Item 1. Financial Statements
Item
1. Financial Statements.
My
Size Inc. and Subsidiaries
Condensed
Consolidated
Interim
Financial
Statements
As
of June 30, 2023
(unaudited)
U.S.
Dollars in Thousands
1
MY
SIZE, INC. AND ITS SUBSIDIARIES
Condensed
Consolidated Interim Financial Statements as of June 30, 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)
7-12
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)
June 30,
December 31,
2023
2022
(Unaudited)
(Audited)
Assets
Current Assets:
Cash and cash equivalents
1,127
2,100
Restricted cash
123
263
Inventory
1,043
997
Account receivables
754
1,940
Other receivables and prepaid expenses
945
758
Total current assets
3,992
6,058
Long term deposits
27
28
Property and equipment, net
130
140
Operating right-of-use asset
430
583
Intangible assets
1,228
1,377
Goodwill
1,403
1,395
Investment in JV
58
99
Investment in marketable securities
26
47
Total non-current assets
3,302
3,669
Total assets
7,294
9,727
Liabilities and stockholders’ equity
Current liabilities:
Operating lease liability
145
159
Bank overdraft and short-term loans
152
155
Trade payables
1,531
2,487
Liabilities to Related parties
622
698
Other payables
657
680
Total current liabilities
3,107
4,179
Long-term loans
306
376
Deferred tax liabilities
244
328
Operating lease liability
204
308
Total non-current liabilities
754
1,012
Total liabilities
3,861
5,191
COMMITMENTS AND CONTINGENCIES
-
-
Stockholders’ equity:
Stock Capital -
Common stock of $ 0.001 par value - Authorized: 250,000,000 shares; Issued and outstanding: 2,438,780 and 1,464,117 as of June 30, 2023 and December 31, 2022, respectively
2
1
Additional paid-in capital
61,553
58,673
Accumulated other comprehensive loss
( 676 )
( 637 )
Accumulated deficit
( 57,446 )
( 53,501 )
Total stockholders’ equity
3,433
4,536
Total liabilities and stockholders’ equity
7,294
9,727
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
2023
2022
Six-Months Ended
June 30,
Three-Months Ended
June 30,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenues
2,010
1,205
1,290
801
Cost of revenues ( * )
( 1,918 )
( 730 )
( 771 )
( 479 )
Gross profit
92
475
519
322
Operating expenses
Research and development
( 569 )
( 802 )
( 227 )
( 390 )
Sales and marketing
( 1,646 )
( 1,854 )
( 967 )
( 895 )
General and administrative
( 1,923 )
( 1,576 )
( 879 )
( 689 )
Total operating expenses
( 4,138 )
( 4,232 )
( 2,073 )
( 1,974 )
Operating loss
( 4,046 )
( 3,757 )
( 1,554 )
( 1,652 )
Financial income (expenses), net
( 100 )
( 147 )
46
( 64 )
Equity loss of equity method investees
( 39 )
-
( 5 )
-
Loss before taxes
( 4,185 )
( 3,904 )
( 1,513 )
( 1,716 )
Taxes on income
240
-
222
-
Net loss
( 3,945 )
( 3,904 )
( 1,291 )
( 1,716 )
Other comprehensive income (loss):
Foreign currency translation differences
( 39 )
122
( 24 )
64
Total comprehensive loss
( 3,984 )
( 3,782 )
( 1,315 )
( 1,652 )
Basic and diluted loss per share **
( 1.80 )
( 3.88 )
( 0.53 )
( 1.68 )
Basic and diluted weighted average number of shares outstanding **
2,190,758
1,005,120
2,444,146
1,018,550
(*)
During the six and three
month ended June 30, 2023, the Company recorded an inventory write-down of $ 643 and $ 0 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
( 8,000 )
- *
222
-
-
222
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
-
-
-
( 39 )
( 3,945 )
( 3,984 )
Balance as of June 30, 2023
2,438,780
2
61,553
( 676 )
( 57,446 )
3,433
( * )
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 January 1, 2022
959,300
1
56,453
( 406 )
( 45,191 )
10,857
Stock-based compensation related to options granted to employees and consultants
-
- **
162 **
-
-
162
Issuance of shares in Business Combination
62,777
- * **
458 **
-
-
458
Total comprehensive loss
-
- **
- **
122
( 3,904 )
( 3,782 )
Balance as of June 30, 2022
1,022,077
1
57,073
( 284 )
( 49,095 )
7,695
( * )
Represents an amount less than $1
( ** )
Adjusted to give retroactive effect of 1:25 reverse stock split, see Note
1(b)
Common stock
Additional paid-in
Accumulated other comprehensive
Accumulated
Total stockholders’
Number
Amount
capital
loss
deficit
equity
Balance as of April 1, 2023
2,446,780
2
61,467
( 652 )
( 56,155 )
4,662
Stock-based compensation related to options granted to employees and consultants
( 8,000 )
- *
86
-
-
86
Total comprehensive loss
-
-
-
( 24 )
( 1,291 )
( 1,315 )
Balance as of June 30, 2023
2,438,780
2
61,553
( 676 )
( 57,446 )
3,433
( * )
Represents an amount less than $1
Common stock
Additional paid-in
Accumulated other comprehensive
Accumulated
Total stockholders’
Number
Amount
capital
loss
deficit
equity
Balance as of April 1, 2022
1,015,101
1
57,025
( 348 )
( 47,379 )
9,298
Balance
1,015,101
1
57,025
( 348 )
( 47,379 )
9,298
Stock-based compensation related to options granted to employees and consultants
-
-
48
-
-
48
Issuance of shares in Business Combination ( * )
6,976
- *
-
-
-
1
Total comprehensive loss
-
-
-
64
( 1,716 )
( 1,652 )
Balance as of June 30, 2022
1,022,077
1
57,073
( 284 )
( 49,095 )
7,695
Balance
1,022,077
1
57,073
( 284 )
( 49,095 )
7,695
( * )
Represents an amount less than $1
5
MY
SIZE, INC. AND ITS SUBSIDIARIES
Condensed
Consolidated Interim Statements of Cash Flows (Unaudited)
U.S.
dollars in thousands
2023
2022
Six-Months Ended
June 30,
2023
2022
(Unaudited)
(Unaudited)
Cash flows from operating activities:
Net loss
( 3,945 )
( 3,904 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
16
23
Change in operating lease right-of-use asset
88
20
Amortization of intangible assets
151
53
Change in warrants and derivatives
-
37
Change in liabilities to related parties
( 76 )
-
Interest of long-term liabilities
11
-
Interest paid
( 11 )
-
Revaluation of investment in marketable securities
23
11
Change in Investment in JV
39
-
Stock based compensation
222
162
Change in inventory
( 95 )
( 455 )
Change in deferred tax liabilities
( 36 )
( 12 )
Change in account receivable
1,119
( 55 )
Changes in operating lease liabilities
( 68 )
-
Change in other receivables and prepaid expenses
( 205 )
( 170 )
Change in trade payables
( 888 )
( 300
)
Change in account payables
15
520
Net cash used in operating activities
( 3,640 )
( 4,070 )
Cash flows from investing activities:
Acquisition of a subsidiary, net of cash acquired
-
( 300 )
Purchase of property and equipment
-
( 25 )
Net cash used in investing activities
-
( 325 )
Cash flows from financing activities:
Proceeds from issuance of shares, net of issuance costs
2,658
-
Loans received
-
18
Repayment of loans
( 62 )
( 42 )
Net cash provided by (used in) financing activities
2,596
( 24 )
Effect of exchange rate fluctuations on cash and cash equivalents
( 69 )
201
Increase (decrease) in cash, cash equivalents and restricted cash (*)
( 1,113 )
( 4,218 )
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
1,250
6,725
Non cash activities:
Shares issued in Acquisition of a subsidiary
-
457
(*)
$ 973
relates to change in cash and cash equivalents and, $ 140
to change in restricted cash for the six months ended June 30, 2023.
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.
In
addition to the measurement technologies, following the Orgad International Marketing Ltd. (“Orgad”) acquisition as
detailed below, the Company operates an online retailer platform, has expertise in e-commerce, supply chain, and has technology
operating as a third-party seller on Amazon.com and other sites.
Following
the acquisition of Naizfit Bespoke Technologies, S.L (“Naiz” or “Naiz Fit”) in October 2022, the Company
expanded its offering outreach and customer base.
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 Fit, 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 six-month period ended June 30, 2023, the Company has incurred significant losses and negative cash flows from operations and
has an accumulated deficit of $ 57,446 . The Company has financed its operations mainly through fundraising from various investors.
The
Company’s management expects that the Company will continue to generate losses and negative cash flows from operations for
the foreseeable future. Based on the projected cash flows and cash balances as of June 30, 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.
On December 7, 2022, the Company’s board of directors approved a
1-for-25 reverse stock split of the Company’s issued and outstanding shares of common stock. The reverse stock split became effective
on December 8, 2022. Exercise price and net loss per share amounts were adjusted retroactively for all periods presented in these financial
statements.
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. Operating results for the six months ended June 30, 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
June 30, 2023
Fair value hierarchy
Level 1
Level 2
Level 3
Financial assets
-
-
-
Investment in marketable securities (*)
-
26
-
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
-
Derivatives (**)
10
(*)
For the six and three-month
periods ended June 30, 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 $( 21 ), $( 11 ), $( 7 ) and $( 22 ), respectively.
(**)
The Derivatives 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
2023
2022
Six months ended
June 30,
Three months ended
June 30,
2023
2022
2023
2022
Stock-based compensation expense – Cost of revenues
15
28
6
7
Stock-based compensation expense - Research and development
29
18
6
6
Stock-based compensation expense - Sales and marketing
55
58
15
19
Stock-based compensation expense - General and administrative
123
58
59
16
Stock-based compensation
expense
222
162
86
48
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 and other equity awards to officers and key employees. The
total number of shares of common stock which may be granted to directors, officers, employees under this plan, is limited to 289,000
shares. 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 six and three-month period ended June 30, 2023, the Company did not grant any stock options under the 2017 Employee Plan, no options
were exercised and options to purchase 6,933 shares of common stock expired. In addition, 8,000 restricted shares that were granted to
Ezequiel Javier Brandwain were terminated and voided.
The
total stock option compensation expense for employees during the six and three-month period ended June 30, 2023 and 2022 which was
recorded was $ 162 ,
$ 44 ,
$ 61
and $ 15 ,
respectively.
The total stock option compensation expense relating to the Orgad acquisition during the six and three-month period
ended June 30, 2023 and 2022 which was recorded was $ 60 , $ 118 , $ 25 and $ 33 , 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
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 . 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 $ 11,400 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 . 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. 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 a 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.
The mediation was held on July 26, 2023 and various settlement options were explored. A second day of mediation has been scheduled
for August 14, 2023. 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
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. 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 Six month ended June 30, 2023
Revenues from external customers
1,738
88
184
2,010
Operating (loss) income
( 956 )
( 2,794 )
( 296 )
( 4,046 )
Fashion and equipment e-commerce platform
Saas
Solution
Naiz
As of June 30, 2023:
Assets
2,522
4,107
2,558
Fashion and equipment e-commerce platform
SaaS
Solutions
Naiz
Total
For the six months ended June 30, 2022
Revenues from external customers
1,112
93
-
1,205
Operating (loss) income
71
( 3,828 )
-
( 3,757 )
Fashion and equipment e-commerce platform
SaaS
Solutions
Naiz
Total
As of Three months ended June 30, 2023
Revenues from external customers
1,160
32
98
1,290
Operating (loss) income
( 131 )
( 1,267 )
( 156 )
( 1,554 )
Fashion and equipment e-commerce platform
SaaS
Solutions
Naiz
Total
As of Three
months ended June 30, 2022
Revenues from external customers
752
49
-
801
Operating (loss) income
( 2 )
( 1,650 )
-
( 1,652 )
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 .
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 and the Company and lessor signed an agreement to settle the issue in which the Company paid to the lessor an amount of
$ 50
to cover his loss. The Company recognized the payment to the lessor as a general and administrative expense.
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 (the “PIPE 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.
The pre-funded warrants are immediately exercisable
at an exercise price of $ 0.001 per share and will not expire until exercised in full. The warrants are immediately exercisable upon issuance
at an exercise price of $ 2.805 per share, subject to adjustment as set forth therein. The Series A warrants have a term of five and one-half
years from the date of issuance and the Series B warrants have a term of 28 months from the date of issuance. The warrants may be exercised
on a cashless basis if there is no effective registration statement registering the shares underlying the warrants.
In connection with the PIPE Purchase Agreement,
we entered into a registration rights agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights
Agreement, the Company is required to file a resale registration statement (the “Registration Statement”), with the SEC, to register for resale the shares issuable upon exercise of the unregistered pre-funded warrants and the
Series A and Series B warrants, within 20 days of the signing date of the PIPE Purchase Agreement (the “Signing Date”), and to have
such Registration Statement declared effective within 60 days after the Signing Date in the event the Registration Statement is not
reviewed by the SEC, or 90 days of the Signing Date in the event the Registration Statement is reviewed by the SEC. The Company will be
obligated to pay certain liquidated damages if it fails to maintain the effectiveness of the Registration Statement.
Aggregate gross
proceeds to the Company in respect of the offerings was approximately $ 3,000 ,
before deducting fees payable to the placement agent and other offering expenses payable by the Company. The net proceeds were approximately
$ 2,600 .
As of June 30, 2023, all the pre funded warrants were
exercised.
The Company also entered into a letter agreement
(the “Engagement Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), pursuant to which
Wainwright agreed to serve as the exclusive placement agent for the Company in connection with the offerings. The Company paid
Wainwright a cash placement fee equal to 7 %
of the aggregate gross proceeds raised in the offerings, a management fee of 1 %
of the aggregate gross proceeds raised in the offerings, a non-accountable expense allowance of $ 85 and
clearing fees of $ 15.95 .
Wainwright also received placement agent warrants - to purchase 68,740 shares
of common stock, at an exercise price of $ 3.8188 per
share and a term expiring on January 10, 2028.
c.
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. This
restructuring did not have a material impact on the Company’s results. The Company expects it to lower future operating costs without significant impact on revenues.
Note
8 – Subsequent events
On
July 13, 2023, the compensation committee of the board of directors of the Company reduced the exercise price of outstanding options
of certain officers and directors of the Company for the purchase of an aggregate of 23,575 shares of common stock (with exercise prices
of $ 26.00 per Share) to $ 1.09 per share, which was the closing price for the Company’s shares on July 13, 2023. The exercise price
reduction includes options held by, among others, the Company’s named executive officers with respect to the following number of
shares: (i) Ronen Luzon, the Company’s Chief Executive Officer and director: 8,001 shares, (ii) Or Kles, the Company’s Chief
Financial Officer: 5,760 shares, and (iii) Billy Pardo, the Company’s Chief Operating Officer and Chief Product Officer: 6,094
shares.
The incremental compensation cost resulting from the repricing is approximately $ 10 .
12
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.