What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-12 · 113 added, 107 removed, 169 unchanged (57% of the section changed)

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

following discussion and analysis provides information that we believe to be relevant to an assessment and understanding of our results

of operations and financial condition for the periods described.

This discussion should be read together with our condensed consolidated

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

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

31, 2021, filed with the Securities and Exchange Commission on March 31, 2022, or the Annual Report, including the consolidated annual

financial statements as of December 31, 2021 and their accompanying notes included therein.

following discussion and analysis provide information that we believe to be relevant to an assessment and understanding of our

results of operations and financial condition for the periods described.

This discussion should be read together with our condensed

consolidated interim financial statements and the notes to the financial statements, which are included in this Quarterly Report on

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

the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 31, 2022, or the Annual Report,

including the consolidated annual financial statements as of December 31, 2021, and their accompanying notes included

Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of

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may cause actual results to differ materially from those contained in any forward-looking statements.

We qualify all of the information

presented in this Quarterly Report on Form 10-Q, and particularly our forward-looking statements, by these cautionary statements.

the context otherwise requires, all references to “we,” “us,” “our” or “the Company”

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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

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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 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 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 same day.

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

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.

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(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,

closing, and (ii) 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.

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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

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.

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.

in thousands)

Cost of revenues

and development expenses

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.

Three months ended

Six months ended

(dollars in thousands)

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.

Research and development expenses

Sales and marketing

General and administrative

Operating loss

Financial income (expenses), net

and Three Months Ended June 30, 2022 Compared to Six and Three Months Ended June 31, 2021

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 six months ended June 30, 2022 amounted to $1,205,000

compared to $57,000 for the six months ended June 30, 2021.

Our revenues for the three months ended June 30, 2022 amounted to

$801,000 compared to $30,000 for the three months ended June 30, 2021.

The increase was primarily attributable to $1,112,000 in

revenue generated from Orgad from February 7, 2022, the the date of closing of the Orgad acquisition, or the Acquisition Date,

through to the end of the second quarter 2022 and to $752,000 in revenue generated from Orgad for the three months ended June 30,

cost of revenues expenses for the six and three months ended June 30, 2022 amounted to $730,000 and $479,000, respectively, compared

to none for the six and three months ended June 30, 2021.

The 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.

Our research and development expenses

for the six months ended June 30, 2022 amounted to $802,000 compared to $3,380,000 for the six months ended June 30, 2021.

in comparison with the corresponding period primarily resulted from share-based payment in the amount of $2,618,000

that was recorded in the corresponding period attributed to the share issuance to Shoshana Zigdon under the Amendment to Purchase Agreement

dated May 26, 2021, and decrease in shared based expenses to employees.

Our research and development expenses

for the three months ended June 30, 2022 amounted to $390,000 compared to $3,007,000 for the three months ended June 30, 2021.

in comparison with the corresponding period primarily resulted from share-based payment in amount of $2,618,000

that was recorded in the corresponding period attributed to the share issuance to Shoshana Zigdon under the Amendment to Purchase Agreement

dated May 26, 2021 and decrease in shared based expenses to employees.

and Marketing Expenses

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.

Our sales and marketing expenses

for the six months ended June 30, 2022 amounted to $1,854,000 compared to $1,277,000 for the six months ended June 30, 2021.

in comparison with the corresponding period was mainly due to the hiring of new employees and expenses associated with Orgad activities,

offset by a reduction in share-based payment expenses to employees and consultants.

Our sales and marketing expenses for the three months ended June 30, 2022

amounted to $895,000 compared to $731,000 for the three months ended June 30, 2021.

The increase in comparison with the corresponding

period was mainly due to expenses associated with Orgad activities, offset by a reduction in share-based

payment expenses to employees and consultants.

and Administrative Expenses

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.

Our general and administrative

expenses for the six months ended June 30, 2022 amounted to $1,576,000 compared to $1,229,000 for the six months ended June 30, 2021.

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

associated with Orgad activities.

Our general and administrative

expenses for the three months ended June 30, 2022 amounted to $689,000 compared to $605,000 for the three months ended June 30, 2021.

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

with Orgad activities.

a result of the foregoing, for the six months ended June 30, 2022, our operating loss was $3,757,000 a decrease of $2,072,000

compared to our operating loss for the six months ended June 30, 2021 of $5,829,000.

a result of the foregoing, for the three months ended June 30, 2022, our operating loss was $1,652,000 a decrease of $2,661,000

compared to our operating loss for the three months ended June 30, 2021 of $4,313,000.

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.

financial expense, net for the six months ended June 30, 2022 amounted to $147,000 compared to financial income of $32,000 for the six

months ended June 30, 2021.

During the six months ended June 30, 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 primarily

due revaluation of investment in marketable securities.

financial expense, net for the three months ended June 30, 2022 amounted to $64,000 compared to financial expenses of $27,000 for the three

months ended June 30, 2021.

During the three months ended June 30, 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 expenses primarily

due revaluation of investment in marketable securities and exchange rate differences offset in income from revaluation of derivative.

a result of the foregoing, our net loss for the six months ended June 30, 2022 was $3,904,000, compared to net loss of $5,797,000 for

the six months ended June 30, 2021.

The decrease in the net loss was mainly due to the reasons mentioned above.

a result of the foregoing, our net loss for the three months ended June 30, 2022 was $1,716,000, compared to net loss of $4,340,000 for

the three months ended June 30, 2021.

The decrease in the net loss was mainly due to the reasons mentioned above.

and Capital Resources

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and in the U.S.

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.

As of June 30, 2022, we had cash,

cash equivalents, and restricted cash of $6,725,000 compared to $10,943,000 of cash, cash equivalents and restricted cash as of December

This decrease primarily resulted from our operating activities, the acquisition of Orgad, and resources that were deployed to

grow Orgad’s business.

used in operating activities amounted to $4,070,000 for the six months ended June 30, 2022, compared to $2,669,000 for the six

months ended June 30, 2021.

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

working capital.

cash used in investing activities was $325,000 for the six months ended June 30, 2022, compared to cash provided by investing

activities of $172,000 for the six months ended June 30, 2021.

The increase from the corresponding period was mainly due to the

acquisition of Orgad offset by changes in restricted deposits that occured in the six months ended June 30, 2021.

cash used in financing activities was $24,000 for the six months ended June 30, 2021, compared to cash provided by financing

activities of $5,832,000 for the six months ended June 30, 2021.

The cash flow from financing activities for the six months

ended June 30, 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.

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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

cash flows and cash balances as of June 30, 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:

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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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

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.

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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