND ITS SUBSIDIARIES

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3 - Financial Instruments (Cont.)

December 31, 2020

Fair value hierarchy

Financial assets

Investment in marketable securities (*)

the three month period ended March 31, 2021 and 2020, the recognized gain (based on quoted market prices with a discount due to security

restrictions on iMine shares) of the marketable securities was $49 and $33, respectively.

value hierarchy

in marketable securities (*)

the six and three month periods ended June 30, 2021 and 2020, the recognized gain (based on quoted market prices with a discount

due to security restrictions on iMine shares) of the marketable securities was $ 22 and $ ( 27 ) , and $ 15 and $ 3 , respectively.

value hierarchy

4 - Stock Based Compensation

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Sales and Marketing and General and Administrative expenses as shown in the following table:

Schedule of Stock Based Expenses

Six months ended

Three months ended

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issued to consultants:

the three month period ended March 31, 2021, the Company did not grant any options to consultants, no such options were exercised

and options to purchase 1,000 shares expired.

total stock option compensation expense during the three month period ended March 31, 2021 and 2020 which was recorded under sales and

marketing was $7 and $4, respectively and under general and administrative was $0 and $6, respectively.

In May 2021, the Company entered into a

consulting agreement with a consultant pursuant to which the Company agreed upon the three-month anniversary of the agreement to

issue to the consultant a (i) a warrant to purchase up to 50,000

shares of the Company’s common stock exercisable at $ 1.50

per share and expiring on December

31, 2022 , and (ii) a warrant to purchase up to 50,000

shares of the Company’s common stock exercisable at $ 2.00

per share and expiring on December

During both the six and three month period

ended June 30, 2021, an amount of $ 38 , respectively, was recorded by the Company as stock option compensation expense with respect

to the consultant.

In June 2021, the Company entered into a

consulting agreement with a consultant pursuant to which the Company agreed to issue to the consultant a warrant to purchase up to 50,000

shares of the Company’s common stock exercisable at $ 1.50

per share and expiring on December

During both the six and three month period

ended June 30, 2021, an amount of $ 9 , was recorded by the Company as stock option compensation expense with respect to the consultant.

the six month period ended June 30, 2021, the Company issued 150,000

warrants to consultants, no such warrants

were exercised and warrants to purchase 3,667

shares expired.

total stock option compensation expense during the six and three month period ended June 30, 2021 and 2020 which was recorded under sales

and marketing was $ 60 , $ 53 , $ 5 and $ 1 respectively and under general and administrative was $ 0 , $ 0 , $ 12 and $ 6 , respectively.

AND ITS SUBSIDIARIES

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March 2017, the Company adopted the My Size, Inc.

2017 Equity Incentive Plan (the “2017 Employee Plan”) pursuant to which

the Company’s Board of Directors may grant stock options to officers and key employees.

2017 Equity Incentive Plan (the “2017 Employee Plan”) pursuant to which

the Company’s Board of Directors may grant stock options to officers and key employees.

The total number of options which may be

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Stock options can

be granted with an exercise price equal to or less than the stock’s fair market value at the grant date.

As further described below,

in August 2020, the Company’s shareholders approved an increase in the number of shares available for issuance under the Plan to

May 25, 2020, the compensation committee of the Board of Directors of the Company reduced the exercise

price of outstanding options of employees and directors of the Company for the purchase of an aggregate of 140,237 shares of common stock

of the Company (with exercise prices ranging between $18.15 and $9.15) to $1.04 per share, which was the closing price for the Company’s

of the Company (with exercise prices ranging between $ 18.15 and $ 9.15 ) to $ 1.04 per share, which was the closing price for the Company’s

common stock on May 22, 2020, and extended the term of the foregoing options for an additional one year from the original date of expiration.

The incremental compensation cost resulting from the repricing was $53, and the expenses during three months ended March 31,

2021 and 2020 were $1 and $0, respectively.

August 10, 2020, the Company’s shareholders approved an increase in the shares available for issuance under the 2017 Employee Plan

The incremental compensation cost resulting from the repricing was $ 53 , and the expenses during the six and three month period ended

June 30, 2021 were $ 1 , $ 0 and the expenses during both the six and three months ended June 30, 2020 were $ 43 .

August 10, 2020, the Company’s shareholders approved an increase in the shares available for issuance under the 2017 Employee Plan

from 200,000 to 1,450,000 shares.

As a result and pursuant to approval of the Company’s compensation committee that was contingent

on the foregoing shareholder approval, the number of shares available for issuance under the Company’s 2017 Consultant Incentive

As a result and pursuant to approval of the Company’s compensation committee that was contingent

on the foregoing shareholder approval, the number of shares available for issuance under the Company’s 2017 Consultant Incentive

Plan was reduced from 466,667 to 216,667 shares.

the three month period ended March 31, 2021, the Company did not grant any stock options under the 2017 Employee Plan, no such options

were exercised and options to purchase 21,610 shares of common stock expired.

total stock option compensation expense during the three month period ended March 31, 2021 and 2020 which was recorded was $136 and $60,

respectively.

the six and three month period ended June 30, 2021, the Company granted an aggregate of 97,500 of stock options under the 2017 Employee

Plan, no such options were exercised and options to purchase 40,777 and 19,167 shares of common stock, respectively, expired.

total stock option compensation expense during the six and three month period ended June 30, 2021 and 2020 which was recorded was $ 171

and $ 35 , and $ 103 and $ 42 , respectively.

AND ITS SUBSIDIARIES

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5 - Contingencies and Commitments

August 7, 2018, the Company commenced an action against North Empire LLC (“North Empire”) in the Supreme Court of the

State of New York, County of New York for breach of a Securities Purchase Agreement (the “Agreement”) in which it is

August 7, 2018, the Company commenced an action against North Empire LLC (“North Empire”) in the Supreme Court of the

State of New York, County of New York for breach of a Securities Purchase Agreement (the “Agreement”) in which it is

seeking damages in an amount to be determined at trial, but in no event less than $ 616,000 .

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Empire in the amount of $ 10,958,589 .

North Empire also filed a third-party complaint against the Company’s CEO and now former

Chairman of the Board asserting similar claims against them in their individual capacities.

On October 17, 2018, the Company filed

a reply to North Empire’s counterclaims.

On November 15, 2018, the Company’s CEO and now former Chairman of the Board

filed a motion to dismiss North Empire’s third-party complaint.

a reply to North Empire’s counterclaims.

On November 15, 2018, the Company’s CEO and now former Chairman of the Board

filed a motion to dismiss North Empire’s third-party complaint.

On January 6, 2020, the Court granted the motion and dismissed

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Company believes it is more likely than not that the counterclaims will be denied.

July 5, 2021, the Company was served with a legal complaint filed by Fidelity Venture Capital Ltd.

and Dror Atzmon in the Magistrate’s

Court in Tel Aviv for a monetary award in an amount of NIS 1,436,679

and a declaratory relief.

The plaintiffs allege that the Company breached its contractual obligations to pay them for services

allegedly rendered to the Company by the plaintiffs under a certain consulting agreement dated July 2, 2014, in an amount of NIS 819,000 .

Additionally, the plaintiffs allege that the Company should compensate them for losses allegedly incurred by them following their investment

in the Company’s shares issued under a certain private offering.

In the alternative, the plaintiffs move that the court will declare

the investment agreement void with full restitution of plaintiffs’ original investment in an amount of NIS 1,329,650 .

At this preliminary stage, before any fact finding and pre-trial procedures (including disclosure of documents) have been conducted and

before the statement of defense has been prepared and filed, the Company cannot evaluate the chances of the claim to succeed.

6 - Significant Events During the Reporting Period

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The net proceeds to the Company from the offering were approximately $ 1,700 , after deducting

placement agent’s fees and other estimated offering expenses payable by the Company.

January and February 2021, a holder of warrants exercised warrants to purchase 725,000 ordinary shares of the Company in exchange

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The net proceeds to the Company from the offering were approximately $ 2,872 , after

deducting placement agent’s fees and other estimated offering expenses payable by the Company.

May 7, 2021, the Company issued an additional 392,780 shares of the Company’s common stock in connection with the full exercise

of the underwriter’s overallotment option granted in the Company’s March 2021 public offering.

These additional shares

were sold to the underwriter at a public offering price of $ 1.26 per share, resulting in additional net proceeds to the Company,

net of the underwriting discount, of approximately $ 463 .

May 26, 2021, the Company issued 2,500,000 shares of common stock to Ms.

Zigdon in consideration of the Waiver.

See note 1(c) above.

late 2019, a novel strain of COVID-19, also known as coronavirus, was reported in Wuhan, China.

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largely concentrated in China, it has now spread to Israel and the United States, and infections have been reported globally.

countries around the world, including in Israel, have from time to time significant governmental measures being implemented

to control the spread of the virus, including temporary closure of businesses, severe restrictions on travel and the movement of

people, and other material limitations on the conduct of business.

countries around the world, including in Israel, have from time to time significant governmental measures being implemented to control

the spread of the virus, including temporary closure of businesses, severe restrictions on travel and the movement of people, and

other material limitations on the conduct of business.

These measures have resulted in work stoppages and other disruptions.

The Company has implemented remote working and work place protocols for its employees in accordance with government requirements.

In addition, while the Company has seen an increased demand for MySizeID, the COVID-19 pandemic has had a particularly adverse impact

on the retail industry and this has resulted in an adverse impact on the Company’s marketing and sales activities.

Company has implemented remote working and work place protocols for its employees in accordance with government requirements.

addition, while the Company has seen an increased demand for MySizeID, the COVID-19 pandemic has had a particularly adverse impact

on the retail industry and this has resulted in an adverse impact on the Company’s marketing and sales activities.

the Company has three ongoing pilots with international retailers that have been halted, the Company is unable to participate physically

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delayed or cancelled.

The extent to which COVID-19 continues to impact the Company’s operations will depend on future developments,

which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, and the

actions that may be required to contain COVID-19 or treat its impact.

Note 7 - Events Subsequent to the balance sheet

On May 7, 2021, the Company

closed on the sale of an additional 392,780 shares of the Company’s common stock in connection with the full exercise of the

underwriter’s overallotment option granted in the Company’s March 2021 public offering.

These additional shares were

sold to the underwriter at a public offering price of $1.26 per share, resulting in additional net proceeds to the Company, net

of the underwriting discount, of approximately $460.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

following discussion and 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 notes to the financial statements, which are included in this Quarterly Report on Form 10-Q.

information should also be read in conjunction with the information contained in our Annual Report on Form 10-K for the year ended December

31, 2020, filed with the Securities and Exchange Commission on March 29, 2021, or the Annual Report, including the consolidated annual

financial statements as of December 31, 2020 and their accompanying notes included therein.

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.

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.

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 assumptions that could cause actual results to differ materially from estimates or

projections contained in the forward-looking statements include but are not limited to:

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;

ability to continue as a going concern;

related to the COVID-19 pandemic;

new and unproven nature of the measurement technology markets;

ability to achieve customer adoption of our products;

dependence on assets we purchased from a related party and the risk that such assets may in the future be repurchased;

ability to enhance our brand and increase market awareness;

ability to introduce new products and continually enhance our product offerings;

success of our strategic relationships with third parties;

technology system failures or breaches of our network security;

from competitors;

reliance on key members of our management team;

or future litigation;

impact of the political and security situation in Israel on our business.

foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any forward-looking

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

Because the risk factors referred to on page 12 of our Annual Report, could cause actual results or outcomes to differ materially

from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking

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

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 cautionary statements.

the context otherwise requires, all references to “we,”

“us,”

“our”

or “the Company”

in this Quarterly Report on Form 10-Q are to My Size, Inc.

a Delaware corporation, and its subsidiaries, including MySize Israel 2014

Ltd, Topspin Medical (Israel) Ltd and My Size LLC.

taken as a whole.

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.

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

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

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

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.

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.

Information about COVID-19

late 2019, a novel strain of COVID-19, also known as coronavirus, was reported in Wuhan, China.

While initially the outbreak was largely

concentrated in China, it has now spread to Israel and the United States, and infections have been reported globally.

Many countries

around the world, including in Israel, have from time to time significant governmental measures implemented to control the spread

of the virus, including temporary closure of businesses, severe restrictions on travel and the movement of people, and other material

limitations on the conduct of business.

These measures have resulted in work stoppages and other disruptions.

We implemented remote working

and work place protocols for our employees in accordance with Israeli government requirements.

In addition, while we have seen an increased

demand for MySizeID, the COVID-19 pandemic has had a particularly adverse impact on the retail industry and this has resulted in an adverse

impact on our marketing and sales activities.

For example, we have three ongoing pilots with international retailers that have been halted,

we are unable to participate physically in industry conferences, our ability to meet with potential customers is limited, and in certain

instances sales processes have been delayed or cancelled.

The extent to which COVID-19 continues to impact our operations will depend

on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the

outbreak, and the actions that may be required to contain COVID-19 or treat its impact.

of Operations

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

Three months ended

(dollars in thousands)

Cost of revenues

Research and development expenses

Sales and marketing expenses

General and administrative expenses

Operating loss

Financial income, net

Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

started to generate revenue in 2019 and we expect to incur additional losses to increase our sales and marketing efforts and to perform

further research and development activities.

Our revenues for the three months ended March 31, 2021 amounted to $27,000 compared to $30,000

for the three months ended March 31, 2020.

and Development Expenses

research and development expenses for the three months ended March 31, 2021 amounted to $373,000 compared to $348,000 for the three months

ended March 31, 2020.

The increase in comparison with the corresponding period was mainly due to an increase in shared based expenses.

and Marketing Expenses

sales and marketing expenses for the three months ended March 31, 2021 amounted to $546,000 compared to $625,000 for the three months

ended March 31, 2020.

The decrease in comparison with the corresponding period was mainly due to a decrease in digital marketing and

a decrease in travel expenses.

and Administrative Expenses

general and administrative expenses for the three months ended March 31, 2021 amounted to $624,000 compared to $516,000 for the three

months ended March 31, 2020.

The increase in comparison with the corresponding period was mainly due to an increase in share-based payments,

professional services and insurance expenses.

a result of the foregoing, for the three months ended March 31, 2021, our operating loss was $1,516,000, an increase of $56,000, or 3.8%,

compared to our operating loss for the three months ended March 31, 2020 of $1,460,000.

financial income, net for the three months ended March 31, 2021 amounted to $59,000 compared to financial income of $1,000 for the three

months ended March 31, 2020.

The increase in comparison with the corresponding period was mainly due to revaluation of investment in

marketable securities.

a result of the foregoing research and development, sales and marketing, general and administrative expenses net of revenues, and financial

income, our net loss for the three months ended March 31, 2021 was $1,457,000, compared to net loss of $1,459,000 for the three months

ended March 31, 2020.

and Capital Resources

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

and in the U.S.

of March 31, 2021, we had cash, cash equivalents, restricted cash and restricted deposits of $6,023,000 compared to $1,958,000 of cash,

cash equivalents and restricted cash as of December 31, 2020.

This increase primarily resulted from the public offerings that we completed

in January and March 2021 and proceeds from warrants that were exercised, as further described below.

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 $1.26 per share for gross proceeds of approximately $3,300,000.

net proceeds of approximately $2,872,000, after deducting the underwriting discounts and commissions and estimated offering expenses.

On May 7, 2021, we closed on the sale of an additional 392,780 shares of our common stock in connection with the full exercise of

the underwriters’

underwriter’s overallotment option granted in the March 2021 public offering.

These additional shares were

sold to the underwriter at a public offering price of $1.26 per share, resulting in additional net proceeds, after deducting the underwriting

discount, of approximately $460,260.

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 approximately $2,008,000.

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 $797,000.

used in operating activities amounted to $1,271,000 for the three months ended March 31, 2021, compared to $1,436,000 for the three months

ended March 31, 2020.

The decrease in cash used in operating activities was mainly due to revaluation of investment in marketable securities,

share based payments and working capital.

cash used in investing activities was $3,000 for the three months ended March 31, 2021, compared to cash used in investing activities

of $27,000 for the three months ended March 31, 2020.

The decrease from the corresponding period was mainly due to investment in right-of-use

asset in the corresponding period compared to no investment in the current period.

cash provided by financing activities was $5,369,000 for the three months ended March 31, 2021, compared to $1,694,000 for the three

months ended March 31, 2020.

The cash flow from financing activities for the three months ended March 31, 2021 resulted from the public

offerings that occurred in January 2021 and March 2021 and from proceeds that were received from an investor for warrants that

were exercised.

do not have any material commitments for capital expenditures during the next twelve months.

expect to continue to generate losses and negative cash flows from operations for the foreseeable future and expect to need to obtain

additional funds in the future.

Based on the projected cash flows and cash balances as of March 31, 2021, management is of the opinion

that our existing cash will be sufficient to fund operations until the end of March 2022.

As a result, there is substantial doubt

about the Company’s ability to continue as a going concern.

However, 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:

our current operating expenses;

growth opportunities;

and retain qualified management and key employees;

to competitive pressures;

with regulatory requirements;

compliance with applicable laws and exchange rules.

conditions in the capital markets are such that traditional sources of capital 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, the

COVID-19 pandemic, economic conditions and a 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

If we cannot raise additional capital when needed, it may have a material adverse 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.

We may also be required

to recognize 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 may need may not be available on terms favorable

to us, or at all.

If we are unable to obtain such additional financing on a timely basis, we may have to curtail our 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.

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

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.

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.

results may differ from these estimates under different assumptions or conditions.

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

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.

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.

from Contracts with Customers

Company implemented ASC 606, Revenue from Contract with Customers.

recognize revenue under ASC 606, the Company applies the following five steps:

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.

the performance obligations in the contract.

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.

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.

revenue when or as the Company satisfies a performance obligation.

When the Company provides a service, revenue is recognized over

the service term.

Company’s revenue is derived from the sale of cloud-enabled software subscriptions, associated software maintenance and support.

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 subscription, 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.

Subscription and Services Offerings

performance obligations includes cloud-enabled subscriptions, software maintenance, training and technical support.

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).

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 occur.

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 Disclosure About Market Risk.

required for a smaller reporting company.

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-Q

Item 1. Financial Statements