What changed in this filing

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Item 1. Financial Statements

2023-11-14 compared with 2023-08-14 · 308 added, 205 removed, 258 unchanged (67% of the section changed)

1 unchanged sentence

and Subsidiaries

of June 30, 2023

of September 30, 2023

Dollars in Thousands

AND ITS SUBSIDIARIES

Consolidated Interim Financial Statements as of June 30, 2023 (Unaudited)

Consolidated Interim Financial Statements as of September 30, 2023 (Unaudited)

Condensed Consolidated Interim Balance Sheets (Unaudited)

6 unchanged sentences

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

September 30,

Current Assets:

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Issued and outstanding:

2,438,780 and 1,464,117 as of June 30, 2023 and December 31, 2022, respectively

2,981,792 and 1,464,117 as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

7 unchanged sentences

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

Six-Months Ended

Nine-Months Ended

September 30,

Three-Months Ended

September 30,

Cost of revenues ( * )

Cost of revenues

Operating expenses

13 unchanged sentences

Basic and diluted weighted average number of shares outstanding**

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))

During the nine and three

month ended September 30, 2023, the Company recorded an inventory write-down of $ 643 and $ 0 due to the fire that occurred in its

warehouse (see Note 8(a))

Adjusted to give retroactive

4 unchanged sentences

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

Additional paid-in

Accumulated other comprehensive

Total stockholders’

comprehensive

stockholders’

Balance as of January 1, 2023

1 unchanged sentence

Issuance of shares, net of issuance cost of $ 959 ( ** )

Issuance of shares, net of issuance cost

Exercise of warrants and prefunded warrants

Total comprehensive loss

Balance as of June 30, 2023

Represents an amount less than $1

Additional paid-in

Accumulated other comprehensive

Total stockholders’

Balance as of September 30, 2023

an amount less than $1

notes 8(b) and 8(e)

comprehensive

stockholders’

Balance as of January 1, 2022

2 unchanged sentences

Total comprehensive loss

Balance as of June 30, 2022

Balance as of September 30, 2022

Represents an amount less than $1

Adjusted to give retroactive effect of 1:25 reverse stock split, see Note

Additional paid-in

Accumulated other comprehensive

Total stockholders’

Balance as of April 1, 2023

Adjusted to give retroactive effect of 1:25 reverse

stock split, see Note 1(b)

comprehensive

stockholders’

Balance as of July 1, 2023

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

Issuance of shares, net of issuance cost of $ 518 (**)

Issuance of shares, net of issuance cost

Exercise of prefunded warrants

Exercise of warrants and prefunded warrants

Total comprehensive loss

Balance as of June 30, 2023

Balance as of September 30, 2023

Represents an amount less than $1

Additional paid-in

Accumulated other comprehensive

Total stockholders’

Balance as of April 1, 2022

see notes 8(e)

comprehensive

stockholders’

Balance as of July 1, 2022

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

Issuance of shares in Business Combination ( * )

Issuance of shares in Business Combination

Total comprehensive loss

Balance as of June 30, 2022

Balance as of September 30, 2022

Represents an amount less than $1

2 unchanged sentences

dollars in thousands

Six-Months Ended

Nine-Months Ended

September 30,

Cash flows from operating activities:

11 unchanged sentences

Change in deferred tax liabilities

Change in account receivable

Change in account receivables

Changes in operating lease liabilities

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Effect of exchange rate fluctuations on cash and cash equivalents

Increase (decrease) in cash, cash equivalents and restricted cash (*)

Increase (decrease) in cash,

cash equivalents and restricted cash (*)

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

2 unchanged sentences

Shares issued in Acquisition of a subsidiary

relates to change in cash and cash equivalents and, $ 140

to change in restricted cash for the six months ended June 30, 2023.

$ 1,213 relates to change

in cash and cash equivalents and, $ 191 to change in restricted cash for the nine months ended September 30, 2023.

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

7 unchanged sentences

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.

(“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.

the acquisition of Naizfit Bespoke Technologies, S.L (“Naiz” or “Naiz Fit”) in October 2022, the Company

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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.

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 .

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.

the nine-month period ended September 30, 2023, the Company has incurred significant losses and negative cash flows from operations

and has an accumulated deficit of $ 58,578 .

The Company has financed its operations mainly through fundraising from various investors.

1 unchanged sentence

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.

Based on the projected cash flows and cash balances as of September 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.

plans include the continued commercialization of the Company’s products and securing sufficient financing through the sale

6 unchanged sentences

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

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.

October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on

civilian and military targets.

Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located

along Israel’s border with the Gaza Strip and in other areas within the State of Israel.

These attacks resulted in thousands

of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers.

Following the attack, Israel’s

security cabinet declared war against Hamas and commenced a military campaign against Hamas and other terrorist organizations in

parallel to their continued rocket and terror attacks.

The Company cannot currently predict the intensity or duration of Israel’s

war against Hamas, nor can predict how this war will ultimately affect the Company’s business and operations or Israel’s

economy in general.

The war with Hamas has had an immaterial effect on its

operations and financial results so far.

This is attributable to its global footprint and the offices in Spain which has become a

hub for the Company’s sizing solutions business.

The majority of Orgad’s inventory utilizes fulfillment by Amazon rather than

fulfilling directly.

Inventory is now maintained and orders are shipped from regional Amazon warehouses, thereby reducing exposure

to inventory risk and contributing to operating efficiencies.

AND ITS SUBSIDIARIES

to Condensed Consolidated Interim Financial Statements (Unaudited)

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

2 - Significant Accounting Policies

1 unchanged sentence

The accompanying unaudited

condensed consolidated interim financial statements included herein have been prepared by the Company in accordance with the rules

condensed consolidated interim financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules

and regulations of the United States Securities and Exchange Commission (“SEC”).

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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.

Operating results for the nine months ended September 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

5 unchanged sentences

applied in the preparation of the latest annual financial statements.

AND ITS SUBSIDIARIES

to Condensed Consolidated Interim Financial Statements (Unaudited)

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

Critical accounting estimates:

Due to the change of the operating segments as stated in note 7, and the reduction of the company's reporting units

as a result, the company examined the need for impairment for those reporting units.

The estimated fair value of the remaining reporting

units was higher than their carrying amounts, and therefore there was no need to provide for impairment.

3 - Financial Instruments

7 unchanged sentences

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

June 30, 2023

September 30, 2023

Fair value hierarchy

10 unchanged sentences

Derivatives (**)

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.

For the nine and three-month

periods ended September 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

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of Stock Based Compensation Expenses

Six months ended

Nine months ended

September 30,

Three months ended

September 30,

Stock-based compensation expense – Cost of revenues

9 unchanged sentences

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.

total number of shares of common stock which may be granted to directors, officers, employees under this plan, is limited to 289,000

Stock options can be granted with an exercise price equal to or less than the stock’s fair market value at the date

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.

options can be granted with an exercise price equal to or less than the stock’s fair market value at the date of grant.

December 7, 2022, the Company’s stockholders approved an increase in the shares available for issuance under the 2017 Equity Incentive

11 unchanged sentences

The options vest in over three years in three equal portions from the vesting commencement date.

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.

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 ,

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.

the nine and three-month period ended September 30, 2023, the Company granted options to purchase 93,000 shares of common stock 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.

total stock option compensation expense for employees during the nine and three-month period ended September 30, 2023 and 2022 which

was recorded was $ 214 , $ 53 $ 52 and $ 9 , respectively.

total stock option compensation expense relating to the Orgad acquisition during the nine and three-month period ended September 30,

2023 and 2022 which was recorded was $ 76 , $ 267 , $ 16 and $ 73 , respectively.

AND ITS SUBSIDIARIES

5 unchanged sentences

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.

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

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.

has been completed and both parties have filed motions for summary judgment in connection with the claims and counterclaims.

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.

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.

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.

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 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.

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 mediation was held on July 26, 2023 and various settlement options were explored but the mediation did not lead to settlement.

The Company intends to vigorously defend any claims made by North Empire.

Company believes it is more likely than not that the counterclaims will be denied.

Note 6 - Goodwill

During the third quarter

of 2023, the Company merged its two SAAS segments into one segment (see Note 7), which also resulted in a change in the Company’s

composition of reporting units.

After the restructuring, the aggregate carrying amounts of goodwill allocated to each reporting unit are

of Aggregate Carrying Amount Of Goodwill

SaaS Solutions

Fashion and equipment e-commerce platform

Based on provisional amounts revised on December 31, 2022

a loss-making segment into other reporting units, was viewed by the Company as an indicator for impairment which required the Company

to perform an interim goodwill impairment assessment.

September 2023, the fair value of each reporting units was determined using the income approach.

The income approach is a forward-looking

approach for estimating fair value.

Within the income approach, the method used is the discounted cash flow method.

The company, using

independent valuation services, starts with a forecast of all the expected net cash flows associated with the reporting unit, which includes

the application of a terminal value, and then applies a discount rate to arrive at a net present value amount.

Cash flow projections

are based on the Company’s estimates of revenue growth rates and operating margins, taking into consideration industry and market

The discount rate used is based on the weighted average cost of capital (“WACC”), adjusted for the relevant risk

associated with country-specific and business-specific characteristics.

If any of these expectations were to vary materially from the

Company’s assumptions, the Company may record an impairment of goodwill allocated to these reporting units in the future.

assumptions used in the discounted cash flow analysis of the SAAS reporting unit included, but were not limited to, a WACC of 24 %,

terminal growth rates of 3 % and EBIT margin which is excepted to gradually increase from a negative margin of 33.1 % in 2024 to a positive

margin of 29.5 % in 2029.

assumptions used in the discounted cash flow analysis of the Fashion and equipment e-commerce platform reporting unit included, but were

not limited to, a WACC of 21.5 %, terminal growth rates of 3 % and EBIT margin which is excepted to gradually increase from a negative

margin of 9.1 % in 2024 to a positive margin of 6.9 % in 2029.

assumptions are deemed as Level III inputs in regard to the fair value hierarchy.

Company concluded based on the results of the interim quantitative goodwill impairment assessment performed as of September 30, 2023,

that goodwill was not impaired in both reporting units.

The fair value of the SAAS reporting unit is approximately 2.7 % above its carrying

amount and fair value of the Fashion and equipment e-commerce platform reporting unit is approximately 9.7 % above its carrying amount.

While there was no impairment related to goodwill for both reporting units, a future potential impairment is possible should actual results

differ from forecasted results used in the valuation analysis.

Also, the valuation of goodwill can differ materially if financial projections

or market inputs used to determine the WACC change significantly.

AND ITS SUBSIDIARIES

2 unchanged sentences

7 – 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.

Effective 1 July 2023 the Company merged its two SAAS segments into

one segment, hence reducing the reportable segments from three to the following two segments:

(i) fashion and equipment e-commerce platform,

and (ii) SaaS based innovative artificial intelligence driven measurement solutions.

This realignment reflects the way resources are allocated

and performance is assessed by the Chief Operating Decision Maker.

The fashion and equipment e-commerce platform which represents Orgad’s

activity that was acquired by the Company in 2022, mainly operates on Amazon.

The SaaS based innovative artificial intelligence driven

measurement solutions, or SaaS Solutions operating segment consists of My Size Inc, My Size Israel, My Size LLC and Naiz Fit.

the Company’s financial reporting for September 30, 2023, comparative information for 2022 was restated to reflect the changes

in reportable segments.

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

of Reportable Operating Segments

Fashion and equipment e-commerce platform

As of the Six month ended June 30, 2023

As of the Nine month ended September 30, 2023

Revenues from external customers

Operating (loss) income

Fashion and equipment e-commerce platform

As of June 30, 2023:

Fashion and equipment e-commerce platform

For the six months ended June 30, 2022

As of September 30, 2023:

For the Nine months ended September 30, 2022

Revenues from external customers

Operating (loss) income

Fashion and equipment e-commerce platform

As of Three months ended June 30, 2023

As of Three months ended September 30, 2023

Revenues from external customers

Operating (loss) income

Fashion and equipment e-commerce platform

months ended June 30, 2022

As of Three months ended September 30, 2022

Revenues from external customers

Operating (loss) income

Fashion and equipment e-commerce platform

AND ITS SUBSIDIARIES

to Condensed Consolidated Interim Financial Statements (Unaudited)

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

7 – Operating Segments (Cont.)

September 30, 2022:

As of the year ended December 31, 2022

1 unchanged sentence

Operating (loss) income

Fashion and equipment e-commerce platform

As of December 31, 2022:

of December 31, 2022:

8 – Significant events during the reporting period

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.

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 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

to cover his loss.

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 its loss.

The Company recognized the payment to the lessor as a general and administrative expense.

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.

During the reporting period, claims by the owners a neighboring warehouse were made of damage caused by the fire.

As of the date these financial statements were authorized for issuance, no lawsuit was filed against the Company, and the amount of potential

loss, if any, cannot be reasonably estimated.

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.

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.

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

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.

connection with the PIPE Purchase Agreement, the Company 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.

will be obligated to pay certain liquidated damages if it fails to maintain the effectiveness of the Registration Statement.

AND ITS SUBSIDIARIES

to Condensed Consolidated Interim Financial Statements (Unaudited)

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

8 – Significant events during the reporting period (Cont.)

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

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

of September 30, 2023, all the pre funded warrants were exercised.

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.

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.

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.

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.

8 – Subsequent events

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

May 2023, the Company initiated a transfer of the support, development and customer success

operations to its 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.

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:

The incremental compensation cost resulting from the repricing is approximately $ 10 .

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.

incremental compensation cost resulting from the repricing is approximately $ 10 .

August 24, 2023, the Company entered into an inducement offer letter agreement (the “Inducement

Letter”) with a certain holder (the “Holder”) of certain of the Company’s

existing warrants to purchase up to (i) 1,963,994 shares of the Company’s common stock

issued on January 12, 2023 at an exercise price of $ 2.805 per share (the “January 2023

Warrants”), (ii) 6,864 shares of the Company’s common stock issued on January

17, 2020 at an exercise price of $ 94.00 per share (the “January 2020 Warrants”),

and (ii) 47,153 shares of the Company’s common stock issued on October 28, 2021 at

an exercise price of $ 31.50 per share, having terms ranging from 28 months to five and one-half

years (the “October 2021 Warrants” and together with the January 2023 Warrants

and the January 2020 Warrants, the “Existing Warrants).

to the Inducement Letter, the Holder agreed to exercise for cash its Existing Warrants to purchase an aggregate of 2,018,012 shares

of the Company’s common stock at a reduced exercise price of $ 2.09 per

share in consideration of the Company’s agreement to issue new common stock purchase warrants (the “New

Warrants”), to purchase up to an aggregate of 5,367,912 shares

of the Company’s common stock (the “New Warrant Shares”), at an exercise price of $ 2.09 per

The Company received aggregate gross proceeds of approximately $ 4.2 million

from the exercise of the Existing Warrants by the Holder, before deducting placement agent fees and other offering expenses payable

by the Company.

The net proceeds are approximately $ 3.6 million.

As of September 30, 2023, the

Company issued to the holder 543,012

shares and 1,475,000

9 – Subsequent events

In October 2023, Hamas terrorists infiltrated Israel’s southern

border from the Gaza Strip and conducted a series of attacks on civilian and military targets- see note 1(c).

On November 3, 2023, the Company was

notified, by the Nasdaq Listing Qualifications that the Company is not in compliance with the minimum

bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2), or the Rule, for continued listing on The Nasdaq Capital Market.

Notification Letter provides that the Company has 180 calendar days, or until May 1, 2024, to regain compliance with the Rule.

regain compliance, the bid price of our common stock must have a closing bid price of at least $ 1.00

per share for a minimum of 10 consecutive business days.

In the event we do not regain compliance by July 5, 2022, the Company may

then be eligible for additional 180 days if the Company meet the continued listing requirement for market value of publicly held

shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and

will need to provide written notice of the Company’s intention to cure the deficiency during the second compliance period .

the Company does not qualify for the second compliance period or fails to regain compliance during the second compliance period, then

Nasdaq will notify the Company of its determination to delist the Company common stock, at which point the Company will have an

opportunity to appeal the delisting determination to a Hearings Panel.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements