What changed in this filing

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Item 1. Financial Statements

2022-05-12 compared with 2021-11-15 · 401 added, 382 removed, 108 unchanged (88% of the section changed)

1 unchanged sentence

and Subsidiaries

of September 30, 2021

of March 31, 2022

Dollars in Thousands

AND ITS SUBSIDIARIES

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

Consolidated Interim Financial Statements as of March 31, 2022 (Unaudited)

Consolidated Interim Balance Sheets (Unaudited)

6 unchanged sentences

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

September 30,

and cash equivalents

receivables and prepaid expenses

current assets

Cash and cash equivalents

Restricted cash

Restricted deposit

Accounts receivable

Other receivables and prepaid expenses

Total current assets

Property and equipment, net

Right-of-use asset

Investment in marketable securities

Total non-current assets

Liabilities and stockholders’ equity

and equipment, net

in marketable securities

non-current assets

and stockholders’ equity

lease liability

overdraft and borrowings

current liabilities

Operating lease liability

Trade payables

Accounts payable

Total current liabilities

Operating lease liability

Total non-current liabilities

Total liabilities

COMMITMENTS AND CONTINGENCIES

Stockholders’ equity:

Stock Capital -

Common stock of $ 0.001 par value - Authorized:

tax liabilities

lease liability

non-current liabilities

AND CONTINGENCIES

Stockholders’

Common stock of $ 0.001

par value - Authorized:

200,000,000 shares;

Issued and outstanding:

15,069,587 and 7,232,836 as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

an amount less than $1

25,377,528 and 23,982,503 as of March 31, 2022 and December 31,

2021, respectively

paid-in capital

other comprehensive loss

stockholders’ equity

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)

Nine-Months Ended

September 30,

Three-Months Ended

September 30,

Cost of revenues

and development

and marketing

and administrative

operating expenses

Research and development

Sales and marketing

General and administrative

Total operating expenses

Operating loss

Financial income (expenses), net

Other comprehensive income (loss):

Foreign currency translation differences

Total comprehensive loss

Basic and diluted loss per share

Basic and diluted weighted average number of shares outstanding

income (expenses), net

comprehensive income (loss):

currency translation differences

comprehensive loss

and diluted loss per share

Basic and diluted

weighted average number of shares outstanding

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

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

Additional paid-in

Accumulated other comprehensive

Total stockholders’

Balance as of January 1, 2021

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

Exercise of options granted to employees

Restricted shares issued to shareholder (*)

Issuance of shares, net of issuance cost of $ 768

Exercise of warrants and pre funded warrants

Exercise of warrants and pre funded warrants, shares

Liability reclassified to equity

Exercise of warrants

Total comprehensive loss

Balance as of September 30, 2021

Represents an amount less than $1

Additional paid-in

Accumulated other comprehensive

Total stockholders’

Balance as of January 1, 2020

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

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 September 30, 2020

Additional paid-in

Accumulated other comprehensive

Total stockholders’

Balance as of July 1, 2021

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

Exercise of options granted to employees

Exercise of warrants

Total comprehensive loss

Balance as of September 30, 2021

an amount less than $1

Additional paid-in

Accumulated other comprehensive

Total stockholders’

Balance as of July 1, 2020

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

other comprehensive

stockholders’

as of January 1, 2022

compensation related to options granted to employees and consultants

of shares in Business Combination ( * )

of shares in Business Combination

comprehensive loss

as of March 31, 2022

other comprehensive

stockholders’

as of January 1, 2021

compensation related to options granted to employees and consultants

Issuance of shares,

net of issuance cost of $ 736

Issuance of shares,

net of issuance cost

Exercise of warrants

Total comprehensive loss

Balance as of September 30, 2020

an amount less than $1

comprehensive loss

as of March 31, 2021

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

AND ITS SUBSIDIARIES

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dollars in thousands

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of operating lease right-of-use asset

Revaluation of warrants and derivatives

Revaluation of investment in marketable securities

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

Stock based compensation

(Increase) decrease in accounts receivables

Decrease in other receivables and prepaid expenses

Increase (decrease) in trade payable

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 provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from issuance of shares, net of issuance costs

Proceeds from Exercise of warrants

Net cash provided by financing activities

Effect of exchange rate fluctuations on cash and cash equivalents

Increase in cash, cash equivalents and restricted cash

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

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

flows from operating activities:

to reconcile net loss to net cash used in operating activities:

of operating lease right-of-use asset

of warrants and derivatives

of investment in marketable securities

based compensation

Decrease in accounts receivables

(Increase) in other receivables and prepaid expenses

(Increase) in inventory

in trade payable

Intangible asset

Interest for the bank

Conditional commitment

Deferred tax liabilities

in accounts payable

cash used in operating activities

flows from investing activities:

Acquisition of a subsidiary, net of cash acquired

of property and equipment

cash provided by (used in) investing activities

flows from financing activities:

from issuance of shares, net of issuance costs

Loans received

Repayment of long term

from Exercise of warrants

cash provided by financing activities

of exchange rate fluctuations on cash and cash equivalents

(Decrease) in cash, cash equivalents and restricted cash

cash equivalents and restricted cash at the beginning of the period

cash equivalents and restricted cash at the end of the period

Non cash activities:

Restricted shares issued to shareholder

shares issued in Acquisition of a subsidiary

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

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proprietary algorithms which are able to calculate and record measurements in a variety of

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 the Russian Federation.

References to the Company

include the subsidiaries unless the context indicates otherwise.

the nine month period ended September 30, 2021, the Company has incurred significant losses

Following the acquisition of Orgad International

Marketing Ltd.

(“Orgad”) in February 2022 (see note 6), we also operate an omnichannel e-commerce platform.

Company has four subsidiaries, My Size Israel 2014 Ltd (“My Size Israel”), Topspin Medical (Israel) Ltd., and Orgad all

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

References to the Company include

the subsidiaries unless the context indicates otherwise.

the three-month period ended March 31, 2022, the Company has incurred significant losses

and negative cash flows from operations and has an accumulated deficit of $ 47,379 .

has financed its operations mainly through fundraising from various investors.

Taking into account the proceeds from warrant exercises and the Company’s

financing in October 2021 described in note 7b below, management’s believes that cash on hand will be sufficient to meet its obligations

for a period which is longer than 12 months.

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

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

shares of common stock to

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 nine and three month period ended September 30, 2021, an amount of $ 2,618 and $ 0 was recorded in research and development expense

respectively.

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, 2022, management is of the opinion that

its existing cash will be sufficient to fund operations for a period less than 12 month.

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.

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.

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.

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, spread 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.

These measures have resulted in work stoppages and other disruptions.

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

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.

2 - Significant Accounting Policies

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with rules and regulations of the SEC.

Operating results for the nine months ended September 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.

Operating results for the three months ended March 31, 2022 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, 2021.

AND ITS SUBSIDIARIES

to Condensed Consolidated Interim Financial Statements (Unaudited)

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

2 - Significant Accounting Policies (cont.)

Accounting Policies:

significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements

are identical to those applied in the preparation of the latest annual financial statements, except the following new policies which

was adopted following the business combination (see note 6):

are measured at the lower of cost or net realizable value.

The cost of inventories comprises of the costs incurred in bringing the inventories to their present location and condition.

Net realizable value is the estimated

selling price in the ordinary course of business.

At the point of the loss recognition, a new, lower-cost basis for

that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that

newly established cost basis.

Revenue Recognition

Since the acquisition of Orgad (see note

6 - Business combination), the Company’s revenues are comprised of two main categories:

(1) selling products

to customers (2) licensing cloud-enabled software subscriptions, associated software maintenance and support.

Company recognizes revenue in accordance with ASC Topic 606, Revenues from Contracts with Customers (“ASC 606”).

with a customer exists only when:

the parties to the contract have approved it and are committed to perform their respective obligations,

the Company can identify each party’s rights regarding the distinct goods or services to be transferred (“performance obligations”),

the Company can determine the transaction price for the goods or services to be transferred, the contract has commercial substance and

it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that

will be transferred to the customer.

Revenue from sale of products

Revenue from sale of

products is recognized at the time the related performance obligation is satisfied by transferring a promised good to a

Revenue is recognized net of allowances for refunds and any taxes collected from customers, which are subsequently

remitted to governmental authorities.

Refunds are estimated at contract inception and updated at the end of each reporting period if

additional information becomes available.

Revenue is recognized when control of the product is transferred to the customer.

The Company maintains

a returns policy that allows its customers to return product within a specified period of time.

The estimate of the provision for

returns is based upon historical experience with actual returns.

AND ITS SUBSIDIARIES

to Condensed Consolidated Interim Financial Statements (Unaudited)

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

2 - Significant Accounting Policies (cont.)

versus Agent Considerations

Company follows the guidance provided in ASC 606 for determining whether it is a principal or an agent in arrangements with customers,

by assessing whether the nature of the Company’s promise is a performance obligation to provide the specified goods (principal)

or to arrange for those goods to be provided by the other party (agent).

With regard to products being sold by Orgad through Amazon,

this determination involves judgment.

The Company determined it is a principal, as it has determined that it controls the promised product

before it is transferred to the end customers, it is primarily responsible for fulfilling the promise to provide the goods, and it has

discretion in establishing prices.

Therefore, the revenues are recorded on a gross basis.

Business combinations

Company applies the provisions of ASC 805, “Business Combination” and allocates the fair value of purchase consideration

to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.

of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

When determining the fair values of assets acquired and liabilities assumed, the Company estimated the future expected cash flows from

acquired platform from a market participant perspective, useful lives and discount rates.

In addition, management makes significant estimates

and assumptions, which are uncertain, but believed to be reasonable.

estimates in valuing certain intangible assets include but are not limited to future expected cash flows from acquired platform s from

a market participant perspective, useful lives and discount rates.

Management’s estimates of fair value are based upon assumptions

believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

Acquisition-related costs

are recognized separately from the acquisition and are expensed as incurred.

represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination.

Under ASC 350, “Intangible - Goodwill and Other”, goodwill is not amortized, but rather is subject to an annual impairment

350 requires goodwill to be tested for impairment at the reporting unit level at least annually, the fourth quarter ,

or between annual tests in certain circumstances, and written down when impaired.

Goodwill is tested for impairment by comparing the

fair value of the reporting unit with its carrying value.

350 allows an entity to first assess qualitative factors to determine whether it is necessary

to perform the two-step quantitative goodwill impairment test.

If the qualitative assessment does not result in a more likely than not

indication of impairment, no further impairment testing is required.

If it does result in a more likely than not indication of impairment,

the two-step impairment test is performed.

Goodwill is not deductible for income tax purposes.

Goodwill is allocated to the fashion

and equipment e-commerce platform segment.

Alternatively ,

ASC 350 permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step

of the goodwill impairment test.

There were no impairment charges to goodwill during the period presented.

AND ITS SUBSIDIARIES

to Condensed Consolidated Interim Financial Statements (Unaudited)

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

2 - Significant Accounting Policies (cont.)

Intangible assets

assets consist of identifiable intangible assets that the Company has acquired from previous business combinations.

Intangible assets

are recorded at costs, net of accumulated amortization.

The Company amortizes its intangible assets reflecting the pattern in

which the economic benefits of the intangible assets are consumed.

When a pattern cannot be reliably determined, the Company uses a straight-line

amortization method.

estimated useful lives of the company’s intangible assets are as follows:

of Estimated Useful Lives of Intangible Assets

period the Company evaluates the estimated remaining useful lives of its intangible assets and whether events or changes in circumstances

warrant a revision to the remaining period of amortization

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.

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

AND ITS SUBSIDIARIES

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3 - Financial Instruments

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.

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.

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.

characteristics include, for example:

condition and location of the asset.

Restrictions,

if any, on the sale or the use of the asset.

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:

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.

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.

based on inputs that are unobservable and significant to the overall fair value measurement.

expected volatility of the share prices reflects the assumption that the historical volatility of the share prices is reasonably indicative

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

In addition, the carrying amounts of along term loan

is approximate to its fair value because there was no change in the market conditions since its exceptions.

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

company on the OTCQB.

to sales restrictions on the sale of the iMine shares, the fair value of the shares was measured on the basis of the quoted market

price for an otherwise identical unrestricted equity instrument of the same issuer that trades in a public market, adjusted to reflect

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

of Fair value of Financial Assets and Liabilities

September 30, 2021

Fair value hierarchy

Financial assets

Investment in marketable securities (*)

to sales restrictions on the sale of the iMine shares, the fair value of the shares was measured on the basis of the quoted market price

for an otherwise identical unrestricted equity instrument of the same issuer that trades in a public market, adjusted to reflect the

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

Schedule of Significant Assets and Liabilities Measured at Fair Value on Recurring Basis

value hierarchy

in marketable securities (*)

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 nine and three month periods ended September 30, 2021 and 2020, the recognized gain (loss) (based on quoted market prices with

a discount due to security restrictions on iMine shares) of the marketable securities was $ 46 and $ 24 , and $ 18 and $ 3 , respectively.

December 31, 2020

Fair value hierarchy

Financial liabilities

value hierarchy

in marketable securities (*)

the three-month periods ended March 31, 2022 and 2021, the recognized gain (loss) (based on quoted market prices with a discount

due to security restrictions on iMine shares) of the marketable securities was ($ 14 ) and $ 49 , respectively.

value hierarchy

4 - Stock Based Compensation

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:

of Stock Based Expenses

Nine months ended

September 30,

Three months ended

September 30,

Stock-based compensation expense - Research and development

Stock-based compensation expense - Sales and marketing

Stock-based compensation expense - General and administrative

stock-based expense equity awards recognized in the financial statements for services received is related to Cost of Revenues,

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

Schedule of Stock Options Granted to Non-Employees

Stock-based compensation expense - Cost of Revenues

compensation expense - Research and Development

compensation expense - Sales and Marketing

compensation expense - General and Administrative

share based compensation expense

issued to consultants:

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

of the Company’s common stock exercisable at $ 1.50

share and expiring on December

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

of the Company’s common stock exercisable at $ 2.00

share and expiring on December 31, 2022 .

the nine and three month period ended September 30, 2021, an amount of $ 63 , and $ 25 , respectively, was recorded by the Company as

stock option compensation expense with respect to the consultant.

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

the nine and three month period ended September 30, 2021, an amount of $ 34 and $ 25 was recorded by the Company as stock option compensation

expense with respect to the consultant.

the nine month period ended September 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 nine and three month period ended September 30, 2021 and 2020 which was recorded under

sales and marketing was $ 116 , $ 56 , $ 8 and $ 3 respectively and under general and administrative was $ 0 , $ 0 , $ 17 and $ 5 , respectively.

July 2019, the Company entered into a three-year agreement with a consultant (“Consultant14”) to provide services to

the Company including assisting the Company to promote, market and sell the Company’s technology to potential customers.

to such agreement and in partial consideration for such consulting services, the Company agreed to issue to Consultant14 options

to purchase up to 2,667 shares of the Company’s common stock upon execution of the agreement.

The options are exercisable at

$ 15.00 per share and shall vest in 3 equal instalments every twelve months starting July 2019.

Unexercised options shall expire 4

years from the effective date.

AND ITS SUBSIDIARIES

2 unchanged sentences

4 - Stock Based Compensation (Cont.)

addition, the Company agreed to issue to Consultant14 options to purchase up to 22,233 shares of the Company’s common stock

upon execution of the agreement.

The options are exercisable at $ 1.08 per share and shall vest in 4 equal instalments every six months

starting September 2020.

Unexercised options shall expire 5 years from the effective date.

the three-month period ended March 31,2022 and 2021, an amount of $ 3

respectively, were recorded by the Company as stock-based

equity awards with respect to Consultants.

Option Plan for Employees:

3 unchanged sentences

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

granted to directors, officers, employees under this plan, is limited to 5,770,000 options.

Stock options can be granted with an exercise

price equal to or less than the stock’s fair market value at the date of grant.

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

per share, which was the closing

price for the Company’s common stock on May 22, 2020, and extended the term of the foregoing options for an additional one year

from the original date of expiration.

The incremental compensation cost resulting from the repricing was $ 53 ,

and the expenses during the nine and three month period ended September 30, 2021 were $ 2

respectively and the expenses during both the nine

and three months ended September 30, 2020 were $ 47

respectively.

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 three-month period ended March 31, 2022 were $ 2 and

$1, respectively and the expenses during the three months ended March 31, 2021 were $ 47 and $4, respectively.

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

3 unchanged sentences

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

the nine and three month period ended September 30, 2021, the Company granted an aggregate of 97,500

of stock options under the 2017

Employee Plan, 4,458 options were exercised and options to purchase 40,777

shares of common stock, respectively,

total stock option compensation expense during the nine and three month period ended September 30, 2021 and 2020 which was recorded was

$ 234 and $ 62 , and $ 312 and $ 209 , respectively.

the three-month period ended March 31, 2022, the Company didn’t grant any stock options under the 2017

Employee Plan, no options were exercised and options to purchase 51,873

shares of common stock, expired.

total stock option compensation expense during the three-month period ended March 31, 2022 and 2021 which was recorded

respectively.

AND ITS SUBSIDIARIES

15 unchanged sentences

to North Empire causing damage to North Empire in the amount of $ 10,958,589 .

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.

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.

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.

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.

On December 30, 2021, the Court denied both My Size and North Empire’s motions for

summary judgment, arguing there were factual issues to be determined at trial.

26, 2022, the Company filed a notice of appeal of the summary judgment decision.

must be fully perfected and filed by July 26, 2022.

On February 3, 2022, the Company filed

a motion to reargue the Court’s decision denying the Company’s motion for summary

On or about March 31, 2022, North Empire filed its opposition papers to the

Company’s motion to reargue.

The return date on the motion to reargue has been adjourned

to May 23, 2022.

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

and Dror Atzmon in the Magistrate’s Court in Tel Aviv for a monetary award in

an amount of NIS 1,436,679

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

and Dror Atzmon in the Magistrate’s

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

(approximately $ 450,000 )

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

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

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

(approximately $ 256,000 ).

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.

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

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

(approximately $ 415,000 ).

Company filed its statement of defense on October 25, 2021.

The first preliminary court hearing

of the case is scheduled for January 23, 2022.

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

Company cannot evaluate the chances of the claim to succeed.

May 2021, the Company received notice from Custodian Ventures, LLC (“Custodian”)

of its intention to nominate four candidates to stand for election to our board of directors

at the Company’s 2021 annual meeting of stockholders.

Custodian subsequently made a book and records

request and has made public statements calling for changes to our management.

September 22, 2021, Custodian commenced an action in the Court of Chancery of the State of Delaware captioned, Custodian Ventures, LLC

(the “Delaware Action”).

In the Delaware Action, Custodian sought an order from the

Court of Chancery pursuant to Section 211 of the General Corporation Law of the State of Delaware compelling us to hold an annual meeting.

On November 4, 2021, the Company entered into a settlement agreement (the

“Settlement Agreement”) with Custodian and certain affiliates and director nominees (collectively, the “Lazar Parties”)

settling and dismissing the Delaware Action (see note 7c).

On October 19, 2021, the Company commenced an action in the United States

District Court for the Southern District of New York against Custodian, Activist Investing LLC, Milton C.

Ault III, Ault Alpha LP, Ault

Alpha GP LLC, Ault Capital Management LLC, Ault & Company Inc., David Aboudi, Patrick Loney and David Nathan, , pursuant to Sections

13(d) and 14(a) of the Securities Exchange Act of 1934, and certain rules promulgated thereunder (the “SDNY Action”).

complaint sought, among other things, declaratory and injunctive relief related to defendants’ efforts to nominate a slate of directors

for election at our next annual meeting.

The complaint alleged that the defendants formed an undisclosed “group” for purposes

of Section 13(d) and has misrepresented its true purpose in purchasing My Size, Inc.

stock in filings made with the SEC.

the complaint alleged that the defendants engaged in an unlawful solicitation of investors in violation of the Exchange Act proxy rules

in connection with their efforts to elect a slate of directors to the Company’s board of directors.

On October 20, 2021, the Court

signed an order granting a hearing on an anticipated motion for a preliminary injunction and expedited scheduling and discovery in aid

thereof, and scheduled that hearing for December 2, 2021.

On November 4, 2021, the Company entered into the Settlement Agreement with

the Lazar Parties settling and dismissing the claims asserted in the SDNY Action and the Delaware Action against one another (see note

On November 8, 2021, the remaining defendants in the SDNY Action filed and answer and counterclaim asserting a claim against the

Company pursuant to New York Civil Rights Law Section 70-a, also known as New York’s anti-SLAPP statute.

6 - Significant Events During the Reporting Period

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.

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

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.

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.

While initially the outbreak was

largely concentrated in China, spread 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.

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.

7 - Events Subsequent to the balance sheet date

On October 26, 2021, holders of warrants exercised an aggregate

of 2,625,908 shares of common stock in consideration for $ 2,889 .

October 28, 2021, the Company sold in a registered direct offering 2,514,800

shares of its common stock

and, in a concurrent private placement, an aggregate of 1,886,100

unregistered warrants to

purchase shares of common stock, at an offering price of $ 1.352

per share and associated

In addition, on the same day, the Company sold in a private placement 3,772,208

unregistered shares of common

stock and unregistered warrants to purchase up to an aggregate of 2,829,156

shares of common stock at

the same purchase price as in the registered direct offering.

The warrants are immediately exercisable and will expire five years

from issuance at an exercise price of $ 1.26 per share, subject to adjustment as set forth therein.The gross proceeds from the

offerings were $ 8,500 .

The net proceeds to the Company from the offerings were approximately $ 7,560 ,

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

In connection with

the offerings, the Company issued to the placement agent warrants to purchase 440,091 shares on substantially the same terms as the

purchasers in the offerings at an exercise price of $ 1.69 per share and a term expiring on October 26, 2026 .

November 4, 2021, the Company entered into the Settlement Agreement with the Lazar Parties.

Pursuant to the Settlement Agreement,

the Company and the Lazar Parties agreed to compromise and settle the Delaware Action and SDNY Action.

In addition, pursuant to the

Settlement Agreement, the Company agreed to reimburse Custodian for out of pocket expenses and in consideration for the dismissal

and release of claims against the Company an aggregate amount equal to $ 275 , to be paid within three business days of the effective

date of the Settlement Agreement.

With respect to the Company’s 2021 annual meeting of stockholders, Custodian agreed to, among

other things, withdraw or rescind (i) its May 12, 2021 notice of stockholder nominations of four director candidates with respect

to the Company’s 2021 annual meeting of stockholders, (ii) the notice dated October 28, 2021 submitted by Custodian to the

Company notifying the Company of Custodian’s continued intent to bring its nomination of four director candidates before the

Company’s stockholders at the 2021 annual meeting, and (iii) any and all related materials and notices submitted to the Company

in connection therewith or related thereto and to not take any further action in connection with the solicitation of any proxies

in connection with the Company.

Custodian also agreed to cease any and all solicitation and other activities in connection with the

2021 annual meeting.

In addition, Custodian agreed to certain customary standstill provisions for a period of five years beginning

on the effective date of the Agreement (the “Standstill Period”).

The Settlement Agreement also provides that during

the Standstill Period, the Lazar Parties will vote all shares of common stock of the Company it beneficially owns in in accordance

with any proposal or recommendation made by the Company or the Board of Directors of the Company that is submitted to the stockholders

of the Company, unless to do so would violate applicable law and except with respect to certain extraordinary transactions.

The Settlement

Agreement also contains non-disparagement and confidentiality provisions, subject to certain exceptions.

The first court preliminary hearing was held on March 1, 2022.

the first preliminary hearing and the Court’s comments and recommendation, the plaintiffs filed a motion to strike out the

claim without prejudice.

On March 8, 2022 the Court ordered dismissal without prejudice of the claim.

The Court also ruled that to

the extent the plaintiffs will not move within 7 days to revise their motion do dismiss their claim “with prejudice”, the

Company will be entitled to request an order for costs.

On April 11, 2022 the Court ordered the plaintiffs to pay the Company’s

costs in the amount of NIS 15,000 ,

within 30 days.

AND ITS SUBSIDIARIES

to Condensed Consolidated Interim Financial Statements (Unaudited)

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

6 – Business Combination

February 7, 2022, the Company acquired 100 %

of the shares and voting interests in Orgad an omnichannel

e-commerce platform .

The acquisition was designed to create an additional revenue stream for the Company by becoming a direct

e-commerce seller while leveraging the synergies between MySizeID and Orgad’s e-commerce platform.

results of operations of Orgad have been included in the consolidated financial statements since the acquisition date of February 7,

Orgad revenues included in the Company’s consolidated statement of operations from February 7, 2022 through March 31, 2022

were $ 360,113 .

If the acquisition had occurred on January 1, 2021, management estimates that the consolidated pro forma revenues for the

year would have been $ 2,768

thousand, and the net loss would have been $ 2,272 thousand

Consideration

following table summarizes the acquisition date fair value of each major class of consideration:

of Fair Value of Acquisition

of shares of common stock ( 1,395,025

consideration transferred

cash payment is subject to working capital adjustments.

(**) Quoted price as of acquisition date

addition, the Company agreed to pay to the former owners of Orgad, on the two-year and the three-year anniversary of the

closing, $ 350,000

in each of these years provided that in the

case of the second and third installments certain revenue targets are met and subject further to certain downward post-closing adjustment.

Furthermore, 1,395,024

shares of common stock will be issued

in eight equal quarterly instalments until the lapse of two years from closing.

Additional earn-out payments of 10 %

of the operating profit of Orgad for the years 2022 and 2023 will also be paid.

All of these payments are subject to the former

owners being actively engaged with Orgad at the date such payment is due, and therefore were not taken as part of the consideration

for the business combination.

During the three-month period

ended March 31,2022 an amount of $ 83 and $ 72 was recorded by the Company as expenses, with respect to the future grants and payments.

assets acquired and liabilities assumed

the preliminary purchase price allocation, the Company allocates the purchase price to tangible and identified intangible assets acquired

and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation

techniques based on estimates and assumptions made by management at the time of the acquisition.

Such estimates are subject to change

during the measurement period which is not expected to exceed one year.

The purchase price allocation was not finalized duo to examination

of the net working capital of Orgad at the acquisition date.

Any adjustments to the preliminary purchase price allocation identified

during the measurement period will be recognized in the period in which the adjustments are determined.

AND ITS SUBSIDIARIES

to Condensed Consolidated Interim Financial Statements (Unaudited)

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

6 – Business Combination (Cont.)

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date:

of Fair Value of Assets Acquired and Liabilities

and Cash Equivalent

identifiable net assets acquired

estimated useful lives of the selling platform are 3 years .

During the three-month period ended March 31,2022 an amount of $ 21 was recorded

by the Company as an expense.

Acquisition-related

The Company incurred transaction

costs of approximately $ 55

thousand during the 3-month period

ended March 31, 2022 which were included in general and administrative expenses

in the consolidated statements of income (loss).

AND ITS SUBSIDIARIES

to Condensed Consolidated Interim Financial Statements (Unaudited)

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

7 – Operating Segments

The Company’s reportable

operating segments are (i) fashion and equipment e-commerce platform see note 6, regarding business combination and (ii)

SaaS based innovative artificial intelligence driven measurement solutions.

The fashion and equipment e-commerce platform which represent

Orgad’s activity that was acquired by the Company, mainly operates on Amazon.

The SaaS based innovative artificial

intelligence driven measurement solutions, or SaaS Solutions operating segment consists of My Size Inc and My Size Israel.

related to the operations of the Company’s reportable operating segments is set forth below:

of Reportable Operating Segments

and equipment e-commerce platform

the three months ended March 31, 2022

loss (income)

and equipment e-commerce platform

March 31, 2022:

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