My Size, Inc. 10-Q

Item 1. Financial Statements. My Size Inc. and Subsidiaries Condensed Consolidated Interim Financial Statements As of June 30, 2021 (unaudited) U.S. Dollars in Thousands 1 MY SIZE, INC. AND ITS SUBSIDIARIES Condensed Consolidated Interim Financial Statements as of June 30, 2021 (Unaudited) Contents Page Condensed Consolidated Interim Balance Sheets 3 Condensed Consolidated Interim Statements of Comprehensive Loss 4 Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity 5 Condensed Consolidated Interim Statements of Cash flows 6 Notes to Condensed Consolidated Interim Financial Statements 7-11 2 MY SIZE, INC. AND ITS SUBSIDIARIES Condensed Consolidated Interim Balance Sheets U.S. dollars in thousands (except share data and per share data) June 30, December 31, 2021 2020 (Unaudited) (Audited) Assets Current Assets: Cash and cash equivalents 4,824 1,689 Restricted cash 269 85 Restricted deposit - 184 Accounts receivable 35 28 Other receivables and prepaid expenses 202 482 Total current assets 5,330 2,468 Property and equipment, net 117 128 Right-of-use asset 829 911 Investment in marketable securities 81 59 Total non-current assets 1,027 1,098 Total assets 6,357 3,566 Liabilities and stockholders’ equity Current liabilities: Operating lease liability 130 129 Trade payables 330 381 Accounts payable 429 400 Derivatives 2 1 Total current liabilities 891 911 Operating lease liability 521 579 Total non-current liabilities 521 579 Total liabilities 1,412 1,490 COMMITMENTS AND CONTINGENCIES Stockholders’ equity: Stock Capital - Common stock of $ 0.001 par value - Authorized: 100,000,000 shares; Issued and outstanding: 15,038,327 and 7,232,836 as of June 30, 2021 and December 31, 2020, respectively 15 7 Additional paid-in capital 45,838 37,164 Accumulated other comprehensive loss ( 440 ) ( 424 ) Accumulated deficit ( 40,468 ) ( 34,671 ) Total stockholders’ equity 4,945 2,076 Total liabilities and stockholders’ equity 6,357 3,566 The accompanying notes are an integral part of the condensed consolidated interim financial statements. 3 MY SIZE, INC. AND ITS SUBSIDIARIES Condensed Consolidated Interim Statements of Comprehensive Loss U.S. dollars in thousands (except share data and per share data) 2021 2020 2021 2020 Six-Months Ended June 30, Three-Months Ended June 30, 2021 2020 2021 2020 (Unaudited) (Unaudited) Unaudited) (Unaudited) Revenues 57 51 30 21 Cost of revenues - ( 1 ) - - Gross profit 57 50 30 21 Operating expenses Research and development ( 3,380 ) ( 688 ) ( 3,007 ) ( 340 ) Sales and marketing ( 1,277 ) ( 1,077 ) ( 731 ) ( 452 ) General and administrative ( 1,229 ) ( 1,078 ) ( 605 ) ( 562 ) Total operating expenses ( 5,886 ) ( 2,843 ) ( 4,343 ) ( 1,354 ) Operating loss ( 5,829 ) ( 2,793 ) ( 4,313 ) ( 1,333 ) Financial income (expenses), net 32 30 ( 27 ) 29 Net loss ( 5,797 ) ( 2,763 ) ( 4,340 ) ( 1,304 ) Other comprehensive income (loss): Foreign currency translation differences ( 16 ) 3 22 4 Total comprehensive loss ( 5,813 ) ( 2,760 ) ( 4,318 ) ( 1,300 ) Basic and diluted loss per share ( 0.51 ) ( 0.72 ) ( 0.33 ) ( 0.25 ) Basic and diluted weighted average number of shares outstanding 11,276,238 3,835,651 13,340,164 5,166,772 The accompanying notes are an integral part of the interim condensed consolidated financial statements 4 MY SIZE, INC. AND ITS SUBSIDIARIES Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity 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, 2021 7,232,836 7 37,164 ( 424 ) ( 34,671 ) 2,076 Stock-based compensation related to options granted to employees and consultants - - 232 - - 232 Restricted shares issued to shareholder (*) 2,500,000 3 2,615 - - 2,618 Issuance of shares, net of issuance cost of $ 768 4,580,491 4 5,031 - - 5,035 Exercise of warrants 725,000 1 796 - - 797 Exercise of warrants and pre funded warrants Exercise of warrants and pre funded warrants, shares Liability reclassified to equity Total comprehensive loss - - - ( 16 ) ( 5,797 ) ( 5,813 ) Balance as of June 30, 2021 15,038,327 15 45,838 ( 440 ) ( 40,468 ) 4,945 (*) See note 1 c. Common stock Additional paid-in Accumulated other comprehensive Accumulated Total stockholders’ Number Amount capital loss deficit equity Balance as of January 1, 2020 2,085,900 2 30,102 ( 539 ) ( 28,514 ) 1,051 Stock-based compensation related to options granted to employees and consultants - - 163 - - 163 Issuance of shares, net of issuance cost of $ 1,000 2,439,802 3 5,992 - - 5,995 Exercise of warrants and pre funded warrants 2,632,134 2 14 16 Liability reclassified to equity - - 328 - - 328 Total comprehensive loss - - - 3 ( 2,763 ) ( 2,760 ) Balance as of June 30, 2020 7,157,836 7 36,599 ( 536 ) ( 31,277 ) 4,793 Common stock Additional paid-in Accumulated other comprehensive Accumulated Total stockholders’ Number Amount capital loss deficit equity Balance as of April 1, 2021 12,145,547 12 42,671 ( 462 ) ( 36,128 ) 6,093 Stock-based compensation related to options granted to employees and consultants - - 89 - - 89 Restricted shares issued to shareholder (*) 2,500,000 3 2,615 - - 2,618 Issuance of shares, net of issuance cost of $ 32 392,780 - ** 463 - - 463 Total comprehensive loss - - - 22 ( 4,340 ) ( 4,318 ) Balance as of June 30, 2021 15,038,327 15 45,838 ( 440 ) ( 40,468 ) 4,945 (*) See note 1 c. (**) Represents an amount less than $1 Common stock Additional paid-in Accumulated other comprehensive Accumulated Total stockholders’ Number Amount capital loss deficit equity Balance as of April 1, 2020 2,600,701 3 32,193 ( 540 ) ( 29,973 ) 1,683 Stock-based compensation related to options granted to employees and consultants - - 93 - - 93 Issuance of shares, net of issuance cost of $ 642 1,925,001 2 4,299 - - 4,301 Issuance of shares, net of issuance cost 1,925,001 2 4,299 - - 4,301 Exercise of warrants and pre funded warrants 2,632,134 2 14 - - 16 Total comprehensive loss - - - 4 ( 1,304 ) ( 1,300 ) Balance as of June 30, 2020 7,157,836 7 36,599 ( 536 ) ( 31,277 ) 4,793 5 MY SIZE, INC. AND ITS SUBSIDIARIES Condensed Consolidated Interim Statements of Cash Flows U.S. dollars in thousands 2021 2020 Six-Months Ended June 30, 2021 2020 (Unaudited) (Unaudited) Cash flows from operating activities: Net loss ( 5,797 ) ( 2,763 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 21 19 Amortization of operating lease right-of-use asset 22 21 Revaluation of derivatives 1 ( 19 ) Revaluation of investment in marketable securities ( 22 ) ( 15 ) Expense arising from restricted shares issued to compensate waiver by a shareholder 2,618 - Stock based compensation 232 163 (Increase) decrease in accounts receivables ( 7 ) 11 Decrease in other receivables and prepaid expenses 279 64 Decrease in trade payable ( 50 ) ( 90 ) Increase (decrease) Increase in accounts payable 34 ( 16 ) Net cash used in operating activities ( 2,669 ) ( 2,625 ) Cash flows from investing activities: Change in restricted deposits 184 ( 170 ) Investment in right-of-use asset - ( 25 ) Purchase of property and equipment ( 12 ) ( 5 ) Net cash provided by (used in) investing activities 172 ( 200 ) Cash flows from financing activities: Proceeds from issuance of shares, net of issuance costs 5,035 6,011 Proceeds from Exercise of warrants 797 - Net cash provided by financing activities 5,832 6,011 Effect of exchange rate fluctuations on cash and cash equivalents ( 16 ) ( 10 ) Increase in cash, cash equivalents and restricted cash 3,319 3,176 Cash, cash equivalents and restricted cash at the beginning of the period 1,774 1,466 Cash, cash equivalents and restricted cash at the end of the period 5,093 4,642 Non cash activities: Restricted shares issued to shareholder 2,618 - The accompanying notes are an integral part of the interim condensed consolidated financial statements. 6 MY SIZE, INC. AND ITS SUBSIDIARIES Notes to Condensed Consolidated Interim Financial Statements (unaudited) U.S. dollars in thousands (except share data and per share data) Note 1 - General a. My Size, Inc. is developing unique measurement technologies based on algorithms with applications in a variety of areas, from the apparel e-commerce market, to the courier services market and to the Do It Yourself smartphone and tablet apps market. The technology is driven by proprietary algorithms which are able to calculate and record measurements in a variety of novel ways. The 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. b. During 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. 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 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 of additional equity securities, debt or capital inflows from strategic partnerships. Additional funds may not be available when the Company needs them, on terms that are acceptable to it, or at all. If the Company is unsuccessful in commercializing its products and securing sufficient financing, it may need to cease operations. The financial statements include no adjustments for measurement or presentation of assets and liabilities, which may be required should the Company fail to operate as a going concern. c. Further to Note 1b of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020: 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”). Pursuant to 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. The 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. During the six and three month period ended June 30, 2021, an amount of $ 2,618 was recorded in research and development expense. Note 2 - Significant Accounting Policies a. Unaudited condensed consolidated financial statements : The accompanying unaudited condensed consolidated interim financial statements included herein have been prepared by the Company in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements are comprised of the financial statements of the Company. In management’s opinion, the interim financial data presented includes all adjustments necessary for a fair presentation. All intercompany accounts and transactions have been eliminated. Certain information required by U.S. generally accepted accounting principles (“GAAP”) has been condensed or omitted in accordance with rules and regulations of the SEC. Operating results for the 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. 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, 2020. b. Use of estimates : The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. 7 MY SIZE, INC. AND ITS SUBSIDIARIES Notes to Condensed Consolidated Interim Financial Statements (unaudited) U.S. dollars in thousands (except share data and per share data) Note 3 - Financial Instruments Fair value of financial instruments: Accounting 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. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price. 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. In accordance with ASC 820 when measuring the fair value, an entity shall take into account the characteristics of the asset or liability if a market participant would take those characteristics into account when pricing the asset or liability at the measurement date. Such characteristics include, for example: a. The condition and location of the asset. b. Restrictions, if any, on the sale or the use of the asset. 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: Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. 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, accounts receivable, other receivables, trade payables and 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 share, 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 public market, adjusted to reflect the effect of the sales restrictions and is therefore, ranked as Level 2 assets. Schedule of Fair value of Financial Assets and Liabilities June 30, 2021 Fair value hierarchy Level 1 Level 2 Level 3 Financial assets Investment in marketable securities (*) - 81 - June 30, 2021 Fair value hierarchy Level 1 Level 2 Level 3 Financial liabilities Derivatives - 2 - 8 MY SIZE, INC. AND ITS SUBSIDIARIES Notes to Condensed Consolidated Interim Financial Statements (unaudited) U.S. dollars in thousands (except share data and per share data) Note 3 - Financial Instruments (Cont.) December 31, 2020 Fair value hierarchy Level 1 Level 2 Level 3 Financial assets Investment in marketable securities (*) - 59 - (*) For 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. December 31, 2020 Fair value hierarchy Level 1 Level 2 Level 3 Financial liabilities Derivatives - 1 - Note 4 - Stock Based Compensation The stock-based expense equity awards recognized in the financial statements for services received is related to Research and Development, Sales and Marketing and General and Administrative expenses as shown in the following table: Schedule of Stock Based Expenses Six months ended June 30, Three months ended June 30, 2021 2020 2021 2020 Stock-based compensation expense - Research and development 70 51 9 31 Stock-based compensation expense - Sales and marketing 93 46 68 24 Stock-based compensation expense - General and administrative 69 66 12 38 232 163 89 93 Warrants issued to consultants: a. 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 31, 2022 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. b. 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 31, 2022 . 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. c. During 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. The 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. 9 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 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 to officers and key employees. The total number of options which may be granted to directors, officers, employees under this plan, was initially limited to 200,000 shares of common stock. 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 1,450,000 . On May 25, 2020, the compensation committee of the Board of Directors of the Company reduced the exercise price of outstanding options of employees and directors of the Company for the purchase of an aggregate of 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 common stock on May 22, 2020, and extended the term of the foregoing options for an additional one year from the original date of expiration. The incremental compensation cost resulting from the repricing was $ 53 , and the expenses during the 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 . On 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 Plan was reduced from 466,667 to 216,667 shares. During 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. The 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. 10 MY SIZE, INC. AND ITS SUBSIDIARIES Notes to Condensed Consolidated Interim Financial Statements (unaudited) U.S. dollars in thousands (except share data and per share data) Note 5 - Contingencies and Commitments a. On 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 . On August 2, 2018, North Empire filed a Summons with Notice against the Company, 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 the Company against them, alleging that the Company failed to deliver stock certificates to North Empire causing damage to North Empire in the amount of $ 10,958,589 . North Empire also filed a third-party complaint against 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. On January 6, 2020, the Court granted the motion and dismissed the third-party complaint. Discovery has been completed and both parties have filed motions for summary judgment in connection with the claims and counterclaims. The Company believes it is more likely than not that the counterclaims will be denied. b. On July 5, 2021, the Company was served with a legal complaint filed by Fidelity Venture Capital Ltd. and Dror Atzmon in the Magistrate’s Court in Tel Aviv for a monetary award in an amount of NIS 1,436,679 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. Note 6 - Significant Events During the Reporting Period a. On January 8, 2021, the Company conducted a public offering of its securities pursuant to which it issued 1,569,179 shares of its common stock for gross proceeds of $ 2,008 . 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. b. In January and February 2021, a holder of warrants exercised warrants to purchase 725,000 ordinary shares of the Company in exchange for $ 797 . c. On March 25, 2021, the Company conducted a public offering of its shares of common stock pursuant to which it issued 2,618,532 shares of its common stock for gross proceeds of $ 3,300 . 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. d. On 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 . e. On 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. f. In late 2019, a novel strain of COVID-19, also known as coronavirus, was reported in Wuhan, China. While initially the outbreak was largely concentrated in China, it 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 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. For example, the Company has three ongoing pilots with international retailers that have been halted, the Company is unable to participate physically in industry conferences, its 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 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. 11