Item
1. Financial Statements.
My
Size, Inc. and Subsidiaries
Condensed Consolidated
Interim
Financial
Statements
As
of June 30, 2017
(unaudited)
U.S.
Dollars in Thousands
My
Size, Inc.
Condensed Consolidated Interim Financial
Statements as of June 30, 2017 (Unaudited)
Contents
|
Page
|
|
|
Condensed Consolidated Interim Balance Sheets
|
3
|
|
|
Condensed Consolidated Interim Statements of Comprehensive Loss
|
4
|
|
|
Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity (Deficit)
|
5-7
|
|
|
Condensed Consolidated Interim Statements of Cash Flows
|
8
|
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
9-15
|
My
Size, Inc.
Condensed Consolidated Interim Balance
Sheets
U.S.
dollars in thousands (except share data and per share data)
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
|
$ thousands
|
|
|
$ thousands
|
|
Assets
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
128
|
|
|
|
34
|
|
Other receivables and prepaid expenses
|
|
|
220
|
|
|
|
1,401
|
|
Restricted cash
|
|
|
69
|
|
|
|
62
|
|
Total current assets
|
|
|
417
|
|
|
|
1,497
|
|
|
|
|
|
|
|
|
|
|
Investment in marketable securities
|
|
|
308
|
|
|
|
579
|
|
Property and equipment, net
|
|
|
74
|
|
|
|
74
|
|
|
|
|
382
|
|
|
|
653
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
799
|
|
|
|
2,150
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Trade payable
|
|
|
186
|
|
|
|
229
|
|
Accounts payable
|
|
|
514
|
|
|
|
316
|
|
Derivative liabilities
|
|
|
248
|
|
|
|
80
|
|
Warrants and share based liabilities
|
|
|
308
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,256
|
|
|
|
625
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
Stockholders’ equity (Deficit):
|
|
|
|
|
|
|
|
|
Capital stock -
|
|
|
|
|
|
|
|
|
Common stock of $ 0.001 par value - Authorized: 50,000,000 shares; Issued and outstanding: 17,605,359 and 17,405,359 respectively
|
|
|
17
|
|
|
|
17
|
|
Additional paid-in capital
|
|
|
14,052
|
|
|
|
13,347
|
|
Available for sale reserve
|
|
|
(67
|
)
|
|
|
(93
|
)
|
Accumulated other comprehensive loss
|
|
|
(103
|
)
|
|
|
(102
|
)
|
Accumulated deficit
|
|
|
(14,356
|
)
|
|
|
(11,644
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity (Deficit)
|
|
|
(457
|
)
|
|
|
1,525
|
|
Total liabilities and stockholders’ equity
|
|
|
799
|
|
|
|
2,150
|
|
The
accompanying notes are an integral part of the condensed consolidated interim financial statements.
My
Size, Inc.
Condensed
Consolidated Interim Statements of Comprehensive Loss
U.S.
dollars in thousands (except share data and per share data)
|
|
Six-Months Ended
June 30,
|
|
|
Three-Months Ended
June 30,
|
|
|
Year ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
$ thousands
(Unaudited)
|
|
|
$ thousands
(Unaudited)
|
|
|
$ thousands
(Unaudited)
|
|
|
$ thousands
(Unaudited)
|
|
|
$ thousands
(Audited)
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
411
|
|
|
|
328
|
|
|
|
204
|
|
|
|
151
|
|
|
|
727
|
|
Marketing, General and administrative
|
|
|
2,056
|
|
|
|
925
|
|
|
|
1,177
|
|
|
|
599
|
|
|
|
1,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
2,467
|
|
|
|
1,253
|
|
|
|
1,381
|
|
|
|
750
|
|
|
|
2,586
|
|
Operating loss
|
|
|
(2,467
|
)
|
|
|
(1,253
|
)
|
|
|
(1,381
|
)
|
|
|
(750
|
)
|
|
|
(2,586
|
)
|
Financial (expenses) income, net
|
|
|
(245
|
)
|
|
|
(2,143
|
)
|
|
|
63
|
|
|
|
(2,757
|
)
|
|
|
(1,748
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations
|
|
|
(2,712
|
)
|
|
|
(3,396
|
)
|
|
|
(1,318
|
)
|
|
|
(3,507
|
)
|
|
|
(4,334
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on available for sale securities
|
|
|
26
|
|
|
|
594
|
|
|
|
(67
|
)
|
|
|
527
|
|
|
|
(24
|
)
|
Foreign currency translation differences
|
|
|
(1
|
)
|
|
|
(83
|
)
|
|
|
4
|
|
|
|
7
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
(2,687
|
)
|
|
|
(2,885
|
)
|
|
|
(1,381
|
)
|
|
|
(2,973
|
)
|
|
|
(4,356
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
|
(0.15
|
)
|
|
|
(0.22
|
)
|
|
|
(0.07
|
)
|
|
|
(0.23
|
)
|
|
|
(0.27
|
)
|
Basic and diluted weighted average number of shares outstanding
|
|
|
17,545,690
|
|
|
|
15,313,793
|
|
|
|
17,605,359
|
|
|
|
15,313,793
|
|
|
|
16,345,499
|
|
The
accompanying notes are an integral part of the condensed consolidated interim financial statements.
My
Size, Inc.
Condensed Consolidated Interim Statements
of Changes in Stockholders’ Equity (Deficit) (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
|
|
|
|
|
Additional
|
|
|
Available
|
|
|
Foreign
|
|
|
|
|
|
Total Stockholders’
|
|
|
|
Common stock
|
|
|
paid-in
|
|
|
for sale
|
|
|
currency
|
|
|
Accumulated
|
|
|
Equity
|
|
|
|
Number
|
|
|
Amount
|
|
|
capital
|
|
|
reserve
|
|
|
transaction
|
|
|
Deficit
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2017
|
|
|
17,405,359
|
|
|
|
17
|
|
|
|
13,347
|
|
|
|
(93
|
)
|
|
|
(102
|
)
|
|
|
(11,644
|
)
|
|
|
1,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
26
|
|
|
|
(1
|
)
|
|
|
(2,712
|
)
|
|
|
(2,687
|
)
|
Stock-based compensation related to options granted to consultants
|
|
|
-
|
|
|
|
-
|
|
|
|
73
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
73
|
|
Receipts on account of shares and additional investments
|
|
|
200,000
|
|
|
|
-
|
|
|
|
632
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
632
|
|
Balance as of June 30, 2017
|
|
|
17,605,359
|
|
|
|
17
|
|
|
|
14,052
|
|
|
|
(67
|
)
|
|
|
(103
|
)
|
|
|
(14,356
|
)
|
|
|
(457
|
)
|
|
|
Common stock
|
|
|
Additional paid-in
|
|
|
Available
for sale
|
|
|
Foreign currency
|
|
|
Accumulated
|
|
|
Total
stockholders’
|
|
|
|
Number
|
|
|
Amount
|
|
|
capital
|
|
|
reserve
|
|
|
transaction
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2016
|
|
|
15,313,793
|
|
|
|
15
|
|
|
|
4,853
|
|
|
|
(67
|
)
|
|
|
(104
|
)
|
|
|
(7,310
|
)
|
|
|
(2,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
594
|
|
|
|
(83
|
)
|
|
|
(3,396
|
)
|
|
|
(2,885
|
)
|
Stock-based compensation related to options granted to consultants
|
|
|
-
|
|
|
|
-
|
|
|
|
6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6
|
|
Convertible loans converted to equity
|
|
|
-
|
|
|
|
-
|
|
|
|
5,255
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,255
|
|
Warrants reclassified to equity as a result of amended exercise price currency
|
|
|
-
|
|
|
|
-
|
|
|
|
1,041
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2016
|
|
|
15,313,793
|
|
|
|
15
|
|
|
|
11,155
|
|
|
|
527
|
|
|
|
(187
|
)
|
|
|
(10,706
|
)
|
|
|
804
|
|
The
accompanying notes are an integral part of the condensed consolidated interim financial statements.
My
Size, Inc.
Condensed Consolidated Interim Statements
of Changes in Stockholders’ Equity (Deficit) (Unaudited)
U.S.
dollars in thousands (except share data and per share data)
|
|
|
|
|
Additional
|
|
|
Available
|
|
|
Foreign
|
|
|
|
|
|
Total Stockholders’
|
|
|
|
Common stock
|
|
|
paid-in
|
|
|
for sale
|
|
|
currency
|
|
|
Accumulated
|
|
|
Equity
|
|
|
|
Number
|
|
|
Amount
|
|
|
capital
|
|
|
reserve
|
|
|
transaction
|
|
|
Deficit
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of April 1, 2017
|
|
|
17,605,359
|
|
|
|
17
|
|
|
|
14,744
|
|
|
|
-
|
|
|
|
(107
|
)
|
|
|
(13,038
|
)
|
|
|
1,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(67
|
)
|
|
|
4
|
|
|
|
(1,318
|
)
|
|
|
(1,381
|
)
|
Stock-based compensation related to options granted to consultants
|
|
|
-
|
|
|
|
-
|
|
|
|
(924
|
)(*)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(924
|
)
|
Receipts on account of shares and
additional investments
|
|
|
-
|
|
|
|
-
|
|
|
|
232
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
232
|
|
Balance as of June 30, 2017
|
|
|
17,605,359
|
|
|
|
17
|
|
|
|
14,052
|
|
|
|
(67
|
)
|
|
|
(103
|
)
|
|
|
(14,356
|
)
|
|
|
(457
|
)
|
(*) See note 4b.
|
|
Common stock
|
|
|
Additional paid-in
|
|
|
Available
for sale
|
|
|
F
oreign currency
|
|
|
Accumulated
|
|
|
Total
stockholders’
|
|
|
|
Number
|
|
|
Amount
|
|
|
capital
|
|
|
reserve
|
|
|
transaction
|
|
|
Deficit
|
|
|
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of April 1, 2016
|
|
|
15,313,793
|
|
|
|
15
|
|
|
|
5,844
|
|
|
|
-
|
|
|
|
(194
|
)
|
|
|
(7,199
|
)
|
|
|
(1,534
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
527
|
|
|
|
7
|
|
|
|
(3,507
|
)
|
|
|
(2,973
|
)
|
Stock-based compensation related to options granted to consultants
|
|
|
-
|
|
|
|
-
|
|
|
|
56
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
56
|
|
Convertible loans converted to equity
|
|
|
-
|
|
|
|
-
|
|
|
|
5,255
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2016
|
|
|
15,313,793
|
|
|
|
15
|
|
|
|
11,155
|
|
|
|
527
|
|
|
|
(187
|
)
|
|
|
(10,706
|
)
|
|
|
804
|
|
The
accompanying notes are an integral part of the condensed consolidated interim financial statements.
My
Size, Inc.
Condensed Consolidated Statements
of Changes in Stockholders’ Equity (Audited)
U.S.
dollars in thousands (except share data and per share data)
|
|
Common stock
|
|
|
Additional paid-in
|
|
|
Available
for sale
|
|
|
Foreign currency
|
|
|
Accumulated
|
|
|
Total
stockholders’ equity
|
|
|
|
Number
|
|
|
Amount
|
|
|
capital
|
|
|
reserve
|
|
|
transaction
|
|
|
Deficit
|
|
|
(deficiency)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2015
|
|
|
15,313,793
|
|
|
|
15
|
|
|
|
4,855
|
|
|
|
(69
|
)
|
|
|
(104
|
)
|
|
|
(7,310
|
)
|
|
|
(2,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(24
|
)
|
|
|
2
|
|
|
|
(4,334
|
)
|
|
|
(4,356
|
)
|
Stock-based compensation related to
options granted to consultants
|
|
|
-
|
|
|
|
-
|
|
|
|
(23
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(23
|
)
|
Convertible loans converted to equity
|
|
|
2,091,566
|
|
|
|
2
|
|
|
|
7,528
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,530
|
|
Warrants reclassified to equity as a result of amended exercise price currency
|
|
|
-
|
|
|
|
-
|
|
|
|
987
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2016
|
|
|
17,405,359
|
|
|
|
17
|
|
|
|
13,347
|
|
|
|
(93
|
)
|
|
|
(102
|
)
|
|
|
(11,644
|
)
|
|
|
1,525
|
|
The accompanying notes are an integral part
of the condensed consolidated interim financial statements.
My
Size, Inc.
Condensed Consolidated Interim Statements
of Cash Flows
|
|
Six-Months Ended
June 30,
|
|
|
Three-Months Ended
June 30,
|
|
|
Year ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
$ thousands
(Unaudited)
|
|
|
$ thousands
(Unaudited)
|
|
|
$ thousands
(Unaudited)
|
|
|
$ thousands
(Unaudited)
|
|
|
$ thousands
(Audited)
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(2,712
|
)
|
|
|
(3,396
|
)
|
|
|
(1,318
|
)
|
|
|
(3,507
|
)
|
|
|
(4,334
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
15
|
|
|
|
11
|
|
|
|
8
|
|
|
|
6
|
|
|
|
24
|
|
Amortization of warrant, convertible loans and derivative
|
|
|
27
|
|
|
|
2,143
|
|
|
|
56
|
|
|
|
2,757
|
|
|
|
(182
|
)
|
Revaluation of PUT options
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
776
|
|
Revaluation of investment in marketable
securities
|
|
|
340
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,233
|
|
Stock based compensation
|
|
|
73
|
|
|
|
6
|
|
|
|
34
|
|
|
|
56
|
|
|
|
(23
|
)
|
Decrease (increase) in receivables and prepaid expenses
|
|
|
54
|
|
|
|
(4
|
)
|
|
|
62
|
|
|
|
11
|
|
|
|
(27
|
)
|
Increase in derivative liabilities
|
|
|
153
|
|
|
|
-
|
|
|
|
159
|
|
|
|
-
|
|
|
|
80
|
|
Increase (decrease) in trade payable
|
|
|
(63
|
)
|
|
|
106
|
|
|
|
(9
|
)
|
|
|
40
|
|
|
|
86
|
|
Increase in other accounts payable
|
|
|
168
|
|
|
|
70
|
|
|
|
75
|
|
|
|
52
|
|
|
|
208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(1,945
|
)
|
|
|
(1,064
|
)
|
|
|
(933
|
)
|
|
|
(585
|
)
|
|
|
(2,159
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(7
|
)
|
|
|
(23
|
)
|
|
|
(4
|
)
|
|
|
(10
|
)
|
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(7
|
)
|
|
|
(23
|
)
|
|
|
(4
|
)
|
|
|
(10
|
)
|
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of a loan
|
|
|
(10
|
)
|
|
|
(25
|
)
|
|
|
(10
|
)
|
|
|
(25
|
)
|
|
|
(25
|
)
|
Proceeds from realization of guarantees
|
|
|
1,815
|
|
|
|
-
|
|
|
|
666
|
|
|
|
-
|
|
|
|
-
|
|
Proceeds from issuance of shares, warrants and convertible loans
|
|
|
200
|
|
|
|
304
|
|
|
|
-
|
|
|
|
304
|
|
|
|
1,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
2,005
|
|
|
|
279
|
|
|
|
656
|
|
|
|
279
|
|
|
|
1,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
41
|
|
|
|
(13
|
)
|
|
|
50
|
|
|
|
(11
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in cash and cash equivalents
|
|
|
94
|
|
|
|
(821
|
)
|
|
|
(231
|
)
|
|
|
(327
|
)
|
|
|
(885
|
)
|
Cash and cash equivalents at the beginning of the period
|
|
|
34
|
|
|
|
919
|
|
|
|
359
|
|
|
|
425
|
|
|
|
919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
|
128
|
|
|
|
98
|
|
|
|
128
|
|
|
|
98
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non cash transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants reclassified to equity as a result of amended exercise price currency
|
|
|
-
|
|
|
|
987
|
|
|
|
-
|
|
|
|
-
|
|
|
|
987
|
|
Conversation of loan to equity
|
|
|
-
|
|
|
|
4,939
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,846
|
|
The
accompanying notes are an integral part of the condensed consolidated interim financial statements.
My
Size, Inc.
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 a dual listed publicly traded company whose common stock are publicly trading on the TASE
since September 2005 (under the name Topspin Medical Inc) and on the NASDAQ Capital Market (“NASDAQ”)
since July 25, 2016. The Company has developed a measurement technology based on algorithms with broad applications
in a variety of areas, from the apparel e-commerce market to Do It Yourself (“DIY”) smartphone and tablet
apps. The technology is driven by several patent-pending algorithms which are able to calculate and record
measurements in a variety of novel ways.
Since February 2014, the Company also operates
via a wholly-owned subsidiary, My Size (Israel) 2014 Ltd., a company registered in Israel.
|
|
|
|
|
b.
|
Since inception, the Company has incurred losses and negative cash flows from operations and the accumulated loss amounting to approximately $14.3 million. The Company has financed its operations mainly through fundraising from private investors.
|
As of June 30, 2017, the Company
entered into agreements pursuant to which it raised an aggregate of $8,015 of which $5,261 and $1,410 were received in cash and
marketable securities, respectively. The marketable securities are shares of common stock of Diamante Minerals Inc (“DIMN”),
which are accounted as a financial asset available for sale and presented in the Company’s balance sheet under investment
in marketable securities.
As of the date of the report,
the Company has $738 and $455 in guaranteed notes and checks, respectively as remaining balance from the amounts described above.
The guarantee has been provided by an ungraded financial institution. Subsequent to June 30, 2017, the sum of $151 of the guarantee
notes has been redeemed in cash.
As mentioned in note 7a, subsequent
to June 30, 2017, the Board of Directors approved agreements with three private investors who will provide investment totaling
of $780 in exchange for 780,000 shares of common stock of the Company. As of the date of the report the Company received $200 from
the investments in cash. The remaining amount of the investment to be received will be in the form of $50,000 in cash and $530,000
in guarantee notes.
For
the purpose of financing its operating activities in the foreseeable future, the Company relies on the collection of existing
cash commitments from investors, the sale of marketable securities and raising additional funds. However, there is no certainty
regarding the Company’s ability to collect committed funds, obtain additional funding or sell the DIMN shares that it holds.
The Company estimates that the committed investments will be adequate to fund its operations through the 12 months following the
approval date of the financial statements. Failure to obtain the additional funds as mentioned above will require the Company
to curtail operations.
If all the committed funds are
not collected or not replaced by additional funding, there is a significant doubt regarding the Company’s ability to continue
its operation as a going concern. 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.
Note
2 - Significant Accounting Policies
|
a.
|
Unaudited condensed consolidated interim 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 and its subsidiaries collectively referred to as 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 six months ended June
30, 2017 are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31,
2017.
These unaudited condensed consolidated
interim 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, 2016.
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.
|
c.
|
Impact
of recently issued accounting standard not yet adopted:
|
On
March 30, 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to improve
the accounting for share-based payment transactions as part of the FASB’s simplification initiative. This ASU is effective
for annual and interim periods in fiscal years beginning after December 15, 2016. Early adoption is permitted in any interim or
annual period provided that the entire ASU is adopted.
The impact of adopting the new
standard on the operating income is not material.
My
Size, Inc.
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:
ASC
820, “Fair Value Measurements and Disclosures”, defines fair value as the price that would be received to sell an
asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants
at the measurement date.
In
determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring
fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most
observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset
or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that
reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability
developed based on the best information available in the circumstances.
The
fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs
when measuring fair value.
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
a publicly-traded company - Diamante Minerals, Inc. 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.
|
|
|
June 30, 2017
|
|
|
|
|
Fair
value hierarchy
|
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Financial
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
in marketable securities
|
|
|
308
|
|
|
|
-
|
|
|
|
-
|
|
My
Size, Inc.
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)
|
|
|
June 30, 2017
|
|
|
|
|
Fair value hierarchy
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Derivative liabilities
|
|
|
-
|
|
|
|
248
|
|
|
|
-
|
|
|
Warrants and share based liabilities
|
|
|
-
|
|
|
|
308
|
|
|
|
-
|
|
|
|
|
December
31, 2016
|
|
|
|
|
Fair
value hierarchy
|
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Financial
assets
|
|
|
|
|
|
|
|
|
|
|
Investment
in marketable securities
|
|
|
579
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
December
31, 2016
|
|
|
|
|
Fair
value hierarchy
|
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Financial
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
liabilities
|
|
|
-
|
|
|
|
80
|
|
|
|
-
|
|
At June 30, 2017, gross unrecognized
gain (loss), recognized loss and fair value (based on quoted market prices) of these securities were $26, $347 and $308, respectively
(At December 31, 2016, gross unrecognized loss, recognized loss and fair value (based on quoted market prices) of these securities
were ($24), $1,233 and $579, respectively).
My
Size, Inc.
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 (income)
recognized in the financial statements for services received from non-employees is related to Marketing, General and Administrative
and shown in the following table:
|
|
|
Six months ended
June 30,
|
|
|
Three months ended
June 30,
|
|
|
Year ended December 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense - equity awards
|
|
|
73
|
|
|
|
6
|
|
|
|
34
|
|
|
|
28
|
|
|
|
(23
|
)
|
|
Stock-based compensation expense - liability awards
|
|
|
205
|
|
|
|
-
|
|
|
|
178
|
|
|
|
-
|
|
|
|
-
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
278
|
|
|
|
6
|
|
|
|
212
|
|
|
|
28
|
|
|
|
(23
|
)
|
|
a.
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In December 2016, the Company entered into a consulting agreement with a consultant ( “Consultant1”)
pursuant to which Consultant1 is providing services in connection with marketing strategies, micro and macro-economic issues and
for the promotion of the Company’s marketing, business, products and operations through smartphone applications. The agreement
is for a period of 18 months commencing October 2016.
In consideration for services provided under the consulting agreement, the Company will issue Consultant1
25,000 shares of common stock of the Company which will be issued over six quarters as follows: 4,150 issued over each of the first
five quarters and a sixth installment of 4,250 to be issued on the sixth quarter of the consulting agreement. In addition, the
Company will issue to Consultant1 stock options to purchase up to 40,000 shares of the Company’s common stock, exercisable
not later than March 31, 2018 at an exercise price of NIS18 per share.
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In addition, the Company undertook to pay the balance of the consideration for the sale of the shares
by Consultant1 up to the sum of NIS500,000. If the consideration for the sale of the shares falls below 90% of the shares’
price on the stock exchange on the date of sale, the Company shall pay Consultant1 the difference. The Company may decide at its
own discretion whether to make such payment in cash or shares of common stock.
On March 21, 2017, the general meeting adopted a resolution for the approval of a capital remuneration
plan for consultants. The approval was required for the issuance of the options and shares of common stock of the Company issued
to Consultant1.
During the six-month period ended
June 30, 2017, costs in the sum of $1 ($90 during 2016) were recorded by the Company and an undertaking to pay the balance of the
consideration was recognized in the sum of $117 ($80 during 2016) according to the fair value of the undertaking.
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b.
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In December 2016, the Company engaged a consultant (“Consultant2”) to provide services to
the Company with respect to marketing strategy and public relations, including potential investors relations. For such consulting
services, the Company shall issue to Consultant2 options to purchase up to 2,000,000 shares of the Company’s common stock
at variable exercise prices ranging from $3.50 to $9.00 per share. The options are exercisable for periods ranging from 12 months
(or 6 months from filing date of registration statement) to 36 months. The issuance of the options under the agreement is subject
to the receipt of all the approvals required by the laws applicable to the Company, including stock exchange approvals and the
approval by the Company’s shareholders to adopt an equity incentive plan for consultants. The equity incentive plan for consultants
was approved by the shareholders on March 21, 2017, and such options have not yet been issued.
On May 16, 2017, the Company and the Consultant2 entered into an amendment to the consulting agreement
pursuant to which the strike prices of the options was amended so that strike prices range from $1.50 to $5.00 per share.
Following initial grant, the Company reclassified
the options from equity accounted under ASC 505-50 to derivative liability accounted under ASC 815.
The expense recognize in the second quarter,
including the cost associates with the consulting service attributed to the reporting period and the revaluation of the derivative
amounted to$186.
An amount of $186 and $27 was recorded
in the balance sheet as warrants and share based liabilities and share based payments respectively.
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c.
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In April 2017, the Company engaged a consultant (“Consultant3”) to provide services to the
Company with respect to financing and strategic advisory, for such consulting services, the Company will pay a monthly retainer
and shall issue to the Consultant3 50,000 shares of the Company common stock and 31,250 shares each quarter thereafter.
During the six-month period ended June
30, 2017, costs in the sum of $47 were recorded by the Company.
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My
Size, Inc.
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
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a.
|
Further to Note 10a to the annual report on Form 10-K for the year ended December 31, 2016:
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On December
27, 2015, the Company received a legal complaint (the “Complaint”). The defendants named in the Complaint were the
Company, all the members of the Board of Directors of the Company, the officers of the Company, Mrs. Shoshana Zigdon, a shareholder
and related party of the Company, as well as two additional defendants who are not shareholders of the Company. The plaintiff
alleged that the Company violated its obligation to register shares purchased by the plaintiff on July 3, 2014 (the “Original
Shares”) for trade with the Tel Aviv Stock Exchange.
The Company and plaintiff entered
into a settlement agreement (the “Settlement”) dated June 20, 2017 h following a mediation process. Pursuant to the
Settlement, the Company shall make a payment to the plaintiff of NIS325,000 (the “Down Payment”) within 30 days of
the date of the Settlement. Additionally, the Company is obligated to register the Original Shares within a specified time frame.
Moreover, pursuant to the Settlement, the Company will issue, within 60 days, 80,358 additional shares of common stock to the plaintiff
(the “New Shares”), which New Shares shall be registered, to be deposited in escrow and sold for the benefit of plaintiff.
To the extent the Company will not issue the unrestricted New Shares within 60 days of the Settlement, the plaintiff has a right,
at his sole discretion, to an resume the legal proceedings pursuant to the Complaint, provided he deposits the Down Payment in
an escrow account, pending the Court’s final adjudication of the Complaint. Additionally, the Settlement provides that to
the to the extent the aggregate proceeds from the sale of the Original Shares and the New Shares is less than NIS1,600,000, the
Company will either complement the difference in cash or shall issue to the plaintiff additional shares of common stock in lieu
thereof, at the Company’s sole discretion.
The Company recorded a liability
for the cash fee, a derivative and share based liabilities for the additional shares in the amount of $93, $132 and $91, respectively as of June 30, 2017.
The share base liability was recorded
due to the Company’s undertaking to register the shares.
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b.
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Further to Note 10b to the annual report on Form 10-K for the year ended December 31, 2016: As of the date on which the financial statements were signed, the Company has paid its obligation to the investor in full.
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My
Size, Inc.
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 (cont’d)
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c.
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On May 3, 2017, Lightcom (Israel) Ltd., an Israeli company, alleging that it is a shareholder of the Company,
filed a motion (the "Motion") with the Tel Aviv District Court (Financial Division) to approve an action against the
Company as a shareholders’ class action. The subject matter of the action appears to be a report filed by the Company on
April 19, 2017. The Court ordered the Company to respond to the motion by September 19, 2017. The Motion alleges, inter alia,
that the Company’s report date April 19, 2017 regarding its engagement with the Israeli Post was false and misleading, and
that as a result thereof financial damages have been incurred by two purported classes of shareholders: (i) any shareholder who
sold Company’s shares as of April 20, 2017 and until April 27, 2017, with respect to damage directly caused by such sale
and (ii) any shareholder who held shares on April 20, 2017 and subsequent to April 27, 2017 with respect to damage caused by permanent
adverse effect to the shares’ value. The alleged financial damage caused to members of both classes is estimated at NIS 18.8
million. The Company reviewed the Motion initially with its legal counsel and retained an expert to review and analyze the allegations
and data upon which the Motion is based. At this preliminary stage, the Company cannot evaluate the chances of the Motion. However,
based on an initial opinion the Company received from its expert, the Company believes that there is no direct causal connection
between the Company’s report which is the subject matter of the Motion and the alleged damages caused to either class of
purported plaintiffs and that in any case there appears to be no correlation between the alleged scope of damages and the merits
of the alleged case. The Company will respond to the Motion in the time frame ordered by the Court.
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Note
6 - Significant Events During the Reporting Period
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a.
|
In February 2017, the Board of Directors approved agreements with investors that will provide an investment for a total amount of $200 in exchange for 200,000 shares of common stock of the Company. In addition, the Company will issue non-negotiable warrants exercisable into up to 250,000 shares of common stock of the Company until November 22, 2017 at an exercise price of $3.50 per share.
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b.
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On June 5, 2017, the “Company received written notice from the Listing Qualifications Department of The NASDAQ Stock Market LLC notifying the Company that for the preceding 30 consecutive business days, the Company’s common stock did not maintain a minimum Market Value of Listed Securities of $35 million (“MVLS Requirement”) per share as required by NASDAQ Listing Rule 5550(b)(2).
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In accordance with NASDAQ Listing
Rule 5810(c)(3)(C), the Company has a grace period of 180 calendar days, or until December 4, 2017, to regain compliance with
NASDAQ Listing Rule 5550(b)(2). The Company will endeavor to rectify the situation and to meet the MVLS Requirement.
My
Size, Inc.
Notes to Condensed Consolidated Interim
Financial Statements (unaudited)
U.S.
dollars in thousands (except share data and per share data)
Note
7 - Subsequent Events
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a.
|
On August 16, 2017, the Board of Directors
approved agreements with three private investors who will provide investment totaling $780 in exchange for 780,000 shares of common
stock of the Company.
As of the date of the report the Company received $200 from the investments in cash. The remaining amount
of the investment to be received will be in the form of $50,000 in cash and $530,000 in guarantee notes.
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As described in Note 1b as of
June 30, 2017 the Company entered into agreements pursuant to which it raised an aggregate of $8,015 out of which the sum of $5,261
and $1,410 were received in cash and marketable securities, respectively.
As at the date of this
report the Company has $738 and $455 in guarantee notes and checks. Subsequent to June 30, 2017, a sum of $151 of the
guarantee notes have been redeemed in cash.
The following proforma consolidated balance sheet is based on the June 30, 2017 balance sheet with adjustments
for receipt of $1,193 from the remaining guarantee notes and checks from investors for stock subscribed for but not yet issued.
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Assets
|
|
$
|
1,992
|
|
|
|
|
|
|
|
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Liabilities
|
|
|
1,256
|
|
|
|
|
|
|
|
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Stockholders’ equity
|
|
|
736
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
1,992
|
|
The effect on equity and on the assets of collecting the money from the bank guarantees and the checks
is an increase of $1,193. As a result of the foregoing, the Company’s stockholder’s equity, on a pro forma basis, is
$736 as of June 30, 2017.
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, 2016. Our actual results, performance and achievements may differ materially from
those expressed in, or implied by, these forward-looking statements.
Results
of Operations
Six and three months ended June 30,
2017 compared to six and three months ended June 30, 2016
From
inception through June 30, 2017, we have sustained an accumulated deficit of approximately $14.3 million. From inception
through June 30, 2017, 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.
Research
and Development Expenses
Our research and development expenses for
the six months ended June 30, 2017 amounted to $411,000 compared to $328,000 for the six months ended June 30, 2016. The increase
between the corresponding periods primarily results from increased subcontractors expenses and the increased expenses associated
with the hiring of new employees.
Our
research and development expenses for the three months ended June 30, 2017 amounted to $204,000 compared to $151,000 for the three
months ended June 30, 2016. The increase between the corresponding periods primarily results from increased subcontractors expenses
and the increased expenses associated with the hiring of new employees.
Marketing,
General and Administrative Expenses
Our marketing, general and administrative
expenses for the six months ended June 30, 2017 amounted to $2,056,000 compared to $925,000 for the six months ended June 30, 2016.
The increase between the corresponding period in expenses derives mainly from share based payments, increases in public relations
and investor relations expenses which were not significant in the corresponding period and from increased salaries
expenses associated with the hiring of new employees.
Our marketing, general and administrative
expenses for the three months ended June 30, 2017 amounted to $1,177,000 compared to $599,000 for the three months ended June 30,
2016. The increase between the corresponding period in expenses derives mainly from share based payments, increases in public
relations and investor relations expenses which were not significant in the corresponding period and from increased
salaries expenses associated with the hiring of new employees.
Financial income and expense, net
Our financial expenses for the Six months
ended June 30, 2017 amounted to $245,000 compared to financial expense of $2,143,000 for the Six months ended June 30, 2016. The
decrease between the corresponding periods in financial expenses derives mainly from the creation and revaluation of the components
of the options, derivatives and investment in marketable securities.
Our financial income for the three months
ended June 30, 2017 amounted to $63,000 compared to financial expense of $2,757,000 for the three months ended June 30, 2016. The
decrease between the corresponding periods in financial expenses derives mainly from the creation and revaluation of the components
of the options, derivatives and investment in marketable securities.
Net Loss from continuing operations
As a result of the foregoing research
and development, marketing general and administrative expenses, and financial expenses, our net loss from continuing
operations for the six months ended June 30, 2017 was $2,712,000, compared to our net loss from continuing operations for the
six months ended June 30, 2016 of $3,396,000. The main reasons for the change between the corresponding periods is due to a
decrease in finance expenses mainly from the creation and revaluation of the components of the options, derivatives and
investment in marketable securities in the corresponding period; partially offset by an increase in share based payments,
increases in public relations and investor relations expenses which were not significant in the corresponding
period and from increased salaries expenses associated with the hiring of new employees.
Our net loss from continuing
operations for the three months ended June 30, 2017 was $1,318,000, compared to our net loss from continuing operations for
the three months ended June 30, 2016 of $3,507,000. The decrease between the corresponding periods is mainly due to finance
expenses from the revaluation of options and derivatives in the corresponding period; partially offset by an increase in
share based payments, increases in public relations and investor relations expenses which were not significant in
the corresponding period and from increased salary expenses associated with the hiring of new employees.
Liquidity
and Capital Resources
Since
our inception, we have funded our operations primarily through private offerings of our equity securities in Israel.
As of June 30, 2017, we had cash and
cash equivalents of $128,000 as compared to $34,000 as of December 31, 2016. The increase in cash balances is due to collecting
cash from the guarantee notes with offsetting effect of cash used for operating activities during the period.
Net cash used in operating activities was
$1,945,000 for the six months ended June 30, 2017 compared to $1,064,000 for the six months ended June 30, 2016.
The increase in cash used in operating
activities derives mainly from increased payments to service providers and Company employees. The Company has expenses not in the
ordinary course of business mainly from the registration of patents, the listing of our common stock on NASDAQ and legal expenses
associated with lawsuits involving the Company.
Net cashed used in investing activities
was $7,000 for the six months ended June 30, 2017 compared to $23,000 for the six months ended June 30, 2016. The negative cash
flow resulted from purchase of equipment.
Net cash provided by financing activities
was $2,005,000 for the six months ended June 30, 2017 as compared to $279,000 for the six months ended June 30, 2016. The cash
flows from financing activities for the six months ended June 30, 2017 was mainly due to realization of guarantees.
On August 16, 2017, the Board of Directors
approved agreements with three private investors who will provide an investment totaling $780 in exchange for 780,000 shares of
common stock of the Company. As of the date of the report the company received $200 from the investments in cash. The remaining
amount of the investment to be received will be in the form of $50,000 in cash and $530,000 in guarantee notes.
As of June 30, 2017, the Company entered
into agreements pursuant to which it raised an aggregate of $8,015 of which $5,261 and $1,410 were received in cash and marketable
securities, respectively. The marketable securities are shares of common stock of Diamante Minerals Inc (“DIMN”), which
are accounted as a financial asset available for sale and presented in the Company’s balance sheet under investment in marketable
securities.
As of the date of the report, the Company
has $738 and $455 in guaranteed notes and checks, respectively. The guarantee has been provided by an ungraded financial institution.
Subsequent to June 30, 2017, the sum of $151 of the guarantee notes has been redeemed in cash.
For the purpose of financing its operating
activities in the foreseeable future, the Company relies on the collection of existing cash commitments from investors, the sale
of marketable securities and raising additional funds. However, there is no certainty regarding the Company’s ability to
collect committed funds, obtain additional funding or sell the DIMN shares that it holds. The Company estimates that the committed
investments will be adequate to fund its operations through the 12 months following the approval date of the financial statements.
Failure to obtain the additional funds as mentioned above will require the Company to curtail operations.
If all the committed funds are not collected
or not replaced by additional funding, there is a significant doubt regarding the Company’s ability to continue its operation
as a going concern. 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.
A
downturn in the United States stock and debt markets could make it more difficult to obtain financing through the issuance of
equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs
and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to
seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional
dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our shares
of common stock or the debt securities may cause us to be subject to restrictive covenants. Even if we are able to raise the funds
required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or
experience unexpected cash requirements that would force us to seek additional financing. If additional financing is not
available or is not available on acceptable terms, we will have to curtail our operations.
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. GAAP. 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 stock-based compensation in accordance with ASC 718, “Compensation-Stock Compensation” (“ASC
718”) which requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing
model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite
service periods in the Company’s consolidated statements of operations.
The
Company recognizes compensation expenses for the value of its awards granted based on the accelerated method over the requisite
service period of each of the awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of
grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
The
Company selected the Binomial option pricing model (“the Binomial model”) as the most appropriate fair value method
for its stock-options awards. The Binomial model requires a number of assumptions, of which the most significant are the suboptimal
exercise factor and expected stock price volatility. The suboptimal exercise factor is estimated based on employees’ historical
option exercise behavior.
The
suboptimal exercise factor is the ratio by which the stock price must increase over the exercise price before employees are expected
to exercise their stock options.
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
expected option term represents the period that the Company’s stock options are expected to be outstanding. The risk-free interest
rate is based on the yield from Israel treasury zero-coupon bonds with an equivalent term.
The
Company has historically not paid dividends and has no foreseeable plans to pay dividends.
The
Company applies ASC 505-50, “Equity-Based Payments to Non-Employees” with respect to options and warrants issued to
non-employees.
If
any of the assumptions used in the binomial model change significantly, equity-based compensation for future awards may differ
materially compared with the awards granted previously.
Convertible
promissory notes:
The
Company applies ASC 470-20, “Debt with Conversion and Other Options” (“ASC 470-20”). Under the guidelines
of ASC 470-20, the Company measures and recognizes the beneficial conversion feature on the commitment date. The beneficial conversion
feature is measured by allocating a portion of the proceeds equal to the intrinsic value of the feature to additional paid-in-capital.
The intrinsic value of the feature is calculated on the commitment date using the conversion price. This intrinsic value is limited
to the portion of the proceeds allocated to the convertible debt.
The
Company applied ASC 470-20 and ASC 815 to the Convertible promissory notes.