What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-12 · 134 added, 82 removed, 178 unchanged (55% of the section changed)

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dollar translations of NIS amounts presented in this Quarterly Report on

Form 10-Q for three months ended on June 30, 2024 are translated using the rate of NIS 3.759 to $1.00.

Form 10-Q for three months ended on September 30, 2024 are translated using the rate of NIS 3.710 to $1.00.

information in this Quarterly Report on Form 10-Q relating to shares or price per share reflects the 1-for-8 reverse stock split effected

by us on April 19, 2024 with the shares beginning trading on a post-split basis on the Nasdaq Capital Market on April 23, 2024.

are an omnichannel e-commerce platform and provider of AI-driven software-as-a-service (“SaaS”) measurement solutions,

including MySizeID and our subsidiaries, Naiz Fit, which provides SaaS technology solutions that solve size and fit issues and AI

solutions for smarter design through data driven decisions for fashion ecommerce companies, and Orgad, an online retailer operating

in the global markets.

are an omnichannel e-commerce platform and provider of AI-driven software-as-a-service (“SaaS”) measurement solutions, including

MySizeID and our subsidiaries, Naiz Fit, which provides SaaS technology solutions that solve size and fit issues and AI solutions for

smarter design through data driven decisions for fashion ecommerce companies, and Orgad, an online retailer operating in the global markets.

To date, we have generated almost all our revenue as a third-party seller on Amazon.

Our advanced software

and solutions assists us in the supply chain, identifying products that can drive growth and provides a user-friendly experience and

best customer service.

Our advanced software and solutions assist us in

the supply chain, identifying products that can drive growth and provides a user-friendly experience and best customer service.

flagship innovative tech product, MySizeID, enables shoppers to generate highly accurate measurements of their body to find the accurate

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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.

border with Lebanon (with the Hezbollah terror organization) and on other fronts from various extremist groups in region, such as the Houthi

movement in Yemen and various rebel militia groups in Syria and Iraq.

Israel has carried out a number of targeted strikes on sites belonging

to these terror organizations and in October 2024, Israel began limited ground operations against Hezbollah in Lebanon.

In addition, Iran

recently launched a direct attack on Israel involving hundreds of drones and missiles and has threatened to continue to attack Israel

recently launched direct attacks 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.

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Such clashes may escalate in the future into a greater regional conflict.

To date, the war with Hamas has had an immaterial effect on our operations

and financial results.

This is attributable to our global footprint and the offices in Spain, which has become a hub for our sizing solutions

business and the majority of Orgad’s inventory utilizes fulfillment by Amazon rather than fulfilling directly.

To date, security situation in Israel has had an immaterial effect

on our operations and financial results.

This is attributable to our global footprint and the offices in Spain, which has become a hub

for our sizing solutions business and the majority of Orgad’s inventory utilizes fulfillment by Amazon rather than fulfilling directly.

of Operations

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Three months ended

Six months ended

September 30,

Nine months ended

September 30,

(dollars in thousands)

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General and administrative

Impairment of goodwill

Operating loss

1 unchanged sentence

Equity accounted losses

and Three Months Ended June 30, 2024 Compared to Six and Three Months Ended June 30, 2023

revenues for the six months ended June 30, 2024 amounted to $4,963,000 compared to $2,010,000 for the six months ended June 30, 2023.

The increase in the six months ended June 30, 2024 from the corresponding period is primarily attributable to an increase in Orgad sales.

revenues for the three months ended June 30, 2024 amounted to $1,979,000 compared to $1,290,000 for the three months ended June 30, 2023.

The increase in the three months ended June 30, 2024 from the corresponding period is primarily attributable to an increase in Orgad

cost of revenues expenses for the six months ended June 30, 2024 amounted to $2,783,000 compared to $1,918,000 for the six months ended

June 30, 2023.

The increase in comparison with the corresponding period was mainly due to an increase in revenues described above offset

by an inventory mark-down of $643,000 due to the fire that occurred in Orgad’s warehouse during January 2023.

cost of revenues expenses for the three months ended June 30, 2024 amounted to $995,000 compared to $771,000 for the three months ended

June 30, 2023.

The increase in comparison with the corresponding period was mainly due to an increase in revenues described above.

and Three Months Ended September 30, 2024 Compared to Nine and Three Months Ended September 30, 2023

revenues for the nine months ended September 30, 2024 amounted to $6,802,000 compared to $4,166,000 for the nine months ended September

The increase in the nine months ended September 30, 2024 from the corresponding period is primarily attributable to an increase

in Orgad sales due to the fire occurred in the warehouse in January 2023.

revenues for the three months ended September 30, 2024 amounted to $1,839,000 compared to $2,156,000 for the three months ended September

The decrease in the three months ended September 30, 2024 from the corresponding period is primarily attributable to a decrease

in Orgad sales due to low inventory and seasonality.

cost of revenues expenses for the nine months ended September 30, 2024 amounted to $3,831,000 compared to $2,698,000 for the nine months

ended September 30, 2023.

The increase in comparison with the corresponding period was mainly due to an increase in revenues described

above offset by an inventory mark-down of $643,000 due to the fire that occurred in Orgad’s warehouse during January 2023.

cost of revenues expenses for the three months ended September 30, 2024 amounted to $1,048,000 compared to $780,000 for the three months

ended September 30, 2023.

The increase in comparison with the corresponding period was mainly due to an increase in shipping costs and

cost of goods.

and Development Expenses

research and development expenses for the six months ended June 30, 2024 amounted to $263,000 compared to $569,000 for the six months

ended June 30, 2023.

The decrease from the corresponding period was mainly due to a decrease in salaries expenses due to reduced headcount

and a decrease in subcontractor expenses.

research and development expenses for the three months ended June 30, 2024 amounted to $131,000 compared to $227,000 for the three months

ended June 30, 2023.

The decrease from the corresponding period was mainly due to a decrease in salaries expenses due to reduced headcount

and a decrease in subcontractor expenses.

research and development expenses for the nine months ended September 30, 2024 amounted to $352,000 compared to $811,000 for the nine

months ended September 30, 2023.

The decrease from the corresponding period was mainly due to a decrease in salaries expenses due to

reduced headcount and a decrease in subcontractor expenses.

research and development expenses for the three months ended September 30, 2024 amounted to $89,000 compared to $242,000 for the three

months ended September 30, 2023.

The decrease from the corresponding period was mainly due to a decrease in salaries expenses due to

reduced headcount and a decrease in subcontractor expenses.

and Marketing Expenses

sales and marketing expenses for the six months ended June 30, 2024 amounted to $1,933,000 compared to $1,646,000 for the six months

ended June 30, 2023.

The increase primarily resulted from an increase in Amazon fees due to the increase in sales offset by a decrease

in salary expenses due to reduced headcount, consultant expenses, travel and marketing expenses.

sales and marketing expenses for the three months ended June 30, 2024 amounted to $831,000 compared to $967,000 for the three months

ended June 30, 2023.

The decrease primarily resulted from a decrease in salary expenses due to reduced headcount, consultant expenses, travel and marketing expenses offset

by an increase in Amazon fees due to the increase in sales.

sales and marketing expenses for the nine months ended September 30, 2024 amounted to $2,670,000 compared to $2,598,000 for the nine

months ended September 30, 2023.

The increase primarily resulted from an increase in Amazon fees due to an increase in sales offset

by a decrease in salary expenses due to reduced headcount, consultant expenses, travel and marketing expenses.

sales and marketing expenses for the three months ended September 30, 2024 amounted to $737,000 compared to $952,000 for the three months

ended September 30, 2023.

The decrease primarily resulted from a decrease in salary expenses due to reduced headcount, consultant expenses,

travel and marketing expenses offset by an increase in Amazon fees due to the increase in sales.

and Administrative Expenses

general and administrative expenses for the six months ended June 30, 2024 amounted to $1,932,000 compared to $1,923,000 for the six

months ended June 30, 2023.

general and administrative expenses for the three months ended June 30, 2024 amounted to $899,000 compared to $879,000 for the three

months ended June 30, 2023.

As a result of the foregoing, for the six months ended June 30, 2024, our

operating loss was $1,948,000 a decrease of $2,098,000 or 51.9%, compared to our operating loss for the six months ended June 30, 2023

of $4,046,000.

As a result of the foregoing, for the three months ended June 30, 2024,

our operating loss was $877,000 a decrease of $677,000 or 43.6%, compared to our operating loss for the three months ended June 30, 2023

of $1,554,000.

general and administrative expenses for the nine months ended September 30, 2024 amounted to $2,572,000 compared to $3,210,000 for the

nine months ended September 30, 2023.

The decrease primarily resulted from a decrease in professional services and insurance expenses.

general and administrative expenses for the three months ended September 30, 2024 amounted to $640,000 compared to $1,287,000 for the

three months ended September 30, 2023.

The decrease primarily resulted from a decrease in professional services and insurance expenses.

We recorded a

goodwill impairment charge of $631,000 for the three months ended September 30, 2024 as the carrying value of SaaS Solution reporting segment exceeded its expected fair value.

No impairment

was recorded for the three months ended September 30, 2023.

a result of the foregoing, for the nine months ended September 30, 2024, our operating loss was $3,254,000 a decrease of $1,897,000, or

36.8%, compared to our operating loss for the nine months ended September 30, 2023 of $5,151,000.

a result of the foregoing, for the three months ended September 30, 2024, our operating loss was $1,306,000 an increase of $201,000, or

18.2%, compared to our operating loss for the three months ended September 30, 2023 of $1,105,000.

Income (Expenses), Net

financial expenses, net for the six months ended June 30, 2024 amounted to $32,000 compared to financial expenses of $100,000 for

the six months ended June 30, 2023 The decrease compared to the corresponding period was mainly due to a decrease in financial

financial expenses, net for the nine months ended September 30, 2024 amounted to $26,000 compared to financial expenses of $78,000 for

the nine months ended September 30, 2023 The decrease compared to the corresponding period was mainly due to a decrease in financial

expenses exchange rate differences.

financial expenses, net for the three months ended June 30, 2024 amounted to $87,000 as opposed to financial income of $46,000 for

the three months ended June 30, 2023.

During the three months ended June 30, 2024, we had financial expenses mainly from exchange rate

differences whereas in the three months ended June 30, 2023 we had financial income from exchange rate differences.

a result of the foregoing, our net loss for the six months ended June 30, 2024 was $1,980,000, compared to net loss of $3,945,000 for

the six months ended June 30, 2023.

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

a result of the foregoing, our net loss for the three months ended June 30, 2024 was $964,000, compared to net loss of $1,291,000 for

the three months ended June 30, 2023.

financial income, net for the three months ended September 30, 2024 amounted to $6,000 compared to financial income of $22,000 for the

three months ended September 30, 2023.

The decrease compared to the corresponding period was mainly due to a decrease in financial expenses

exchange rate differences.

a result of the foregoing, our net loss for the nine months ended September 30, 2024 was $3,280,000, compared to net loss of $5,077,000

for the nine months ended September 30, 2023.

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

a result of the foregoing, our net loss for the three months ended September 30, 2024 was $1,300,000, compared to net loss of $1,132,000

for the three months ended September 30, 2023.

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

and Capital Resources

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of Israel and in the United States

of June 30, 2024, we had cash, cash equivalents, and restricted cash of $3,275,000 compared to $2,264,000 of cash, cash equivalents and

restricted cash as of December 31, 2023.

This increase primarily resulted from the warrant repricing transaction that was completed in May 2024, offset by

payments that were made to suppliers, resources that were deployed to grow our businesses and payments related to the Orgad acquisition.

Cash used in operating activities amounted to $2,076,000 for the six months

ended June 30, 2024, compared to $3,640,000 for the six months ended June 30, 2023.

The decrease in cash used in operating activity is

derived mainly from a change in inventory and a decrease in the net loss offset by a change in account receivables and trade payables.

cash provided by investing activities was $60,000 or the six months ended June 30, 2024, compared to none for the six months ended

June 30, 2023.

cash provided by financing activities was $2,961,000 for the six months ended June 30, 2024, compared to $2,596,000 for the six

months ended June 30, 2023.

The cash flow from financing activities for the six months ended June 30, 2024 resulted from the May 2024 warrant repricing transaction and a loan that was received compared to the public and private offering that occurred in January 2023.

of September 30, 2024, we had cash, cash equivalents and restricted cash of $2,371,000 compared to $2,264,000 of cash, cash equivalents

and restricted cash as of December 31, 2023.

This increase primarily resulted from the warrant repricing transaction that was completed

in May 2024, offset by payments that were made to suppliers, resources that were deployed to grow our businesses and payments related

to the Orgad acquisition.

used in operating activities amounted to $2,523,000 for the nine months ended September 30, 2024, compared to $4,910,000 for the nine

months ended September 30, 2023.

The decrease in cash used in operating activity is derived mainly from a change in inventory, impairment

of goodwill and a decrease in the net loss offset by a change in account receivables, trade payables and liabilities to related parties.

cash provided by investing activities was $60,000 or the nine months ended September 30, 2024, compared to none for the nine months ended

September 30, 2023.

cash provided by financing activities was $2,626,000 for the nine months ended September 30, 2024, compared to $6,230,000 for the

nine months ended September 30, 2023.

The cash flow from financing activities for the nine months ended September 30, 2024 resulted

from the May 2024 warrant repricing transaction and a loan that was received in February 2024 compared to the public and private

offerings that occurred in January and August 2023.

expect that we 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, 2024, we believe our existing cash will not be sufficient to fund operations for a period

cash flows and cash balances as of September 30, 2024, we believe our existing cash will not be sufficient to fund operations for a period

of more than 12 months.

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Our ability to raise additional capital, if needed, will depend on conditions in the capital markets, economic

conditions the current war between Israel and Hamas, and a number of other factors, many of which are outside our control, and on our

conditions, the security situation in Israel, and a number of other factors, many of which are outside our control, and on our

financial performance.

43 unchanged sentences

estimate could have a material impact on our financial condition or results of operations.

impairment assessment

the fair value of our reporting units using the income approach.

According to the income, we use discounted cash flows to estimate the

Cash flow projections require us to make significant estimates of revenue growth rates and operating margins, taking into

consideration the industry’s and market’s conditions.

The discount rate used is based on the weighted average cost of capital, adjusted for the relevant risk associated with business-specific characteristics.

Examples of critical estimates

in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to the discount

rate, the terminal growth rate and the revenue growth rate.

We have experienced a pair of triggering events in the period ended September

30, 2024 due to sustained decreases in our share price and a decline in actual and forecasted operating results, prompting impairment

assessments of goodwill and long-lived assets, including definite-lived intangibles.

The table below indicates changes in the most significant inputs to our

impairment analysis on each testing date since its last annual test.

Discount rate

Testing dates

December 31, 2023

September 30, 2024

September 2024, we updated the forecasted future cash flows used in the impairment assessment, including revenues, margin, and

capital expenditures to reflect current conditions.

Other changes in valuation assumptions included selection of lower revenue

multiples based upon an assessment of current market conditions.

As a result of this review, we did not identify an impairment to

its definite-lived intangible assets or other long-lived assets.

Based on our analysis, we determined that the carrying

value of our SaaS Solutions reporting unit exceeded its fair value and an impairment charge of $631,000 was recorded.

The analysis was done for the Fashion and equipment e-commerce platform reporting unit as well, but the reporting

value exceeds its carrying amount.

table below indicates changes in the most significant inputs to our impairment analysis on each testing date since its last annual test

for Fashion and equipment e-commerce platform segment.

Discount rate

Testing dates

December 31, 2023

September 30, 2024

September 2024, we updated the forecasted future cash flows used in the impairment assessment, including revenues, margin, and

capital expenditures to reflect current conditions.

Other changes in valuation assumptions included selection of lower revenue

growth rates based upon an assessment of current market conditions.

As a result of this review, the Company did not identify an

impairment to its definite-lived intangible assets or other long-lived assets or for its goodwill for the quarter ended September

30, 2024 (level 3 fair value measurement).

Quantitative and Qualitative Disclosure About Market Risk.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis