What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-12 compared with 2021-11-15 · 145 added, 194 removed, 131 unchanged (72% of the section changed)

57 unchanged sentences

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

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

Ltd, Topspin Medical (Israel) Ltd, Orgad International Marketing Ltd., or Orgad and My Size LLC.

taken as a whole.

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not generate any revenues, and any revenues generated may not be sufficient for us to become profitable or thereafter maintain profitability.

Orgad Acquisition

February 7, 2022, My Size Israel 2014 Ltd, or My Size Israel, entered into a Share Purchase Agreement, or the Orgad Agreement, with Amar

Guy Shalom and Elad Bretfeld, or the Orgad Sellers, pursuant to which the Orgad Sellers agreed to sell to My Size Israel all of the issued

and outstanding equity of Orgad.

operates an omnichannel e-commerce platform engaged in online retailing in the global market.

It operates as a third-party seller on

Amazon.com, eBay and others.

Orgad currently manages more than 1,000 stock-keeping units, or SKUs, mainly in fashion, apparel and shoes,

but is capable of managing tens of thousands of SKUs.

The Orgad Sellers are the sole title and beneficial

owners of 100% of the shares of Orgad.

In consideration of the shares of Orgad, the Orgad Sellers are entitled to receive (i) up to $1,000,000

in cash, or the Orgad Cash Consideration, (ii) an aggregate of 2,790,049 shares, or the Orgad Equity Consideration, of the our common

stock, and (iii) earn-out payments of 10% of the operating profit of Orgad for the years 2022 and 2023.

The transaction closed on the

Orgad Cash Consideration is payable to the Orgad Sellers in three installments, according to the following payment schedule:

which we paid upon closing, (ii) $350,000 payable on the two-year anniversary of the closing, and (iii) $350,000 payable on the three-year

anniversary of the closing;

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.

Equity Consideration is payable to the Orgad Sellers according to the following payment schedule:

(i) 1,395,025 shares were issued at

closing, and (ii) and 1,395,024 shares will be issued in eight equal quarterly installments until the lapse of two years from closing,

subject to certain downward post-closing adjustment.

payment of the second and third cash installments, the equity installments and the earn out are further subject in each case to the Orgad

Sellers being actively engaged with Orgad at the date such payment is due (except if the Orgad Sellers resign due to reasons relating

to material reduction of salary or adverse change in their position with Orgad or its affiliates).

connection with the Orgad Agreement, each of the Orgad Sellers entered into employment agreements with Orgad and six-month lock-up agreements

Information about COVID-19

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 spread 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

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.

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 spread 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

In addition to our Israel operations, we have operations in Russia through our wholly owned

subsidiary, My Size LLC.

Specifically, we undertake some of our sales and marketing using personnel located in Russia.

To date, the invasion

of Ukraine by Russia has not had a material impact on our business.

of Operations

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

Three months ended

Nine months ended

(dollars in thousands)

in thousands)

Cost of revenues

Research and development expenses

Sales and marketing

General and administrative

Operating loss

Financial income (expenses), net

and Three Months Ended September 30, 2021 Compared to Nine and Three Months Ended September 30, 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 nine months ended September 30, 2021 amounted to $88,000 compared to

$139,000 for the nine months ended September 30, 2020.

revenues for the three months ended September 30, 2021 amounted to $31,000 compared to $88,000 for the three months ended September 30,

The decrease in both nine and three months corresponding period primarily resulted from fees from customer projects in the

corresponding period compared to none during the nine and three month ended September 30, 2021, offset by increase in traffic, as measured

by the MySizeID engine per its license agreements.

and development expenses

research and development expenses for the nine months ended September 30, 2021 amounted to $3,842,000 compared to $1,085,000 for the

nine months ended September 30, 2020.

The increase from the corresponding period primarily resulted from share based payment in amount

of $2,618,000 attributed to the share issuance to Shoshana Zigdon under that certain Amendment to Purchase Agreement dated May 26, 2021.

research and development expenses for the three months ended September 30, 2021 amounted to $462,000 compared to $397,000 for the three

months ended September 30, 2020.

The increase from the corresponding period primarily resulted from the hiring of new employees and increase

in expenses to subcontractors.

and marketing

and administrative

income (expenses), net

Three Months Ended March 31, 2022

Compared to Three Months Ended March 31, 2021

We 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, 2022 amounted to $404,000 compared to $27,000 for

the three months ended March 31, 2021.

The increase was primarily attributable to $360,000 in revenue generated from Orgad from

February 7, 2022, the date of closing of the Orgad acquisition, or the Acquisition Date, through to the end of the first quarter 2022.

Cost Of Revenues

Our cost of revenues

expenses for the three months ended March 31, 2022 amounted to $251,000 compared to none for the three months ended March 31, 2021.

increase in comparison with the corresponding period was due to the cost of goods of the revenues generated from Orgad’s operations.

and Development Expenses

research and development expenses for the three months ended March 31, 2022 amounted to $412,000 compared to $373,000 for

the three months ended March 31, 2021.

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 nine months ended September 30, 2021 amounted to $1,798,000 compared to $1,632,000 for the nine

months ended September 30, 2020.

The increase in comparison with the corresponding period was mainly due to an increase in payments to

consultants, share-based payments and hiring new sales consultants offset by decrease in travel and marketing expenses.

sales and marketing expenses for the three months ended September 30, 2021 amounted to $521,000 compared to $555,000 for the three months

ended September 30, 2020.

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

offset by an increase in share-based payments.

Our sales and marketing

expenses for the three months ended March 31, 2022 amounted to $959,000 compared to $546,000 for the three months ended March

The increase in comparison with the corresponding period was mainly due to the hiring of new employees, expenses

associated with Orgad activities and events and travel expenses.

and Administrative Expenses

general and administrative expenses for the nine months ended September 30, 2021 amounted to $2,303,000 compared to $1,855,000

for the nine months ended September 30, 2020.

The increase in comparison with the corresponding period was mainly due to an increase

in professional services, insurance expenses and settlement expenses with the Lazar Parties (as defined below) offset by a decrease in

shared-based payments.

general and administrative expenses for the three months ended September 30, 2021 amounted to $799,000 compared to $1,074,000

for the three months ended September 30, 2020.

The increase in comparison with the corresponding period was mainly due to an increase

in professional expenses, mainly attributed to the proxy fight including settlement expenses with the Lazar Parties offset

by a decrease in shared-based payments.

a result of the foregoing, for the nine month ended September 30, 2021, our operating loss was $7,855,000, an increase of $3,420,000,

or 77%, compared to our operating loss for the nine month ended September 30, 2020 of $4,435,000.

The increase from the corresponding

period primarily resulted from share based payment in amount of $2,618,000 attributed to the share issuance to Shoshana Zigdon under

that certain Amendment to Purchase Agreement dated May 26, 2021.

a result of the foregoing, for the three month ended September 30, 2021, our operating loss was $2,026,000, compared to our operating

loss for the three month ended September 30, 2020 of $1,642,000.

financial income, net for the nine months ended September 30, 2021 amounted to $50,000 as opposed to financial expenses of $2,000

for the nine months ended September 30, 2020.

During the nine months ended September 30, 2021, financial income derived mainly from revaluation

of investment in marketable securities whereas in the corresponding period, we had financial expenses mainly derived from exchange rate

differences offset by financial income mainly from revaluation of investment in marketable securities.

financial income, net for the three months ended September 30, 2021 amounted to $18,000 compared to financial expense of $32,000 for

the three months ended September 30, 2020.

During the three months ended September 30, 2021, financial income mainly derived from

revaluation of investment in marketable securities whereas in the corresponding period we had financial expenses mainly from

revaluation of derivatives and from exchange rate expenses.

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

income, our net loss for the nine months ended September 30, 2021 was $7,805,000 compared to net loss of $4,437,000 for the nine

months ended September 30, 2020, the increase in the net loss was mainly due to the reasons mentioned above.

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

expenses, our net loss for the three months ended September 30, 2021 was $2,008,000, compared to net loss of $1,674,000 for the

three months ended September 30, 2020, the increase in the net loss was mainly due to the reasons mentioned above.

Our general and

administrative expenses for the three months ended March 31, 2022 amounted to $887,000 compared to $624,000 for the three

months ended March 31, 2021.

The increase in comparison with the corresponding period was mainly due to professional services attributed

to the Orgad acquisition and salaries of Orgad management.

As a result of the

foregoing, for the three months ended March 31, 2022, our operating loss was $2,105,000 an increase of $589,000 compared

to our operating loss for the three months ended March 31, 2021 of $1,516,000.

Income (Expenses), Net

Our financial expense,

net for the three months ended March 31, 2022 amounted to $83,000 compared to financial income of $59,000 for the three months ended

March 31, 2021.

During the three months ended March 31, 2022, we had financial expenses mainly from exchange rate differences and

revaluation of investment in marketable securities whereas in the corresponding period we had financial income of $59,000 primarily due

revaluation of investment in marketable securities.

a result of the foregoing, our net loss for the three months ended March 31, 2022 was $2,188,000, compared to net loss of $1,457,000 for the three

months ended March 31, 2021.

and Capital Resources

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and in the U.S.

of September 30, 2021, we had cash, cash equivalents, restricted cash of $3,809,000 compared to $1,774,000 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, including the overallotment that closed in May 2021, and proceeds from warrants that were exercised, as further described

On October 28, 2021,

we sold in a registered direct offering 2,514,800 shares of our 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 warrant.

In addition, on the same day, we sold in a private placement of our securities 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 $8,500,000.

The net proceeds to us from the offering were approximately $7,560,000 after deducting placement agent’s fees and

other estimated offering expenses payable by the Company.

October 26, 2021, holders of warrants exercised an aggregate of 2,625,908 shares of common stock in consideration for $2,889,000.

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.

We received net proceeds of

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

On May 7, 2021,

we issued an additional 392,780 shares of our common stock in connection with the full exercise of the 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 $463,260.

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.

We received net proceeds

of approximately $1,700,000, after deducting the underwriting discounts and commissions and estimated offering expenses.

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 $3,984,000 for the nine months ended September 30, 2021, compared to $3,791,000 for the nine

months ended September 30, 2020.

cash provided by investing activities was $172,000 for the nine months ended September 30, 2021, compared to $209,000 (used in) investing

activities for the nine months ended September 30, 2020.

cash provided by financing activities was $5,857,000 for the nine months ended September 30, 2021, compared to $6,094,000 for the nine

months ended September 30, 2020.

The cash flow from financing activities for the nine months ended September 30, 2021 resulted from the

public offerings that occurred in January 2021 and March 2021, including the full exercise of the underwriter’s overallotment option

that occurred in May 2021 and from proceeds that were received from an investor for warrants that were exercised.

As of March 31, 2022,

we had cash, cash equivalents, and restricted cash of $8,112,000 compared to $10,943,000 of cash, cash equivalents and restricted

cash as of December 31, 2021.

This decrease primarily resulted from our operating activities, the acquisition of Orgad, intercompany loans that was deployed to grow Orgad’s business.

Cash used in operating

activities amounted to $2,579,000 for the three months ended March 31, 2022, compared to $1,271,000 for the three months ended

March 31, 2021.

The increase in cash used in operating activities was mainly due to the acquisition of Orgad and working

Net cash used in

investing activities was $321,000 for the three months ended March 31, 2022, compared to cash used in investing activities of

$3,000 for the three months ended March 31, 2021.

The increase from the corresponding period was mainly due to the acquisition

Net cash provided

by financing activities was $7,000 for the three months ended March 31, 2021, compared to $5,369,000 for the three months ended

March 31, 2021.

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, the proceeds from the October 2021 offerings and warrant exercises,

and cash balances as of September 30, 2021, management believes that the cash on hand will be sufficient to meet its obligations

for a period which is longer than 12 months.

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:

expect that we 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, we believe our existing cash will be sufficient to fund operations for a period less

than 12 months.

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

We will need to raise additional capital, which may not be available on reasonable terms or at all.

Additional capital would be used

to accomplish the following:

our current operating expenses;

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with regulatory requirements;

compliance with applicable laws and exchange rules.

compliance with applicable laws.

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 shareholder activism 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 to us.

If we cannot raise additional capital when needed, it may have a material adverse effect on our

business, results of operations and financial condition.

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

conditions, the impact of the COVID-19 pandemic, the Russian invasion of Ukraine, 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 to us.

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

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

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

20 unchanged sentences

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,

1 unchanged sentence

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

Accounting 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.

generally accepted accounting principles issued by the Financial Accounting Standards

Board, or FASB.

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

amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as

well as the reported expenses during the reporting periods.

Actual results may differ from these estimates under different assumptions

or conditions.

significant accounting policies were revenue from contracts with customers which are more fully described in the notes to our financial

statements appearing elsewhere in this Quarterly Report on Form 10-Q.

We believe that these accounting policies discussed are

critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant

areas involving management’s estimates and assumptions.

We consider an accounting estimate to be critical if:

(1) it requires us

to make assumptions because information was not available at the time or it included matters that were highly uncertain at the time we

were making our estimate;

and (2) changes in the estimate could have a material impact on our financial condition or results of operations.

Quantitative and Qualitative Disclosure About Market Risk.

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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 2. Management’s Discussion and Analysis