Item 1. Financial Statements
Item
1. Financial Statements.
My
Size Inc. and Subsidiaries
Condensed
Consolidated
Interim
Financial
Statements
As
of March 31, 2023
(unaudited)
U.S.
Dollars in Thousands
1
MY
SIZE, INC. AND ITS SUBSIDIARIES
Condensed
Consolidated Interim Financial Statements as of March 31, 2023 (Unaudited)
Contents
Page
Condensed Consolidated Interim Balance Sheets (Unaudited)
3
Condensed Consolidated Interim Statements of Comprehensive Loss (Unaudited)
4
Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity (Unaudited)
5
Condensed Consolidated Interim Statements of Cash flows (Unaudited)
6
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
7-17
2
MY
SIZE, INC. AND ITS SUBSIDIARIES
Condensed
Consolidated Interim Balance Sheets (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
March 31,
December 31,
2023
2022
(Unaudited)
(Audited)
Assets
Current Assets:
Cash and cash equivalents
2,415
2,100
Restricted cash
261
263
Inventory
491
997
Account receivables
1,008
1,940
Other receivables and prepaid expenses
778
758
Total current assets
4,953
6,058
Long term deposits
28
28
Property and equipment, net
107
140
Operating right-of-use asset
557
583
Intangible assets
1,313
1,377
Goodwill
1,412
1,395
Investment in JV
65
99
Investment in marketable securities
33
47
Total non-current assets
3,515
3,669
Total assets
8,468
9,727
Liabilities and stockholders’ equity
Current liabilities:
Operating lease liability
155
159
Bank overdraft and short-term loans
158
155
Trade payables
1,766
2,487
Liabilities to Related parties
675
698
Other payables
97
680
Total current liabilities
2,851
4,179
Long-term loans
342
376
Deferred tax liabilities
313
328
Operating lease liability
300
308
Total non-current liabilities
955
1,012
Total liabilities
3,806
5,191
COMMITMENTS AND CONTINGENCIES
-
-
Stockholders’ equity:
Stock Capital -
Common stock of $ 0.001 par value - Authorized: 250,000,000 shares; Issued and outstanding: 2,446,780 and 1,464,117 as of March 31, 2023 and December 31, 2022, respectively
2
(*)1
Additional paid-in capital
61,467
58,673
Accumulated other comprehensive loss
( 652 )
( 637 )
Accumulated deficit
( 56,155 )
( 53,501 )
Total stockholders’ equity
4,662
4,536
Total liabilities and stockholders’ equity
8,468
9,727
(*) Adjusted to give retroactive effect of 1:25 reverse stock split , see Note 1 (b)
The
accompanying notes are an integral part of the condensed consolidated interim financial statements.
3
MY
SIZE, INC. AND ITS SUBSIDIARIES
Condensed
Consolidated Interim Statements of Comprehensive Loss (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
2023
2022
Three-Months Ended
March 31,
2023
2022
(Unaudited)
(Unaudited)
Revenues
720
104
Cost of revenues
(*)( 1,147 )
(251 )
Gross profit
( 427 )
38
Operating expenses
Research and development
( 342 )
( 412 )
Sales and marketing
( 679 )
( 959 )
General and administrative
( 1,044 )
( 887 )
Total operating expenses
( 2,065 )
( 2,258 )
Operating loss
( 2,492 )
( 2,105 )
Financial expenses, net
( 146 )
( 83 )
Equity income
of equity method investees
( 34 )
Loss before taxes
( 2,672 )
( 2,188 )
Taxes on income
18
-
Net loss
( 2,654 )
( 2,188 )
Other comprehensive income (loss):
Foreign currency translation differences
( 15 )
58
Total comprehensive loss
( 2,669 )
( 2,130 )
Basic and diluted loss per share
( 1.68
)
( 2.25 ) (** )
Basic and diluted weighted average number of shares outstanding
1,582,348
501,841 (** )
(*)
During the three month ended March 31, 2023, the Company recorded an inventory write-down of $ 643 due to the fire that occurred in its warehouse (see Note 7(a))
(**)
Adjusted
to give retroactive effect of 1:25 reverse stock split , see Note 1(b)
The
accompanying notes are an integral part of the interim condensed consolidated financial statements
4
MY
SIZE, INC. AND ITS SUBSIDIARIES
Condensed
Consolidated Interim Statements of Changes in Stockholders’ Equity (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
Number
Amount
capital
loss
deficit
equity
Common stock
Additional paid-in
Accumulated other comprehensive
Accumulated
Total stockholders’
Number
Amount
capital
loss
deficit
equity
Balance as of January 1, 2023
1,464,117
1
58,673
( 637 )
( 53,501 )
4,536
Stock-based compensation related to options granted to employees and consultants
-
-
101
-
-
101
Issuance of shares business combination
35
35
Issuance of shares, net of issuance cost of $ 341 (**)
162,000
*
2,658
-
-
2,658
Exercise of warrants and prefunded warrants
820,663
1
-
-
-
1
Total comprehensive loss
-
-
-
( 15 )
( 2,654
)
( 2,669
)
Balance as of March 31, 2023
2,446,780
2
61,467
( 652
)
( 56,155 )
4,662
(*)
Represents an amount less than $1
(**)
See Note 6(a).
Common stock
Additional paid-in
Accumulated other comprehensive
Accumulated
Total stockholders’
Number
Amount
capital
loss
deficit
equity
Balance as of January 1, 2022
959,300
1
56,453
( 406 )
( 45,191 )
10,857
Stock-based compensation related to options granted to employees and consultants
-
-
114
-
-
114
Issuance of shares in Business Combination
55,801
*
457
-
-
457
Total comprehensive loss
-
-
-
58
( 2,130 )
( 2,072 )
Balance as of March 31, 2022
1,015,101
1
57,024
( 348 )
( 47,321 )
9,356
(*)
Represents
an amount less than $1
Common stock
Additional paid-in
Accumulated other comprehensive
Accumulated
Total stockholders’
Number
Amount
capital
loss
deficit
equity
Balance as of December 31, 2021
959,300
1
56,453
( 406 )
( 45,191 )
10,857
Balance
959,300
1
56,453
( 406 )
( 45,191 )
10,857
Stock-based compensation related to options and restricted shares granted to employees and consultants
176,000
* -
455
-
-
455
Issuance of shares in Business Combination (*)
(**)
295,802
* -
1,446
-
-
1,446
Issuance of shares post Business Combination (*)
(**)
20,924
* -
319
-
-
319
Effect of reverse stock split (Note 10 (b)
12,091
Total comprehensive loss
-
-
-
( 231 )
( 8,310 )
( 8,541 )
Balance as of December 31, 2022
1,464,117
1
58,673
( 637 )
( 53,501 )
4,536
Balance
1,464,117
1
58,673
( 637 )
( 53,501 )
4,536
(*)
Represents
an amount less than $1
The
accompanying notes are an integral part of the interim condensed consolidated financial statements
5
MY
SIZE, INC. AND ITS SUBSIDIARIES
Condensed
Consolidated Interim Statements of Cash Flows (Unaudited)
U.S.
dollars in thousands
2023
2022
Three-Months Ended
March 31,
2023
2022
(Unaudited)
(Unaudited)
Cash flows from operating activities:
Net loss
( 2,654
)
( 2,188 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
27
36
Change in operating lease right-of-use asset
31
11
Amortization of intangible assets
74
21
Change in warrants and derivatives
1
Change in liabilities to related parties
( 23
)
72
Interest of long-term liabilities
6
45
Interest paid
( 6
)
( 4 )
Revaluation of investment in marketable securities
14
14
Change in Investment in JV
34
-
-
Stock based compensation
136
114
Change in inventory
481
( 223 )
Change in deferred tax liabilities
( 18 )
( 5 )
Change in account receivable
903
5
Changes in operating lease liabilities
( 37
)
-
Change in other receivables and prepaid expenses
( 30
)
( 391 )
Change in trade payables
( 1,403 )
( 178 )
Change in account payables
152
91
Net cash used in operating activities
( 2,313
)
( 2,579 )
Cash flows from investing activities:
Acquisition of a subsidiary, net of cash acquired
-
( 300 )
Purchase of property and equipment
-
( 21 )
Net cash provided by (used in) investing activities
-
( 321 )
Cash flows from financing activities:
Proceeds from issuance of shares, net of issuance costs
2,659
-
Loans received
-
18
Repayment of loans
( 25
)
( 11 )
Net cash provided by (used in) financing activities
2,634
7
Effect of exchange rate fluctuations on cash and cash equivalents
( 8
)
62
Increase (decrease) in cash, cash equivalents and restricted cash (*)
313
( 2,831 )
Cash, cash equivalents and restricted cash at the beginning of the period
2,363
10,943
Cash, cash equivalents and restricted cash at the end of the period
2,676
8,112
Non cash activities:
Shares issued in Acquisition of a subsidiary
-
457
(*)
$ 6311
relates to change in cash and cash equivalents and, $ 2 to change in restricted cash.
The
accompanying notes are an integral part of the interim condensed consolidated financial statements.
6
MY
SIZE, INC. AND ITS SUBSIDIARIES
Notes
to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
Note
1 - General
a.
My
Size, Inc. is developing unique measurement technologies based on algorithms with applications
in a variety of areas, from the apparel e-commerce market to the courier services market
and to the Do It Yourself smartphone and tablet apps market. The technology is driven by
proprietary algorithms which are able to calculate and record measurements in a variety of
novel ways.
Following
the acquisition of Naizfit Bespoke Technologies, S.L (“Naizfit”) in October 2022, the Company expanded its offering outreach
and customer base.
Following
the acquisition of Orgad International Marketing Ltd. (“Orgad”) in February 2022, the Company also operates an omnichannel
e-commerce platform.
The
Company has five subsidiaries, My Size Israel 2014 Ltd (“My Size Israel”), Topspin Medical (Israel) Ltd., and Orgad all
of which are incorporated in Israel, My Size LLC which was incorporated in the Russian Federation, and Naiz Bespoke Technologies,
S.L., a limited liability company incorporated under the laws of Spain. References to the Company include the subsidiaries
unless the context indicates otherwise.
b.
During
the three-month period ended March 31, 2023, the Company has incurred significant losses
and negative cash flows from operations and has an accumulated deficit of $ 56,155 . The Company
has financed its operations mainly through fundraising from various investors.
The
Company’s management expects that the Company will continue to generate losses and negative cash flows from operations for
the foreseeable future. Based on the projected cash flows and cash balances as of March 31, 2023, management is of the opinion that
its existing cash will be sufficient to fund operations for a period less than 12 months. As a result, there is substantial doubt
about the Company’s ability to continue as a going concern.
Management’s
plans include the continued commercialization of the Company’s products and securing sufficient financing through the sale
of additional equity securities, debt or capital inflows from strategic partnerships. Additional funds may not be available when
the Company needs them, on terms that are acceptable to it, or at all. If the Company is unsuccessful in commercializing its products
and securing sufficient financing, it may need to cease operations.
The
financial statements include no adjustments for measurement or presentation of assets and liabilities, which may be required should
the Company fail to operate as a going concern.
Note
2 - Significant Accounting Policies
a.
Unaudited
condensed consolidated financial statements:
The
accompanying unaudited condensed consolidated interim financial statements included herein have been prepared by the Company in accordance
with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The unaudited condensed
consolidated financial statements are comprised of the financial statements of the Company. In management’s opinion, the interim
financial data presented includes all adjustments necessary for a fair presentation. All intercompany accounts and transactions have
been eliminated. Certain information required by U.S. generally accepted accounting principles (“GAAP”) has been condensed
or omitted in accordance with rules and regulations of the SEC. Operating results for the three months ended March 31, 2023 are not
necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2023.
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, 2022.
b.
Significant
Accounting Policies:
The
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.
7
MY
SIZE, INC. AND ITS SUBSIDIARIES
Notes
to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
Note
3 - Financial Instruments
The
carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, other receivables, trade payables and accounts
payable approximate their fair value due to the short-term maturities of such instruments.
The
Company holds share certificates in iMine Corporation (“iMine”) formerly known as Diamante Minerals, Inc., a publicly traded
company on the OTCQB.
Due
to sales restrictions on the sale of the iMine 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
March 31, 2023
Fair value hierarchy
Level 1
Level 2
Level 3
Financial assets
Investment in marketable securities (*)
-
33
-
8
MY
SIZE, INC. AND ITS SUBSIDIARIES
Notes
to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
Note
3 - Financial Instruments (Cont.)
December 31, 2022
Fair value hierarchy
Level 1
Level 2
Level 3
Financial assets
Investment in marketable securities (*)
-
47
-
financial assets (**)
10
(*)
For
the three-month periods ended March 31, 2023 and 2022, the Company 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 $( 14 ), respectively.
(**)
The
financial asset includes in other receivables.
December 31, 2022
Fair value hierarchy
Level 1
Level 2
Level 3
Financial liabilities
Derivatives
-
9
-
Note
4 - Stock Based Compensation
The
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 Based Compensation Expenses
2023
2022
Three months ended
March 31,
2023
2022
Stock-based compensation expense – Cost of revenues
9
21
Stock-based compensation expense - Research and development
23
12
Stock-based compensation expense - Sales and marketing
40
39
Stock-based compensation expense - General and administrative
64
42
Stock-based compensation
expense
136
114
9
MY
SIZE, INC. AND ITS SUBSIDIARIES
Notes
to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
Note
4 - Stock Based Compensation (Cont.)
Stock
Option Plan for Employees:
In
March 2017, the Company adopted the My Size, Inc. 2017 Equity Incentive Plan (the “2017 Employee Plan”) pursuant to which
the Company’s Board of Directors may grant stock options to officers and key employees. The total number of options which may be
granted to directors, officers, employees under this plan, is limited to 289,000 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.
On
December 7, 2022, the Company’s stockholders approved an increase in the shares available for issuance under the 2017 Equity Incentive
Plan from 230,800 shares to 289,000 shares.
On
September 29, 2022, the Compensation Committee of the Company approved grants of restricted share awards under the Company’s 2017
Equity Incentive Plan to Ronen Luzon (CEO), Or Kles (CFO), Billy Pardo (COO), Ilia Turchinsky (CTO) and Ezequiel Javier Brandwain (CCO),
pursuant to which were issued 100,000 restricted shares, 24,000 restricted shares, 24,000 restricted shares, 16,000 restricted shares
and 12,000 restricted shares, respectively. Each restricted share awarded under section 102 Capital Gain Restricted Stock Award Agreement. The restricted shares vest in three equal installments on January 1, 2023, January 1, 2024 and January
1, 2025 for Ronen Luzon, Or Kles, Billy Pardo and Ilia Turchinsky and on January 27, 2023, January 27, 2024 and January 27, 2025 for
Ezequiel Javier Brandwain, conditioned upon continuous employment with the Company, and subject to accelerated vesting upon a change
in control of the Company.
On
the same day, the Company granted five-year options to purchase up to 10,000 ordinary shares to other employees of the Company at an
exercise price of $ 5.25 per share. The options vest in over three years in three equal portions from the vesting commencement date.
During
the three-month period ended March 31, 2023, the Company did not grant any stock options under the 2017 Employee Plan, no options
were exercised and options to purchase 26,600 shares of common stock expired.
The
total stock option compensation expense during the three-month period ended March 31, 2023 and 2022 which was recorded was $ 101 and $ 234 ,
respectively.
10
MY
SIZE, INC. AND ITS SUBSIDIARIES
Notes
to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
Note
5 - Contingencies and Commitments
a.
On
August 7, 2018, the Company commenced an action against North Empire LLC (“North Empire”)
in the Supreme Court of the State of New York, County of New York for breach of a Securities
Purchase Agreement (the “Agreement”) in which it is seeking damages in an amount
to be determined at trial, but in no event less than $ 616,000 . On August 2, 2018, North Empire
filed a Summons with Notice against the Company, also in the same Court, in which they allege
damages in an amount of $ 11.4 million arising from an alleged breach of the Agreement. On
September 6, 2018 North Empire filed a Notice of Discontinuance of the action it had filed
on August 2, 2018. On September 27, 2018, North Empire filed an answer and asserted counterclaims
in the action commenced by the Company against them, alleging that the Company failed to
deliver stock certificates to North Empire causing damage to North Empire in the amount of
$ 10,958,589 . North Empire also filed a third-party complaint against the Company’s
CEO and now former Chairman of the Board asserting similar claims against them in their individual
capacities. On October 17, 2018, the Company filed a reply to North Empire’s counterclaims.
On November 15, 2018, the Company’s CEO and now former Chairman of the Board filed
a motion to dismiss North Empire’s third-party complaint. On January 6, 2020, the Court
granted the motion and dismissed the third-party complaint. Discovery has been completed
and both parties have filed motions for summary judgment in connection with the claims and
counterclaims. On December 30, 2021, the Court denied both the Company and North Empire’s
motions for summary judgment, arguing there were factual issues to be determined at trial.
On January 26, 2022, the Company filed a notice of appeal of the summary judgment decision.
The appeal 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 judgment. North Empire will file its opposition papers on or before March 31, 2022,
and the Company will file reply papers on April 29, 2022. On or about September 12, 2022,
the Court issued its Decision and Order denying the Company’s motion to reargue. North
Empire filed its opposing brief on December 7, 2022. Both sides were given an opportunity
to file a reply brief. The Company filed our reply brief on January 4, 2023 and North Empire
filed its reply brief on January 13, 2023. The Appellate Court has scheduled oral argument
for the appeal for February 7, 2023. Oral argument was held before the Appellate Court on
February 7, 2023. On or about February 28, 2023, the Appellate Court filed its Decision and
Order, which affirmed the lower court’s decisions regarding both the Company and North
Empire’s motions for summary judgment and sent the case back to the Supreme Court.
On
or about March 13, 2023, the Supreme Court referred the case to its Alternative Dispute Program and ordered the cases to mediate.
A date for the mediation has not yet been set. The Company intends to vigorously defend any claims made by North Empire.
The
Company believes it is more likely than not that the counterclaims will be denied.
11
MY
SIZE, INC. AND ITS SUBSIDIARIES
Notes
to Condensed Consolidated Interim Financial Statements (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
Note
6 – Operating Segments
As
a result of the business combination in the reporting period (see Note 6), the Company has three reportable segments: (i) fashion and
equipment e-commerce platform, and (ii) SaaS based innovative artificial intelligence driven measurement solutions and (iii) Naiz SaaS
based innovative artificial intelligence driven measurement solutions and. 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 and My Size LLC.
Information
related to the operations of the Company’s reportable operating segments is set forth below:
Schedule
of Reportable Operating Segments
Fashion
and equipment e-commerce platform
SaaS
Solutions
Naiz
Total
As
of the three month ended March 31, 2023
Revenues
from external customers
578
56
86
720
Operating
(loss) income
( 825 )
( 1,527 )
( 140 )
( 2,492 )
Fashion
and equipment e-commerce platform
Saas
Solution
Naiz
As
of March 31, 2023:
Assets
2,181
5,543
2,722
Fashion
and equipment e-commerce platform
SaaS
Solutions
Naiz
Total
As
of the year ended December 31, 2022
Revenues
from external customers
4,132
224
103
4,459
Operating
(loss) income
( 591 )
( 7,181 )
( 338 )
( 8,110 )
Fashion
and equipment e-commerce platform
Saas
Solution
Naiz
As
of December 31, 2022:
Assets
2,022
5,966
1,691
Note
7 – Significant events during the reporting period
a.
On January 2, 2023, Orgad experienced a fire at its warehouse in Israel.
The Company is not aware of any casualties or injuries associated with the fire. The Company shifted Orgad’s operation to its headquarters.
The value of the inventory that was in the warehouse was approximately $ 640,000 . The Company believes that this incident did not affect
the future sales results of Orgad for the year of 2023. The inventory was not insured, the Company and lessor signed an agreement to settle
the issue in which the Company paid to the lessor an amount of $ 50,000 to cover his loss.
b.
On
January 10, 2023, the Company entered into a securities purchase agreement pursuant to which
the Company sold an aggregate of 162,000 of the Company’s shares of common stock and
pre-funded warrants to purchase up to 278,899 shares of common stock and, in a concurrent
private placement, unregistered warrants to purchase up to 883,798 shares of common stock,
consisting of Series A warrants to purchase up to 441,899 shares of common stock and Series
B warrants to purchase up to 441,899 shares of common stock, at an offering price of $ 3.055
per share of common stock and associated Series A and Series B warrants and an offering price
of $ 3.054 per pre-funded warrant and associated Series A and Series B warrants.
In
addition, the Company entered into a securities purchase agreement pursuant to which the Company agreed to sell and issue in a private
placement an aggregate of up to 540,098 unregistered pre-funded warrants and unregistered warrants to purchase up to an aggregate
of 1,080,196 shares of common stock, consisting of Series A warrants to purchase up to 540,098 shares of common stock and Series
B warrants to purchase up to 540,098 shares of common stock at an offering price of $ 3.054 per pre-funded warrant and associated
Series A and Series B warrants.
As
of March 31,2023, all the pre funded warrants were exercised by the investor.
Note
8 – Subsequent events
During
May 2023, the Company initiated a transfer of the support, development and customer success operations to its recently acquired
Spanish entity, Naiz Fit, that is intended to improve efficiency and lower costs between the Company’s operations in Israel
and Naiz Fit. As part of this, the Company reduced headcount by 13 persons in Israel, including the termination of its Chief
Commercial Officer, Ezequiel Javier Brandwain.
12
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