Item
1. Financial Statements.
My
Size Inc. and Subsidiaries
Condensed
Consolidated
Interim
Financial
Statements
As
of March 31, 2018
(unaudited)
U.S.
Dollars in Thousands
My
Size, Inc. and its subsidiaries
Condensed
Consolidated Interim Financial Statements as of March 31, 2018 (Unaudited)
Contents
|
Page
|
|
|
Condensed
Consolidated Interim Balance Sheets
|
3
|
|
|
Condensed
consolidated Interim Statements of Comprehensive Loss
|
4
|
|
|
Condensed
Consolidated Interim Statements of Stockholders’ Equity (Deficit)
|
5-6
|
|
|
Condensed
Consolidated Interim Statements of Cash flows
|
7
|
|
|
Notes
to Condensed Consolidated Interim Financial Statements
|
8-14
|
My
Size, Inc. and its subsidiaries
Condensed
Consolidated Interim Balance Sheets
U.S.
dollars in thousands (except share data and per share data)
|
|
March 31
|
|
|
December 31
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
|
$ thousands
|
|
|
$ thousands
|
|
Assets
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
9,395
|
|
|
|
1,802
|
|
Other receivables and prepaid expenses
|
|
|
100
|
|
|
|
381
|
|
Restricted cash
|
|
|
69
|
|
|
|
70
|
|
Total current assets
|
|
|
9,564
|
|
|
|
2,253
|
|
|
|
|
|
|
|
|
|
|
Investment in marketable securities
|
|
|
282
|
|
|
|
98
|
|
Property and equipment, net
|
|
|
59
|
|
|
|
67
|
|
|
|
|
341
|
|
|
|
165
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
9,905
|
|
|
|
2,418
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Short-term loan
|
|
|
-
|
|
|
|
558
|
|
Trade payables
|
|
|
221
|
|
|
|
245
|
|
Accounts payable
|
|
|
415
|
|
|
|
336
|
|
Warrants, derivatives and stock based compensation liabilities
|
|
|
4,307
|
|
|
|
2,431
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
4,943
|
|
|
|
3,570
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
Shareholders’ equity (deficit):
|
|
|
|
|
|
|
|
|
Stock Capital -
|
|
|
|
|
|
|
|
|
Common stock of $ 0.001 par value -
Authorized: 100,000,000 and 50,000,000 shares respectively; Issued and outstanding: 29,145,927 and 22,238,745 respectively
|
|
|
29
|
|
|
|
22
|
|
Additional paid-in capital
|
|
|
27,698
|
|
|
|
16,008
|
|
Accumulated other comprehensive loss
|
|
|
(294
|
)
|
|
|
(134
|
)
|
Accumulated deficit
|
|
|
(22,471
|
)
|
|
|
(17,048
|
)
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity (deficit)
|
|
|
4,962
|
|
|
|
(1,152
|
)
|
Total liabilities and shareholders’ equity
|
|
|
9,905
|
|
|
|
2,418
|
|
The
accompanying notes are an integral part of the condensed consolidated financial statements.
My
Size, Inc. and its subsidiaries
Condensed
Consolidated Interim Statements of Comprehensive Loss
U.S.
dollars in thousands (except share data and per share data)
|
|
Three months ended
March 31
|
|
|
Year ended
|
|
|
|
2018
|
|
|
2017
|
|
|
December 31
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
2017
|
|
|
|
$ thousands
|
|
|
$ thousands
|
|
|
$ thousands
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
265
|
|
|
|
207
|
|
|
|
845
|
|
Marketing, general and administrative
|
|
|
1,612
|
|
|
|
879
|
|
|
|
4,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
1,877
|
|
|
|
1,086
|
|
|
|
5,610
|
|
Operating loss
|
|
|
(1,877
|
)
|
|
|
(1,086
|
)
|
|
|
(5,610
|
)
|
Financial (expense) income, net
|
|
|
(3,546
|
)
|
|
|
(308
|
)
|
|
|
206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(5,423
|
)
|
|
|
(1,394
|
)
|
|
|
(5,404
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on available for sale securities
|
|
|
-
|
|
|
|
93
|
|
|
|
93
|
|
Foreign currency translation differences
|
|
|
(160
|
)
|
|
|
(5
|
)
|
|
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
(5,583
|
)
|
|
|
(1,306
|
)
|
|
|
(5,343
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
|
(0.20
|
)
|
|
|
(0.08
|
)
|
|
|
(0.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average number of shares outstanding
|
|
|
27,387,726
|
|
|
|
17,525,359
|
|
|
|
17,874,827
|
|
The accompanying notes are an integral part
of the interim condensed consolidated financial statements
My
Size, Inc. and its subsidiaries
Condensed
Consolidated Interim Statements Shareholders’ Equity (Deficit) (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
|
|
Common stock
|
|
|
Additional paid-in
|
|
|
Accumulated
other
comprehensive
|
|
|
Accumulated
|
|
|
Total
Shareholders’
Equity
|
|
|
|
Number
|
|
|
Amount
|
|
|
capital
|
|
|
loss
|
|
|
Deficit
|
|
|
(deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2018
|
|
|
22,238,745
|
|
|
|
22
|
|
|
|
16,008
|
|
|
|
(134
|
)
|
|
|
(17,048
|
)
|
|
|
(1,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation related to employees
|
|
|
-
|
|
|
|
-
|
|
|
|
96
|
|
|
|
-
|
|
|
|
-
|
|
|
|
96
|
|
Issuance of shares to consultants
|
|
|
164,000
|
|
|
|
(*
|
)
|
|
|
135
|
|
|
|
-
|
|
|
|
-
|
|
|
|
135
|
|
Total comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(160
|
)
|
|
|
(5,423
|
)
|
|
|
(5,583
|
)
|
Exercise of warrants and options
|
|
|
3,513,182
|
|
|
|
4
|
|
|
|
7,915
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,919
|
|
Issuance and receipts on account of shares, net of issuance cost of $35
1
|
|
|
3,230,000
|
|
|
|
3
|
|
|
|
3,544
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,547
|
|
Balance as of March 31, 2018
|
|
|
29,145,927
|
|
|
|
29
|
|
|
|
27,698
|
|
|
|
(294
|
)
|
|
|
(22,471
|
)
|
|
|
4,962
|
|
(*)
Represent an amount less than $1.
The
accompanying notes are an integral part of the interim condensed consolidated financial statements
My
Size, Inc. and its subsidiaries
Condensed
Consolidated Interim Statements of Changes in Shareholders’ Equity (Deficit)
U.S.
dollars in thousands (except share data and per share data)
|
|
Common stock
|
|
|
Additional paid-in
|
|
|
Available
|
|
|
Accumulated
other
Comprehensive
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
Number
|
|
|
Amount
|
|
|
capital
|
|
|
for sale
|
|
|
loss
|
|
|
Deficit
|
|
|
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of January 1, 2017
|
|
|
17,405,359
|
|
|
|
17
|
|
|
|
13,347
|
|
|
|
(93
|
)
|
|
|
(102
|
)
|
|
|
(11,644
|
)
|
|
|
1,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
93
|
|
|
|
(5
|
)
|
|
|
(1,394
|
)
|
|
|
(1,306
|
)
|
Stock-based
compensation related to options granted to consultants
|
|
|
-
|
|
|
|
-
|
|
|
|
997
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
997
|
|
Issuance
and receipts on account of shares
|
|
|
200,000
|
|
|
|
(*
|
)
|
|
|
400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
400
|
|
Balance
as of March 31, 2017
|
|
|
17,605,359
|
|
|
|
17
|
|
|
|
14,744
|
|
|
|
-
|
|
|
|
(107
|
)
|
|
|
(13,038
|
)
|
|
|
1,616
|
|
(*) Represent an amount less than $1.
|
|
Common stock
|
|
|
Additional
paid-in
|
|
|
Available
|
|
|
Accumulated
other
comprehensive
|
|
|
Accumulated
|
|
|
Total
stockholders’
equity
|
|
|
|
Number
|
|
|
Amount
|
|
|
capital
|
|
|
for sale
|
|
|
loss
|
|
|
Deficit
|
|
|
(deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2016
|
|
|
17,405,359
|
|
|
|
17
|
|
|
|
13,347
|
|
|
|
(93
|
)
|
|
|
(102
|
)
|
|
|
(11,644
|
)
|
|
|
1,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation related to options granted to employees
|
|
|
-
|
|
|
|
-
|
|
|
|
185
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
185
|
|
Issuance of shares to consultants
|
|
|
159,100
|
|
|
|
(*)
|
|
|
|
147
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
147
|
|
Total comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
93
|
|
|
|
(32
|
)
|
|
|
(5,404
|
)
|
|
|
(5,343
|
)
|
Liability reclassified to equity
|
|
|
80,358
|
|
|
|
(*
|
)
|
|
|
60
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60
|
|
Issuance and receipts on account of shares, net of issuance cost of $360
|
|
|
4,593,928
|
|
|
|
5
|
|
|
|
2,269
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2017
|
|
|
22,238,745
|
|
|
|
22
|
|
|
|
16,008
|
|
|
|
-
|
|
|
|
(134
|
)
|
|
|
(17,048
|
)
|
|
|
(1,152
|
)
|
(*)
Represent an amount less than $1.
The
accompanying notes are an integral part of the interim condensed consolidated financial statements
My
Size, Inc. and its subsidiaries
Condensed
Consolidated Interim Statements of Cash Flows
|
|
Three-Months Ended
March 31,
|
|
|
Year
ended
December
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
|
$ thousands
(Unaudited)
|
|
|
$ thousands
(Unaudited)
|
|
|
$ thousands
(Audited)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(5,423
|
)
|
|
|
(1,394
|
)
|
|
|
(5,404
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
8
|
|
|
|
7
|
|
|
|
30
|
|
Amortization of warrant, convertible loans and Derivative
|
|
|
3,874
|
|
|
|
(29
|
)
|
|
|
(829
|
)
|
Interest Payment of short term loan
|
|
|
(192
|
)
|
|
|
-
|
|
|
|
(323
|
)
|
Revaluation of investment in marketable securities
|
|
|
(188
|
)
|
|
|
340
|
|
|
|
623
|
|
Stock based compensation- equity
|
|
|
231
|
|
|
|
39
|
|
|
|
332
|
|
Stock based compensation- liability
|
|
|
434
|
|
|
|
-
|
|
|
|
1,297
|
|
Change in embedded derivative and warrants
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
127
|
|
Decrease (increase) in receivables and prepaid expenses
|
|
|
2
|
|
|
|
(8
|
)
|
|
|
16
|
|
Decrease in trade payable
|
|
|
(22
|
)
|
|
|
(54
|
)
|
|
|
(9
|
)
|
Increase in accounts payable
|
|
|
84
|
|
|
|
93
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(1,192
|
)
|
|
|
(1,012
|
)
|
|
|
(4,140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
(16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
(16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of warrants
|
|
|
3,626
|
|
|
|
-
|
|
|
|
-
|
|
Repayment of short term loan
|
|
|
(555
|
)
|
|
|
|
|
|
|
(260
|
)
|
Proceeds from issuance of shares, warrants, short term loan and convertible loan
|
|
|
5,923
|
|
|
|
1,349
|
|
|
|
6,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
8,994
|
|
|
|
1,349
|
|
|
|
5,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuations on cash and cash equivalents
|
|
|
(209
|
)
|
|
|
(5
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash, cash equivalents and restricted cash
|
|
|
7,592
|
|
|
|
329
|
|
|
|
1,776
|
|
Cash, cash equivalents and restricted cash at the beginning of the period
|
|
|
1,872
|
|
|
|
96
|
|
|
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at the end of the period
|
|
|
9,464
|
|
|
|
425
|
|
|
|
1,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non cash transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants and share based payment liability to equity
|
|
|
4,293
|
|
|
|
-
|
|
|
|
60
|
|
Non cash share base payments
|
|
|
-
|
|
|
|
958
|
|
|
|
-
|
|
The
accompanying notes are an integral part of the interim condensed consolidated financial statements.
My
Size, Inc. and its subsidiaries
Notes
to Condensed Consolidated Interim Financial Statements (unaudited)
U.S.
dollars in thousands (except share data)
Note
1 – General
|
a.
|
My
Size Inc. along with its subsidiaries (collectively, the “Company”) is developing unique measurement technologies
based on algorithms with applications in a variety of areas, including the apparel e-commerce market, the courier services
market and the to Do It Yourself (“DIY”) smartphone and tablet apps market. The technology is driven by several
patent and patent-pending algorithms which are able to calculate and record measurements in a variety of novel ways.
|
|
|
|
|
b.
|
During the reported periods, the Company
has incurred significant losses and negative cash flows from operations and accumulated loss of $22,471. The Company has financed
its operations mainly through the sale of debt and equity securities.
Management’s
plans contemplate that the cash in hand will be sufficient to meet its obligations for a period which is longer than 12
months.
|
Note
2 - Significant Accounting Policies
|
a.
|
Unaudited
condensed consolidated financial statements:
|
The
accompanying unaudited condensed consolidated interim financial statements included herein have been prepared by the Company in
accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The unaudited
condensed consolidated financial statements are comprised of the financial statements of the Company. In management’s opinion,
the interim financial data presented includes all adjustments necessary for a fair presentation. All intercompany accounts and
transactions have been eliminated. Certain information required by U.S. generally accepted accounting principles (“GAAP”)
has been condensed or omitted in accordance with rules and regulations of the SEC. Operating results for the three months ended
March 31, 2018 are not necessarily indicative of the results that may be expected for any future period or for the year ending
December 31, 2018.
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, 2017.
The
preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect
the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially
from these estimates.
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 (cont’d)
|
c.
|
Impact of recently adopted accounting standard:
|
|
1.
|
In January 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2016-01 (ASU 2016-01) “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with other amendments related specifically to equity securities without readily determinable fair values applied prospectively. ASU 2016-01 is effective for annual reporting periods, and interim periods within those years beginning after December 15, 2017.
|
The Company adopted this guidance
during the three month period ended March 31, 2018 and recorded a gain of $188 for changes in the fair value of the
investment in marketable securities in the statements of comprehensive loss in operating expenses and not as other
comprehensive income.
|
2.
|
In November 2016, the FASB issued guidance on the treatment of restricted cash in the statements of cash flows. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for the fiscal year beginning on January 1, 2018, including interim periods within that year (early adoption is permitted).
|
The Company adopted this guidance retrospectively during the three months ended March 31, 2018. During the
three month period ended March 31, 2018 and 2017 and the year ended December 31, 2017, restricted cash balances in the amount of
$69, $66 and $70, respectively, were presented in the statement of cash flows as cash and cash equivalents.
|
3.
|
In January 2016, the FASB issued guidance which updates certain aspects of recognition, measurement, presentation and disclosure of equity investments. The guidance requires entities to recognize changes in fair value in net income rather than in accumulated other comprehensive income. The Company adopted this guidance during the three months ended March 31, 2018. The adoption did not have a material impact on the Company's consolidated financial statements.
|
|
4.
|
In August 2016, the FASB issued ASU
2016-15, Classification of Certain Cash Receipts and Cash Payments, which provides guidance on several issues related to cash
flows classifications.
The Company implemented this guidance retrospectively for the
three month period ended March 31, 2018 according to which the payment of a principal short term loan was classified in the
statement of cash flows to cash flow from financing activities and the interest related to the debt was classified in the
statements of cash flows to cash flows from operating activities.
During the three month period ended March 31, 2018 and
2017 and for the year ended December 31, 2017, interest on short term loan was classified in the statements of cash flows to cash
flow from operating activities in the amount of $192, $0 and $323, respectively.
|
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
Fair
value of financial instruments:
Accounting
Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures, relating to fair value measurements, defines
fair value and established a framework for measuring fair value. ASC 820 fair value hierarchy distinguishes between market participant
assumptions developed based on market data obtained from sources independent of the reporting entity and the reporting entity’s
own assumptions about market participant assumptions developed based on the best information available in the circumstances. ASC
820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, essentially an exit price. In addition, the fair value of assets and liabilities
should include consideration of non-performance risk, which for the liabilities described below includes the Company’s own
credit risk.
As
a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used
in the valuation methodologies in measuring fair value:
|
Level
1 -
|
|
Valuations
based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments
and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and
regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
|
|
|
|
|
|
Level
2 -
|
|
Valuations
based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either
directly or indirectly.
|
|
|
|
|
|
Level
3 -
|
|
Valuations
based on inputs that are unobservable and significant to the overall fair value measurement.
|
The
expected volatility of the share prices reflects the assumption that the historical volatility of the share prices is reasonably
indicative of expected future trends.
The
carrying amounts of cash and cash equivalents, other accounts receivable, short-term loan, accounts payable and other accounts
payable approximate their fair value due to the short-term maturities of such instruments.
The Company holds shares in
Diamante Minerals Inc, a publicly-traded company which are classified as available-for-sale equity securities. The marketable securities
have readily determinable fair market values that are calculated based on the share price in the measurement date and ranked as
Level 1 assets.
|
|
|
March 31, 2018
|
|
|
|
|
Fair value hierarchy
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in marketable securities (*)
|
|
|
282
|
|
|
|
-
|
|
|
|
-
|
|
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’d)
|
|
|
March
31, 2018
|
|
|
|
|
Fair
value hierarchy
|
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Financial
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants,
Derivative and stock based compensation liabilities
|
|
|
-
|
|
|
|
4,307
|
|
|
|
-
|
|
|
|
|
December
31, 2017
|
|
|
|
|
Fair
value hierarchy
|
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Financial
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
in marketable securities (*)
|
|
|
98
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
December 31, 2017
|
|
|
|
|
Fair value hierarchy
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants, Derivative and stock based compensation liabilities
|
|
|
-
|
|
|
|
2,431
|
|
|
|
-
|
|
(*)
For the three month period ended March 31, 2018 and 2017 the recognized gain (loss) (based on quoted market prices) of the marketable
securities was $188 and ($340), respectively (for the twelve months ended December 2017 $(623)).
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
The
stock based expense recognized in the financial statements for services received from non-employees is related to Marketing,
General and Administrative expenses and shown in the following table:
|
|
|
Three months ended
March 31
|
|
|
Year ended
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense - equity awards
|
|
|
231
|
|
|
|
39
|
|
|
|
332
|
|
|
Stock-based compensation expense - liability awards
|
|
|
434
|
|
|
|
-
|
|
|
|
1,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
665
|
|
|
|
39
|
|
|
|
1,629
|
|
Option
issued to consultants
|
a.
|
Further
to Note 10a of the Annual Report on Form 10-K for the year ended December 31, 2017:
During the three month period ended March
31, 2018, costs in the sum of $1 (2017: $7) were recorded by the Company as share-based expenses. As of March 31, 2018 and December
31, 2017 the Company recorded a liability to pay the balance of the consideration in the sum of $107 and $126, respectively, according
to the fair value of the liability.
Subsequent to March 31, 2018 the Company issued to Consultant1 an additional
82,368 shares of common stock of the Company and as of the date of this report, the Company has no additional obligation to
Consultant1.
|
|
b.
|
Further to Note 10b of the Annual
Report on Form 10-K for the year ended December 31, 2017:
During January 2018, options to purchase up to 781,838 shares of common stock of the Company were exercised
for proceeds of $1,314.
|
|
c.
|
In January 2018, the Company engaged a consultant (“Consultant6”) to provide strategic consulting
and investor relations services. The agreement with such consultant is for a period of 12 months In consideration for consulting
services, the Company agreed to pay a monthly fee of $5 and to issue to Consultant6 99,000 shares of common stock of the Company
in three tranches of 33,000 each, with each tranche vesting on the first day of January, April and August 2018. The issuance of
the shares under the agreement was subject to the receipt of all the approvals required by the laws applicable to the Company,
including approvals by The Nasdaq Capital Market and the Tel Aviv Stock Exchange, and the approval of the Company’s shareholders
to increase the reserve pursuant to the Company’s 2017 Consultant Equity Incentive Plan. The increase in reserve pursuant
to the Company’s 2017 Consultant Equity Incentive Plan was approved by the Company’s shareholders on February 12, 2018
at the Company’s Special Meeting of Stockholders.
During the three month period ended March 31, 2018, costs in the sum of $35 were recorded by the Company
as stock-based equity- awards.
|
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’d)
|
d.
|
In February 2018, the Company engaged
a consultant (“Consultant7”) to provide consulting related to investor relations. For such services, the Company
agreed to issue to Consultant7 65,000 shares of common stock of the Company. The issuance of the shares will be as follows:
50,000 shares shall vest upon the effective date of the agreement and 15,000 shares shall vest three month after the
effective date of the agreement.
During the three month period ended March 31, 2018, costs in the sum of $18 were recorded by the Company
as stock-based equity- awards.
|
|
|
|
|
e.
|
In October 2017, the Company engaged three consultants (“Consultants”) to provide services to
the Company including promoting the company's products and services to increase sales. For such consulting services, the Company
agreed to issue to each of the Consultants options to purchase 50,000 shares of the Company’s common stock at exercise prices
$2.00 per share. The options shall vest quarterly in four equal installments every three months. The options shall terminate 18
months from their respective vesting dates. The issuance of the options under the agreement was subject to the receipt of all the
approvals required by the laws applicable to the Company, including approvals by The Nasdaq Capital Market and the Tel Aviv Stock
Exchange and the approval of the Company’s shareholders to increase the reserve pursuant to the Company’s 2017 Consultant
Equity Incentive Plan. The increase in reserve pursuant to the Company’s 2017 Consultant Equity Incentive Plan was approved
by the Company’s shareholders on February 12, 2018 at the Company’s Special Meeting of Stockholders.
During the three month period ended March 31, 2018, costs in the sum of $46 were recorded by the Company
as stock-based liability- awards.
|
Stock
Option Plan for employees
In
March
2017, the Company adopted the 2017 Equity Incentive Plan (the “Plan”) pursuant to which the Company’s Board
of Directors may grant stock options to officers and key employees. Up to 3,000,000 options may be granted to
directors, officers and employees under the Plan. Stock options are granted at an exercise price equal the fair market value
of the Company’s stock at the date of grant.
During the three month period
ended March 31, 2018, no options were granted, 26,666 options were exercised and 15,500 options expired.
The total stock option compensation
expense in the three month period ended March 31, 2018 recorded in the research and development and marketing expenses and general
and administrative expenses were $27 and $69, respectively.
Note
5 - Contingencies and Commitments
|
a.
|
Further to Note 12c to the Annual Report
on Form 10-K for the year ended December 31, 2017:
On January 25, 2018, the court
rendered the settlement agreement (the “Settlement Agreement”) between the parties a status of a judgment. On
January 30, 2018, the plaintiff informed the Company that all the Original Shares and the New Shares, were sold for an
aggregate of NIS1,061,533 ($302,087). Accordingly, the plaintiff was entitled to receive from the Company an additional
amount of NIS 213,467 ($6
2,000) payable either in
cash or in kind, by the issuance of additional Company’s common stock (the “Additional
Amount”). “Original Shares” means shares of the Company’s common stock originally issued to the
plaintiff. “New Shares” means 80,358 additional shares of the Company’s common stock issued to the
plaintiff pursuant to the terms of the Settlement Agreement.
Pursuant to the Settlement Agreement, the payment of the Additional Amount was due and payable no later
than March 16, 2018. On March 13, 2018, the Company paid the plaintiff the Additional Amount.
|
|
|
|
|
b.
|
Further
to Note 12d to the Annual Report on Form 10-K for the year ended December 31, 2017:
At
a preliminary hearing on the Company’s motion to dismiss, that was held on April 26, 2018, the Court ordered to
suspend all the proceedings regarding the class motion and the Company’s motion to dismiss, until Israeli Supreme
Court’s adjudication in two cases pending before the Supreme Court, pertaining to similar issues argued by the Company
in its motion to dismiss regarding the proper choice of law applicable to foreign companies listed both on Tel Aviv Stock
Exchange
and on Nasdaq.
|
My
Size, Inc. and its subsidiaries
Notes
to Condensed Consolidated Interim Financial Statements (unaudited)
U.S.
dollars in thousands (except share data and per share data)
Note
6 - Significant Events During the Reporting Period
|
a.
|
Further
to Note 10e to the Annual Report on Form 10-K for the year ended December 31, 2017:
On January 23, 2018, the Company and Consultant5 entered into an amendment to the consulting agreement pursuant to which the
number of the options were amended such that Consultant5 received options to purchase up to 800,000 shares of the Company’s
common stock at an exercise price of $1.00 per share. The options will expire on July 23, 2018.
|
|
b.
|
On February 2, 2018, the Company conducted
a public offering of its securities pursuant to which it issued 3,000,000 shares of its common stock and five-year warrants to
purchase up to 1,500,000 shares of common stock at an exercise price of $2.65 per share for gross proceeds of $6,000. The Company
received net proceeds of $5,46
4
after deducting placement agent fees and other offering expenses.
The common stock and warrants are accounted
for as two different components.
Warrants exercisable into shares of common
stock are recognized as a liability and measured at fair value. Changes in fair value are recorded in the statements of income
and loss.
The warrants were measured at fair
value of $2,102, and the residual net amount of $3,544 was recorded in the equity.
As of March 31, 2018, the warrants were
presented in the balance sheet at a fair value of $1,693.
The warrants carried out price protection in the event that the Company will issue additional warrants
or common shares at a price lower than the exercise price of the warrants. If the first subsequent placement will occur within
six months of the date of issuance of the warrant, then the applicable price shall be reduced to 110% of the new issuance price
of such subsequent placement.
|
|
|
|
|
c.
|
Further to Note 11 to the Annual Report
on Form 10-K for the year ended December 31, 2017:
During the three month period ended March
31, 2018, the Company recorded financial expenses of $192 from the loan.
During February 2018 the Company repaid the remaining outstanding balance of the loan.
|
|
d.
|
Further
to Note 9l to the Annual Report on Form 10-K for the year ended December 31, 2017:
During
the three month period ended March 31, 2018, 2,654,922 warrants were exercised into the Company’s common shares,
for proceeds of $2,260.
Upon
the exercise of the warrants, the Company reclassified the liability warrants into equity in the total amount of $3,851.
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You
should read the following discussion along with our financial statements and the related notes included in this report. The following
discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions, including those discussed
under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2017. Our actual results, performance
and achievements may differ materially from those expressed in, or implied by, these forward-looking statements.
Results
of Operations
From inception through March 31, 2018,
we have sustained an accumulated deficit of approximately $22,471,000. From inception through March 31, 2018, we have not
generated any revenue from operations and expect to incur additional losses to perform further research and development activities
and do not currently have any commercial products. Our product development efforts are thus in their early stages and we cannot
make estimates of the costs or the time they will take to complete.
Three Months Ended March 31, 2018 Compared
to Three Months Ended March 31, 2017
Research and Development Expenses
Our research and development expenses for the
three months ended March 31, 2018 amounted to $265,000 compared to $207,000 for the three months ended March 31, 2017. The increase
between the corresponding period primarily resulted from increased subcontractors expenses and expenses associated with shared
based payments to Company's employees.
Marketing, General and Administrative
Expenses
Our marketing, general and administrative expenses
for the three months ended March 31, 2018 amounted to $1,612,000 compared to $879,000 for the three months ended March 31, 2017.
The increase compared to the corresponding period was mainly due to share based payments and professional services.
Financial Expense, Net
Our financial expenses net for the three months
ended March 31, 2018 amounted to $3,546,000 compared to $308,000 for the three months ended March 31, 2017. The increase was due
to revaluation of warrants, derivatives and stock based compensation liabilities, compared to income from revaluation in the corresponding
period offset by income from revaluation in investment in marketable securities compared to expenses in the corresponding
period.
Net Loss
As a result of the foregoing research and development,
marketing general and administrative expenses, and financial expenses, our net loss for the three months ended March 31, 2018 was
$5,423,000, compared to $1,394,000 for the three months ended March 31, 2017. The main reasons for the increase in net loss were
the expenses due to share based payments, and professional services compared to corresponding period and the expense with
respect to the revaluation of warrants, derivatives and stock based compensation liabilities offset by income from revaluation
in investment in marketable securities compared to expenses in the corresponding period.
Liquidity and Capital Resources
Since our inception, we have funded our operations
primarily through public and private offerings of our equity securities in the State of Israel and in the U.S.
As of March 31, 2018, we had cash, cash equivalents
and restricted cash of $9,464,000 as compared to $1,872,000 as of December 31, 2017. This increase primarily resulted from the
public offering that we completed in February 2018 and from proceeds generated from warrants exercised by investors and consultants,
both of which are further described below.
On October 26, 2017, we entered into a
securities purchase agreements to sell original issue discount non-convertible notes (the “Notes”) and warrants
to certain accredited investors in a private placement. We received gross proceeds of approximately $1,200,000, before
deducting placement agent and other offering expenses. The Notes were initially due on the earlier of (i) February 28, 2018
and (ii) the first offering of our equity securities or any equity-linked or related securities with aggregate gross proceeds
of at least $1 million. The maturity date of the Notes was subsequently amended to the earlier of (i) the closing of our next
offering or (ii) March 31, 2018. As of March 13, 2018, the Company has paid all amounts due and payable on the Notes. The
five-year warrants issued in the private offering are exercisable at a price of $0.75 per share. The warrants contain
provisions providing for price protection in the event that we issue additional equity securities at a price lower than the
exercise price of the warrants. If the first subsequent placement occurs within six months of the date of issuance of the
warrants, then the applicable price shall be reduced to 110% of the new issuance price of such subsequent placement.
On December 22, 2017, we completed a public
offering of 3,832,500 shares of our common stock at a price of $0.65 per share and five-year warrants to purchase an aggregate
of 2,874,375 shares of common stock at an exercise price of $0.851 per share. The gross proceeds from the public offering, before
deducting placement agent fees and other offering expenses, were $2,490,000. The net proceeds from the offering after deducting
the placement agent fees and other offering expenses were approximately $2,130,000. As a result of the public offering, the exercise
price of the warrants issued in the October 2017 private placement was reduced to $0.715.
On
December 27, 2017, we repaid $583 in principal amount of the Notes, and in February 2018, we repaid the remaining outstanding balance
of the Notes.
During the three-month ended March 31, 2018, we received $2,260,000
of additional proceeds from the exercise of 2,654,922 the warrants issued in the December 2017 private placement.
On February 2, 2018, we completed a public
offering pursuant to which we issued 3,000,000 shares of our common stock and five-year warrants to purchase an aggregate of 1,500,000
shares of common stock. The gross proceeds from the offering were $6,000,000 prior to deducting placement agent fees and other
offering expenses. The net proceeds from the offering after deducting the placement agent fees and other offering expenses were
approximately $5,464,000.
We had negative cash flow from operating activities
of $1,192,000 for the three months ended March 31, 2018, compared to $1,012,000 for the three months ended March 31, 2017.
Off-Balance
Sheet Arrangements
We
have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained
interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities
or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market
risk or credit risk support.
Application
of Critical Accounting Policies and Estimates
Our
management’s discussion and analysis of our financial condition and results of operations is based on our financial statements,
which we have prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, as well as the reported expenses during the reporting
periods. Actual results may differ from these estimates under different assumptions or conditions.
While
our significant accounting policies are more fully described in the notes to our financial statements appearing elsewhere in this
report, we believe that the accounting policies discussed below are critical to our financial results and to the understanding
of our past and future performance, as these policies relate to the more significant areas involving management’s estimates
and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because information
was not available at the time or it included matters that were highly uncertain at the time we were making our estimate; and (2)
changes in the estimate could have a material impact on our financial condition or results of operations.
Research
and development expenses
Research
expenses are recognized as expenses when incurred. Costs incurred on development projects are recognized as intangible assets
as of the date as of which it can be established that it is probable that future economic benefits attributable to the asset will
flow to us considering its commercial feasibility. This is generally the case when regulatory approval for commercialization is
achieved and costs can be measured reliably. Given the current stage of the development of our products, no development expenditures
have yet been capitalized. Intellectual property-related costs for patents are part of the expenditure for the research and development
projects. Therefore, registration costs for patents are expensed when incurred as long as the research and development project
concerned does not meet the criteria for capitalization.
Equity-based
compensation
The
Company accounts for its employees’ share-based compensation as an expenses in the financial statements based on ASC 718.
All awards are equity classified and therefore such cost are measured at the grant date fair value of the award. The Company estimates
share option grant date fair value using the Binomial option pricing model.
The
Company records stock options issued to non-employees at fair value, remeasures to reflect the current fair value at each reporting
period and recognizes expense over the related service period.
The
expected volatility of the share prices reflects the assumption that the historical volatility of the share prices is reasonably
indicative of expected future trends.
The risk-free interest rate for grants
with exercise price denominated in NIS is based on the yield from Israel treasury zero-coupon bonds with an equivalent term. The
risk-free interest rate for grants with exercise price denominated in USD is based on the yield from U.S. treasury zero-coupon
bonds with an equivalent term.
Item
4. Controls and Procedures.
Disclosure
Controls and Procedures
We
carried out an evaluation required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under
the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness
of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of
the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial
officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information
required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such
information is accumulated and communicated to our management, including our principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding required disclosure.
As
required by Rule 13a-15(b) under the Exchange Act, our management, under the supervision and with the participation of our principal
executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2018.
Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of March 31,
2018, our disclosure controls and procedures were effective.
Our
disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above.
Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any
control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not
absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements
due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
Changes
in Internal Controls
During the most recent
fiscal quarter, no change has occurred in our internal control over financial reporting that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.