Item 1. Financial Statements
Item
1. Financial Statements.
My
Size, Inc. and Subsidiaries
Condensed
Consolidated
Interim
Financial
Statements
As
of March 31, 2024
(unaudited)
U.S.
Dollars in Thousands
1
MY
SIZE, INC. AND ITS SUBSIDIARIES
Condensed
Consolidated Interim Financial Statements as of March 31, 2024 (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)
5-6
Condensed
Consolidated Interim Statements of Cash flows (Unaudited)
7
Notes
to Condensed Consolidated Interim Financial Statements (Unaudited)
8-15
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,
2024
2023
Assets
Current
Assets:
Cash
and cash equivalents
1,136
2,187
Restricted
cash
75
77
Short
term deposit
-
22
Inventory
2,136
2,879
Account
receivables
406
615
Other
receivables and prepaid expenses
1,001
847
Total
current assets
4,754
6,627
Long
term deposits
7
7
Property
and equipment, net
113
121
Operating
right-of-use asset
48
351
Intangible
assets
996
1,097
Goodwill
741
758
Investment
in JV
-
24
Investment
in marketable securities
11
6
Total
non-current assets
1,916
2,364
Total
assets
6,670
8,991
Liabilities
and stockholders’ equity
Current
liabilities:
Operating
lease liability
53
158
Bank
overdraft and short-term loans
582
158
Trade
payables
1,114
2,154
Liabilities
to Related parties
73
605
Other
payables
877
803
Total
current liabilities
2,699
3,878
Long-term
loans
218
249
Operating
lease liability
-
129
Total
non-current liabilities
218
378
Total
liabilities
2,917
4,256
COMMITMENTS
AND CONTINGENCIES
-
Stockholders’
equity:
Stock
Capital -
Common
stock of $ 0.001 par
value - Authorized: 250,000,000
shares; Issued and outstanding: 641,459 ( * )
and 452,724 ( * )
as of March 31, 2024 and December 31, 2023, respectively
1
1
Additional
paid-in capital
65,527
65,386
Accumulated
other comprehensive loss
( 878 )
( 771 )
Accumulated
deficit
( 60,897 )
( 59,881 )
Total
stockholders’ equity
3,753
4,735
Total
liabilities and stockholders’ equity
6,670
8,991
(*)
Adjusted
to give retroactive effect of 1:8 Reverse stock split, see note 9 (a)
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)
Three-Months
Ended
March
31,
2024
2023
Revenues
2,984
720
Cost
of revenues
( 1,788 )
( * )( 1,147 )
Gross
profit
1,196
( 427 )
Operating
expenses
Research
and development
( 132 )
( 342 )
Sales
and marketing
( 1,102 )
( 679 )
General
and administrative
( 1,033 )
( 1,044 )
Total
operating expenses
( 2,267 )
( 2,065 )
Operating
loss
( 1,071 )
( 2,492 )
Financial
income (expenses), net
55
( 146 )
Equity
loss of equity method investees ***
-
( 34 )
Loss
before income taxes
( 1,016 )
( 2,672 )
Income
tax benefit
-
18
Net
loss
( 1,016 )
( 2,654 )
Other
comprehensive loss:
Foreign
currency translation differences
( 107 )
( 15 )
Total
comprehensive loss
( 1,123 )
( 2,669 )
Basic
and diluted loss per share**
( 1.88 )
( 13.42 )
Basic
and diluted weighted average number of shares outstanding **
539,042
197,794
(*)
During
the three months ended March 31, 2023, the Company recorded an inventory write-down of $ 643
due to the fire that occurred in its warehouse).
(**)
Adjusted
to give retroactive effect of 1:8 reverse stock split , see note 9 (a).
(***)
During
March 2024, the Company closed the joint venture (“JV”) in Brazil with Santista Têxtil.
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)
Amount **
capital **
Common
stock
Additional
paid-in
Accumulated
other
comprehensive
Accumulated
Total
stockholders’
Number**
Amount**
capital**
loss
deficit
equity
Balance
as of January 1, 2024
452,724
1
65,386
( 771 )
( 59,881 )
4,735
Stock-based
compensation related to options granted to employees and consultants
80,000
- *
138
-
-
138
Issuance
of shares in Business Combination
4,360
- *
3
-
-
3
Exercise
of warrants and prefunded warrants
104,375
- *
-
-
-
-
Total
comprehensive loss
-
-
-
( 107 )
( 1,016 )
( 1,123 )
Balance
as of March 31, 2024
641,459
1
65,527
( 878 )
( 60,897 )
3,753
(*)
Represents
an amount less than $1.
(**)
Adjusted
to give retroactive effect of 1:8 reverse stock split , see note 9 (a).
Common
stock
Additional
paid-in
Accumulated
other comprehensive
Accumulated
Total
stockholders’
Number**
Amount **
capital **
loss
deficit
equity
Balance
as of January 1, 2023
183,015
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
20,250
- *
2,658
-
-
2,658
Exercise
of warrants and prefunded warrants
102,583
- *
1
-
-
1
Total
comprehensive loss
-
-
-
( 15 )
( 2,654 )
( 2,669 )
Balance
as of March 31, 2023
305,848
1
61,468
( 652 )
( 56,155 )
4,662
(*)
Represents
an amount less than $1.
(**)
Adjusted
to give retroactive effect of 1:8 reverse stock split , see note 9 (a).
5
Common
stock
Additional
paid-in
Accumulated
other comprehensive
Accumulated
Total
stockholders’
Number**
Amount **
capital **
loss
deficit
equity
Balance
as of December 31, 2022
183,015
1
58,673
( 637 )
( 53,501 )
4,536
Balance
183,015
1
58,673
( 637 )
( 53,501 )
4,536
Stock-based
compensation related to options and restricted shares granted to employees and consultants
( 1,000 )
- (*)
453
-
-
453
Issuance
of shares, net of issuance cost of $ 959
54,000
- (*)
6,258
-
-
6,258
Issuance
of shares, net of issuance cost
54,000
- (*)
6,258
-
-
6,258
Issuance
of Exercise of warrants and prefunded warrants
216,709
- (*)
2
-
-
2
Total
comprehensive loss
-
-
-
( 134 )
( 6,380 )
( 6,514 )
Balance
as of December 31, 2023
452,724
1
65,386
( 771 )
( 59,881 )
4,735
Balance
452,724
1
65,386
( 771 )
( 59,881 )
4,735
(*)
Represents
an amount less than $1.
(**)
Adjusted
to give retroactive effect of 1:8 reverse stock split , see note 9 (a).
6
MY
SIZE, INC. AND ITS SUBSIDIARIES
Condensed
Consolidated Interim Statements of Cash Flows (Unaudited)
U.S.
dollars in thousands
Three-Months
Ended
March
31,
2024
2023
Cash
flows from operating activities:
Net
loss
( 1,016 )
( 2,654 )
Adjustments
to reconcile net loss to net cash used in operating activities:
Depreciation
8
27
Change
in operating lease right-of-use asset
98
31
Amortization
of intangible assets
76
74
Change
in liabilities to related parties
( 525 )
( 23 )
Interest
of long-term liabilities
8
6
Interest
paid
( 5 )
( 6 )
Revaluation
of investment in marketable securities
( 5 )
14
Change
in Investment in JV
-
34
Stock
based compensation
138
136
Change
in inventory
742
481
Change
in deferred tax liabilities
-
( 18 )
Change
in account receivables
209
903
Changes
in operating lease liabilities
( 47 )
( 37 )
Change
in other receivables and prepaid expenses
( 150 )
( 30 )
Change
in trade payables
( 1,014 )
( 1,403 )
Change
in other payables
66
152
Net
cash used in operating activities
( 1,417 )
( 2,313 )
Cash
flows from investing activities:
Proceeds
from investment in JV
38
-
Proceeds from short-term deposits
22
-
Net
cash provided by (used in) investing activities
60
-
Cash
flows from financing activities:
Proceeds
from issuance of shares, net of issuance costs
-
2,659
Loans
received
500
-
Repayment
of loans
( 93 )
( 25 )
Net
cash provided by (used in) financing activities
407
2,634
Effect
of exchange rate fluctuations on cash and cash equivalents
( 103 )
( 8 )
Increase
(decrease) in cash, cash equivalents and restricted cash (*)
( 1,053 )
313
Cash,
cash equivalents and restricted cash at the beginning of the period
2,264
2,363
Cash,
cash equivalents and restricted cash at the end of the period
1,211
2,676
Non
cash activities:
Change
in operating lease right-of-use asset and liability
181
-
(*)
$ 1,051
relates to change in cash and cash equivalents and, $ ( 2 ) to change in restricted cash for the three months ended March 31, 2024.
The
accompanying notes are an integral part of the interim condensed consolidated 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
1 - General
a.
My
Size, Inc (the “Company”). 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 (“DIY”) 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 Naiz Fit Bespoke Technologies, S.L (“Naiz”) 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 six subsidiaries, My Size Israel 2014 Ltd (“My Size Israel”), Topspin Medical (Israel) Ltd., Orgad and Rotrade
Ltd all of which are incorporated in Israel, My Size LLC which was incorporated in the Russian Federation and Naiz., a limited liability company incorporated under the laws of Spain. References to the Company include the subsidiaries unless
the context indicates otherwise.
My
Size, Inc., was incorporated and commenced operations in September 1999, as Topspin Medical Inc. (“Topspin”), a private
company registered in the State of Delaware. In December 2013, the Company changed its name to Knowledgetree Ventures Inc. Subsequently,
in February 2014, the Company changed its name to My Size, Inc. Topspin was engaged, through its Israeli subsidiary, in research
and development in the field of cardiology and urology.
From
September 1, 2005 to March 27, 2024, the Company’s common stock were traded on the Tel Aviv Stock Exchange.
b.
Since inception, the Company incurred significant losses
and negative cash flows from operations and had an accumulated deficit of $ 60,897 . 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, 2024, 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
April 15, 2024, the Company’s board of directors approved a 1-for-8
reverse stock split of the Company’s issued and outstanding shares of common stock. The reverse stock split was effected on
April 19, 2024 with the Company’s shares beginning trading on a post-split basis on the Nasdaq Capital Market
(“Nasdaq”) on April 23, 2024. The exercise prices of the Company’s outstanding warrants and net loss per share
amounts were adjusted retroactively for all periods presented in these financial statements.
c.
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. 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. In addition, since the commencement of these events, there have been continued hostilities
along Israel’s northern border with Lebanon (with the Hezbollah terror organization) and southern border (with the Houthi movement
in Yemen). It is possible that hostilities with Hezbollah in Lebanon will escalate, and that other terrorist organizations, including
Palestinian military organizations in the West Bank as well as other hostile countries will join the hostilities. In addition, Iran recently
launched a direct attack on Israel involving hundreds of drones and missiles and has threatened to continue to attack Israel and is widely
believed to be developing nuclear weapons. Iran is also believed to have a strong influence among extremist groups in the region, such
as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. Such clashes
may escalate in the future into a greater regional conflict.
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.
On
February 24, 2022, Russia invaded Ukraine. The outbreak of hostilities between the two countries could result in more widespread
conflict and could have a severe adverse effect on the region. Following Russia’s actions, various countries, issued broad-ranging
economic sanctions against Russia. Such sanctions included, among other things, a prohibition on doing business with certain Russian
companies, officials and oligarchs; a commitment by certain countries and the European Union to remove selected Russian banks from
the Society for Worldwide Interbank Financial Telecommunications (SWIFT) electronic banking network that connects banks globally;
and restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions.
The
Company shut down its operation in Russia and expects to close down the subsidiary in the near future therefore the impact from the
current situation is very limited.
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
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 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”). 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 three months ended March 31, 2024 are not necessarily indicative
of the results that may be expected for any future period or for the year ending December 31, 2024.
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, 2023.
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.
c.
Critical
accounting estimates:
ASC 350 requires goodwill to be tested for impairment at the reporting unit level at least annually, or between annual tests under certain circumstances, and written down when impaired. Goodwill is tested for impairment by comparing the fair
value of the reporting unit with it carrying value.
Impairment charge of $ 671 as the carrying value of SaaS Solution reporting segment exceeded its expected fair value,
as determined using a discounted cash flow model which is primarily based on management’s future revenue and cost estimates. This
impairment charge was recorded within Impairment of Goodwill, within the Consolidated Statement of Operations, and within the SaaS Solution
segment for the year ended December 31, 2023.
During the first quarter of 2024, there was no more likely than not indication of impairment, therefore no further
impairment testing was required.
d.
Recent adopted accounting pronouncements:
In June 2022, the FASB issued ASC 2022-03 “Fair Value Measurement of Equity Securities Subject to Contractual
Sale Restrictions”. The ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of
the unit of account of the equity security and, therefore, is not considered in measuring its fair value. The ASU also clarifies that
an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The ASU also introduces new disclosure
requirements for equity securities subject to contractual sale restrictions. The ASU do not have a material impact on the Company
consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20)
and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces the number of accounting models
for convertible debt instruments and convertible preferred stock and amends the guidance for the derivatives scope exception for contracts
in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends
the related earnings per share guidance. This standard became effective for the Company beginning on January 1, 2024. Adoption is either
a modified retrospective method or a fully retrospective method of transition. The Company adopted this guidance effective January 1,
2024, and the adoption of this standard did not have a material impact on its consolidated financial statements.
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, 2024
Fair
value hierarchy
Level
1
Level
2
Level
3
Financial
assets
Investment
in marketable securities (*)
-
11
-
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
3 - Financial Instruments (Cont.)
December
31, 2023
Fair
value hierarchy
Level
1
Level
2
Level
3
Financial
assets
Investment
in marketable securities (*)
-
6
-
(*)
For
the three-month period ended March 31, 2024 and 2023, 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 $ 5 and $ ( 14 ) , respectively.
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
2024
2023
Three
months ended
March
31,
2024
2023
Stock-based
compensation expense – Cost of revenues
1
9
Stock-based
compensation expense - Research and development
13
23
Stock-based
compensation expense - Sales and marketing
16
40
Stock-based
compensation expense - General and administrative
111
64
Stock-based compensation
expense
141
136
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
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 130,000 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.
The
fair value of each option award is estimated on the date of grant using the Binomial option-pricing model that used the weighted average
assumptions in the following table. The risk free rate for the expected term of the option is based on the U.S. Treasury yield curve
in effect at the time of grant
Schedule
of Fair Value Assumptions of Stock Option
2024
Grants
Dividend
yield
0 %
Expected
volatility
86.22 %
Risk-free
interest
4.3 %
Contractual
term
2.0 - 2.8
On
December 27, 2023, the Company’s stockholders approved an increase in the shares available for issuance under the 2017 Equity Incentive
Plan from 36,125
shares to 130,000
shares.
On
February 14, 2024, the Compensation Committee of the Company granted restricted common stock awards under the Company’s 2017
Equity Incentive Plan to Ronen Luzon, Or Kles and Billy Pardo, pursuant to which they were issued 37,500
restricted shares, 18,750
restricted shares and 18,750
restricted shares, respectively. The restricted shares shall vest in three equal installments on January 1, 2025, January 1, 2026
and January 1, 2027, 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 a total of 10,000
restricted stock units (“RSUs”) to its directors that will vest on January 1, 2025 and five-years
options to purchase up to 6,875
shares of common stock to other employees of the Company at an exercise price of $ 3.832
per share. The options vesting period is over three years in three equal portions from the vesting commencement date.
During
the three-month period ended March 31, 2024, the Company granted options, restricted stock and RSUs to purchase 91,875
shares of common stock under the 2017 Employee Plan (as described above), no options were exercised and no options were
expired.
The
total stock option compensation expense for employees during the three-month period ended March 31, 2024 and 2023 which was recorded
was $ 67 , and $ 101 , respectively.
The
total stock option compensation expense relating to the Orgad acquisition during the three-month period ended March 31, 2024 and 2023
which was recorded was $ 3 and $ 35 , respectively.
Options
issued to consultants:
In July 2023, the Company entered into a six month agreement (the “Consultant
Agreement”) with a consultant (the “Consultant”) to provide services to the Company, including assisting the Company
to promote, market and sell the Company’s technology to potential customers and make strategic introductions and inquiries with
interested parties in the financial community. Pursuant to the Consultant Agreement and in partial consideration for such consulting services,
the Company agreed to issue to Consultant (i) 5,000 shares of restricted common stock of the Company, (ii) a warrant to purchase
12,500 shares of common stock at an exercise price of $4.00 per share and exercisable for a term of 36 months from the date of issuance,
and (iii) a warrant to purchase 12,500 shares of common stock at an exercise price of $6.00 per share and exercisable for a term of 36
months from the date of issuance.
The
issuance was approved by the Company’s board of directors in February 2024.
During the three-month period ended March 31, 2024 and 2023, the Company
recorded $ 71 , and $ 0 , respectively, as stock-based equity awards with respect to the Consultant.
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
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 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 but the mediation did not lead to settlement. On December 21, 2023, a conference with
the Court was held and the parties were given dates for various pre-trial filings. The next pre-trial conference is scheduled to
be held on May 31, 2024, at which point the Court will schedule the matter for trial on the ultimate claims. 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.
Note
6 - Goodwill
During
the third quarter of 2023, the Company merged its two software-as-a-service (“SaaS”) segments into one segment (see Note
7), which also resulted in a change in the Company’s composition of reporting units. In the Company’s financial reporting
for March 31, 2024, comparative information for 2023 was restated to reflect the changes in reportable segments.
After the restructuring, the aggregate carrying amounts of goodwill allocated to
each reporting unit are as follows:
Schedule
of Aggregate Carrying Amount Of Goodwill
2024
2023
March
31
2024
2023
SaaS
Solutions
609
1,276
Fashion
and equipment e-commerce platform
132
136
Total
741
1,412
12
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
7 – Operating Segments
Effective
July 1, 2023 the Company merged its two SaaS segments into one segment, reducing its 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.
In
the Company’s financial reporting for March 31, 2024, comparative information for 2023 was restated to reflect the changes in reportable
segments.
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
Total
As
of the three month ended March 31, 2024
Revenues
from external customers
2,807
177
2,984
Operating
loss
( 582 )
( 489 )
( 1,071 )
Significant
non-cash items:
Amortization
( 27 )
( 49 )
( 76 )
Fashion
and equipment e-commerce platform
Saas
Solution
As
of March 31, 2024:
Assets
4,251
2,419
Fashion
and
equipment
e-commerce
platform
SaaS
Solutions
Total
As
of the three month ended March 31, 2023
Revenues
from external customers
578
142
720
Operating
loss
( 1,677 )
( 815 )
( 2,492 )
Significant
non-cash items:
Amortization
( 27 )
( 46 )
( 73 )
Fashion and equipment e-commerce
platform
Saas
Solution
As of March 31, 2023:
Assets
5,236
3,232
Fashion and
equipment
e-commerce
platform
SaaS
Solutions
Total
As of the year ended December 31, 2023
Revenues from external customers
6,367
629
6,996
Operating loss
( 3,356 )
( 3,385 )
( 6,741 )
Significant non-cash items:
Amortization
( 111 )
( 191 )
( 302 )
Impairment of goodwill
-
( 671 )
( 671 )
13
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
7 – Operating Segments (Cont.)
Fashion and equipment e-commerce platform
SaaS
Solutions
As of December 31, 2023:
Assets
6,352
2,639
Long-lived assets, which includes investment in JV,
property, plant and equipment and right of use assets, by geographic region are as follows:
Schedule
of Consolidated Assets
2024
2023
March 31,
2024
2023
Israel
376
995
Spain
1,521
2,393
Other
-
66
Total
Assets
1,897
3,454
For the three-month period ended March 31, 2024, 80.06 %
of the Company’s total revenues were generated in the United states, no other foreign destination comprised 10.0% or more of the
Company’s total revenues.
Note
8 – Significant events during the reporting period
a.
Further
to note 16 to the Company’s 10-K for the year ended December 31, 2023, the Company agreed to pay to the former owners of
Orgad, on the two-year and the three-year anniversary anniversaries of the closing of the transaction pursuant to which the Company
acquired 100 % of the shares and voting interests in Orgad, $ 350
in each of these years provided that in the case of the second and third instalments certain revenue targets are met and subject
further to certain downward post-closing adjustment. In February 2024, the amount of $ 700
was fully paid to the former owners of Orgad net of a settlement amount of $ 275 .
b.
On
January 8, 2024, the Company provided a notice of six month termination to the lessor that the office lease agreement will end on
July 8, 2024 instead of August 20, 2025.
As
a result the Company reduced its “Right of use asset” against current liabilities as “Operating lease liability”
and in the non-current liabilities as “Operating lease liability – long term” on the Company’s March 31, 2024
consolidated balance sheets in an amount of $ 181 .
c.
During February 2024, the Company received a loan from commercial lender
in an amount of $ 500 . The loan bears interest at a fix rate of 6 % of the principal and payable in installments during six month term.
14
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
9 – Subsequent events
a.
On
April 15, 2024, the Company announced that the Board approved a one-for-eight reverse stock split of its common stock (the “Reverse
Stock Split”). Upon the Reverse Stock Split every eight shares of the Company’s issued and outstanding common stock is
automatically converted into one share of common stock, without any change in the par value per share. The reverse stock split was effected on April 19, 2024 with the Company’s shares beginning trading on a post-split
basis on the Nasdaq on April 23, 2024. In addition, a proportionate
adjustment was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding options
and warrants entitling the holders to purchase common stock. Any fraction of a share of common stock that would otherwise have resulted
from the Reverse Stock Split was rounded up to the next whole number.
b.
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) (the “Rule”) for continued listing on the
Nasdaq. The Notification Letter
provided that the Company had 180 calendar days, or until May 1, 2024, to regain compliance with the Rule. To regain compliance, the
bid price of the Company’s common stock must have had a closing bid price of at least $1.00 per share for a minimum of 10
consecutive business days. On May 7, 2024, the Company received a letter from Nasdaq that, for the 10 consecutive business days from
April 23, 2024 to May 6, 2024, the closing bid price of the Company’s common stock had been at $1.00 per share or greater.
Accordingly, the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2) and Nasdaq considers the prior bid price
deficiency matter now closed.
15
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.