My Size, Inc. - Quarter Report: 2018 September (Form 10-Q)

U. S. Securities and Exchange Commission

Washington, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File No. 001-37370

MY SIZE, INC.

(Exact name of registrant as specified in its charter)

3 Arava St., pob 1026, Airport City, Israel, 7010000

(Address of principal executive offices)

+972-3-600-9030

Registrant’s telephone number, including area code:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)  Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  Yes ☐   No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November 16, 2018, 29,852,389 shares of common stock, par value $0.001 per share were issued and outstanding.

MY SIZE, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2018

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

My Size, Inc. and Subsidiaries

Condensed Consolidated

Interim

Financial Statements

As of September 30, 2018

(unaudited) 

U.S. Dollars in Thousands

My Size, Inc. and its subsidiaries

Condensed Consolidated Interim Financial Statements as of September 30, 2018 (Unaudited)

Contents

My Size, Inc. and its subsidiaries

Condensed Consolidated Interim Balance Sheets

U.S. dollars in thousands (except share data)

The accompanying notes are an integral part of the condensed consolidated interim 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)

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

My Size, Inc. and its subsidiaries

Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity (Deficit) (Unaudited)

U.S. dollars in thousands (except share data and per share data)

(*) Represent an amount less than $1.

(*) Represent an amount less than $1.

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

My Size, Inc. and its subsidiaries

Condensed Consolidated Interim Statements of Cash Flows

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

My Size, Inc. and its subsidiaries

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

U.S. dollars in thousands (except share data and per share data)

Note 1 - General

Note 2 - Significant Accounting Policies

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 nine months ended September 30, 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 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, 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)

The Company adopted this guidance as of January 1, 2018.

During the nine and three month period ended September 30, 2018, the Company recorded a gain (loss) of $338 and ($87) respectively for changes in the fair value of the investment in marketable securities in the statements of comprehensive loss in financial income (expenses) and not as other comprehensive income.

The Company adopted this guidance retrospectively as of January 1, 2018.

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.

In accordance with ASC820 when measuring the fair value, an entity shall take into account the characteristics of the asset or liability if a market participant would take those characteristics into account when pricing the asset or liability at the measurement date. Such characteristics include, for example:

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:

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 receivables, short-term loan, trade payables and accounts payable approximate their fair value due to the short-term maturities of such instruments.

The Company holds share certificates in iMine Corporation (“iMine”) formerly known as Diamante Minerals, Inc., a publicly-traded company on the OTCQB and is acting to register them under its name and intends to take all necessary actions to complete such registration.

Due to sales restrictions on the sale of the iMine share, the fair value of the shares was measured on the basis of the quoted market price for an otherwise identical unrestricted equity instrument of the same issuer that trades in a public market, adjusted to reflect the effect of the sales restrictions and is therefore, ranked as Level 2 assets.

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)

(*) For the nine and three month period ended September 30, 2018, and 2017, the recognized gain (loss) (based on quoted market prices with a discount due to security-specific restrictions iMine shares) of the marketable securities was $338, $(472), ($87) and $(132), respectively.

(**) For the nine and three month period ended September 30, 2018, and 2017, the financial expenses from derivatives resulting from hedging activities was $2, $0, $2 and $0, 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 4 - Stock Based Compensation

The stock based expense recognized in the financial statements for services received is related to research and development, marketing, general and administrative expenses and shown in the following table: 

Option issued to consultants

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)

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 purchase up to 2,000,000 shares of the Company’s common stock to officers, directors and employees. At the 2018 annual meeting of stockholders, stockholders approved an increase to the number of shares of the Company’s common stock reserved for issuance pursuant to the Plan from 2,000,000 to 3,000,000 shares. The exercise price of the stock options are equal the fair market value of the Company’s stock at the date of grant.

During the nine month period ended September 30, 2018, no options were granted, 26,666 options were exercised and 15,500 options expired.

The total stock option compensation expense during the nine and three month period ended September 30, 2018 which were recorded as research and development and marketing expenses were $33 and $2, respectively.

The total stock option compensation expense during the nine and three month period ended September 30, 2018 which were recorded as general and administrative expenses were $77 and $2, 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 5 - Contingencies and Commitments

My Size, Inc. and its subsidiaries

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

U.S. dollars in thousands (except share data and per share data)

Note 5 - Contingencies and Commitments (cont’d)

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

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 September 30, 2018, we have sustained an accumulated deficit of $22,441,000. From inception through September 30, 2018, we have not generated any revenue from operations and expect to incur additional losses to perform further research and development activities: We do not currently have any commercial products. Our product development efforts continue to be in the early stages and we are unable to currently make estimates of the costs or the time they will take to complete.

Nine and Three Months Ended September 30, 2018 Compared to Nine and Three Months Ended September 30, 2017

Research and Development Expenses

Our research and development expenses for the nine months ended September 30, 2018 amounted to $807,000 compared to $624,000 for the nine months ended September 30, 2017. The increase between the corresponding period primarily resulted from increased subcontractors expenses and expenses associated with share-based payments to Company’s employees.

Our research and development expenses for the three months ended September 30, 2018 amounted to $311,000 compared to $213,000 for the three months ended September 30, 2017. The increase between the corresponding period primarily resulted from increased subcontractors expenses and expenses associated with share-based payments to Company’s employees.

Marketing, General and Administrative Expenses

Our marketing, general and administrative expenses for the nine months ended September 30, 2018 amounted to $3,103,000 compared to $2,667,000 for the nine months ended September 30, 2017. The increase compared to the corresponding period was mainly due to share-based payments, marketing expenses and professional services which were offset by a reduction in public relations and investor relations expenses.

Our marketing, general and administrative expenses for the three months ended September 30, 2018 amounted to $771,000 compared to $611,000 for the three months ended September 30, 2017. The increase compared to the corresponding period was mainly due to share-based payments and professional services offset by increase in marketing expenses.

Financial income (Expenses), Net

Our financial expenses net for the nine months ended September 30, 2018 amounted to $1,483,000 compared to $228,000 for the nine months ended September 30, 2017. The increase was due to revaluation of warrants, and stock based compensation liabilities, compared to the corresponding period offset by income from revaluation in investment in marketable securities compared to expenses in the corresponding period and income from exchange rate differences compared to expenses in the corresponding period.

Our financial expenses net for the three months ended September 30, 2018 amounted to $479,000 compared to financial income of $17,000 for the three months ended September 30, 2017. The increase was due to the revaluation of warrants, derivatives, stock based compensation liabilities and from revaluation of investment in marketable securities, compared to the corresponding prior period.

Net Income (Loss)

As a result of the foregoing, research and development, marketing, general and administrative expenses, and financial expenses, our net loss for the nine months ended September 30, 2018 was $5,393,000, compared to $3,519,000 for the nine months ended September 30, 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 an income from revaluation of investment in marketable securities and exchange rate differences compared to expenses in the corresponding period.

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 September 30, 2018 was $1,561,000, compared to net loss of $807,000 for the three months ended September 30, 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 exchange rate differences 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 debt and equity in the State of Israel and in the U.S.

As of September 30, 2018, we had cash, cash equivalents and restricted cash of $5,483,000 and short term deposit of $2,384,000 compared to $1,872,000 cash, cash equivalents and restricted cash and no deposits as of December 31, 2017. This increase primarily resulted from the public offering that we completed in February 2018 and from proceeds generated from the exercise of warrants, 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 had paid all amounts due and payable on the Notes. The five-year warrants issued in the private offering were initially exercisable at a price of $0.75 per share. The warrants contain price protection provisions in the event that we issue additional equity securities at a price lower than the exercise price of the warrants.

In December 2017 we consummated a public offering of our securities. As a result of such offering, the exercise price of the warrants was reduced to $0.715 per share.

During the nine and three month period ended September 30, 2018, warrants to purchase 444,444 and 111,111 shares of the Company’s common stock were exercised, respectively, for total proceeds of $318,000. The issuance of 111,111 shares was made in October 2018. 

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 $583,000 in principal amount of the Notes, and in February 2018, we repaid the remaining outstanding balance of the Notes.

During the nine months ended September 30, 2018, we received $2,260,000 of proceeds from the exercise of the warrants to purchase 2,654,922 shares of common stock issued in our 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.

Cash used in operating activities was $2,798,000 for the nine months ended September 30, 2018, compared to $2,472,000 for the nine months ended September 30, 2017.

Net cash used in investing activities was $2,404,000 for the nine months ended September 30, 2018, compared to $8,000 for the nine months ended September 30, 2017. The net cash used in investing activities for the nine month ended September 30, 2018 was mainly for short term deposits compared to purchase of property and equipment during the nine months ended September 30, 2017.

We had positive cash flow from financing activities of $9,313,000 for the nine months ended September 30, 2018, compared to $2,496,000 for the nine months ended September 30, 2017. The cash flow from financing activities for the nine months ended September 30, 2018 was due to a public offering our of securities and proceeds from the exercise of the warrants as described above compared to proceeds from a short term loan and a public offering our of securities during the nine months ended September 30, 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 expenses in the financial statements based on Accounting Standards Codification 718. All awards are classified as equity 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 Israeli New Shekel 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 U.S. dollars is based on the yield from U.S. treasury zero-coupon bonds with an equivalent term. 

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

Not required for a smaller reporting company.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

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 September 30, 2018. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2018 were not effective and assessed as material weakness due to lack of controls in providing reasonable assurance regarding the fair value measurement of a financial asset.

To address the material weakness and mitigate the lack of fair value measurement of financial assets, we established controls in place to assess, on a quarterly basis, indicators for fair value measurement as well as to involve a valuation specialist in an effort to ensure our financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Our Chief Executive Officer and Chief Financial Officer do not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Changes in Internal Controls

During the most recent fiscal quarter, no change has occurred in our internal control over fiancial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II – Other Information

Item 1. Legal Proceedings.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

Set forth below are material updates to pending litigation matters which are more fully disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2018 and June 30, 2018.

With respect to the litigation with Lightcom (Israel) Ltd., on October 16, 2018 the appellants in both Supreme Court pending cases withdrew their appeals without prejudice, following the Supreme Court’s recommendation. The Supreme Court commented that it appears that the lower courts’ judgments in the cases before him, which accepted arguments similar to the Company’s arguments in its motion to dismiss, appear to be correct. The Supreme Court recommended that to avoid additional future doubts, the legislator should attend to the matter of the proper choice of law applicable to foreign companies with dual listings. Following the dismissal of the Supreme Court pending cases, at a hearing held on November 19, 2018, the court ordered dismissal of the class action with prejudice. No order for costs was made.

With respect to the litigation commenced by fourteen shareholders, on July 5, 2018, the Supreme Court granted the motion to dismiss, endorsed the settlement agreement and dismissed the appeal.

With respect to the litigation with North Empire LLC (“North Empire”) on September 27, 2018, North Empire filed an answer and asserted counterclaims in the action commenced by the Company against them, alleging that the Company failed to deliver stock certificates North Empire causing damage to North Empire in the amount of $10,958,589. North Empire also filed a third-party complaint against Eli Wales and Ronen Luzon asserting similar claims against them in their individual capacities. On October 17, 2018, the Company filed a reply to North Empire’s counterclaims. On November 15, 2018, Eli Walles and Ronen Luzon filed a motion to dismiss North Empire’s third-party complaint. The Company believes, based on the opinion of its legal counsel, it is more likely than not that the counterclaims will be denied.

Item 1A. Risk Factors.

Not required for a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On November 18, 2018, My Size Israel 2014 Ltd. (“My Size Israel”), a subsidiary of the Company, entered into an employment agreement with Ronen Luzon (the “Luzon Employment Agreement”) pursuant to which Mr. Luzon will serve as Chief Executive Officer of the Company. Pursuant to the terms of the Luzon Employment Agreement, Mr. Luzon shall receive NIS 50,000 per month as his base salary and shall be eligible to receive such bonus as determined by the Company. In addition, Mr. Luzon shall be entitled to other benefits, including, but not limited to, Company contributions towards an education fund and insurance coverage, including for disability. The term of the Luzon Employment Agreement shall be effective as of September 1, 2018 and shall continue until such time either party provides written notice to the other party at least 75 days in advance of the termination of such agreement. The Company may also terminate Mr. Luzon’s employment without prior written notice (or payment in lieu of such notice) for Cause (as defined in the Luzon Employment Agreement). Pursuant to the terms of the Luzon Employment Agreement and subject to certain conditions, payments made by the Company to a comprehensive pension fund (the “Pension Fund”), to a managers insurance, or a combination of payments to an annuity fund and a non-annuity fund (the “Insurance Fund”), including a combination of payments to a Pension Fund and an Insurance Fund, shall be made in lieu of severance payments due to Mr. Luzon.

On November 18, 2018, My Size Israel entered into an employment agreement with Or Kles (the “Kles Employment Agreement”) pursuant to which Mr. Kles will serve as Chief Financial Officer of the Company. Pursuant to the terms of the Kles Employment Agreement, Mr. Kles shall receive NIS 30,000 per month as his base salary and shall be eligible to receive such bonus as determined by the Company. In addition, Mr. Kles shall be entitled to other benefits, including, but not limited to, Company contributions towards an education fund and insurance coverage, including for disability. The term of the Kles Employment Agreement shall be effective as of September 1, 2018 and shall continue until such time either party provides written notice to the other party at least 75 days in advance of the termination of such agreement. The Company may also terminate Mr. Kles’ employment without prior written notice (or payment in lieu of such notice) for Cause (as defined in the Kles Employment Agreement). Pursuant to the terms of the Kles Employment Agreement and subject to certain conditions, payments made by the Company to the Pension Fund or to the Insurance Fund, including a combination of payments to a Pension Fund and an Insurance Fund, shall be made in lieu of severance payments due to Mr. Kles.

On November 18, 2018, My Size Israel entered into an employment agreement with Billy Pardo  (the “Pardo Employment Agreement”) pursuant to which Mrs. Pardo will serve as Chief Product Officer of the Company. Pursuant to the terms of the Pardo Employment Agreement, Mrs. Pardo shall receive NIS 40,000 per month as her base salary and shall be eligible to receive such bonus as determined by the Company. In addition, Mrs. Pardo shall be entitled to other benefits, including, but not limited to, Company contributions towards an education fund and insurance coverage, including for disability. The term of the Pardo Employment Agreement shall be effective as of September 1, 2018 and shall continue until such time either party provides written notice to the other party at least 75 days in advance of the termination of such agreement. The Company may also terminate Mrs. Pardo’s employment without prior written notice (or payment in lieu of such notice) for Cause (as defined in the Pardo Employment Agreement). Pursuant to the terms of the Pardo Employment Agreement and subject to certain conditions, payments made by the Company to the Pension Fund or to the Insurance Fund, including a combination of payments to a Pension Fund and an Insurance Fund, shall be made in lieu of severance payments due to Mrs. Pardo.

On November 18, 2018, My Size Israel entered into an employment agreement with Eliyahu Walles  (the “Walles Employment Agreement”) pursuant to which Mr. Walles will serve as Chairman of the Board of Directors of the Company. Pursuant to the terms of the Walles Employment Agreement, Mr. Walles shall receive NIS 35,000 per month as his base salary and shall be eligible to receive such bonus as determined by the Company. In addition, Mr. Walles shall be entitled to other benefits, including, but not limited to, Company contributions towards an education fund and insurance coverage, including for disability. The term of the Walles Employment Agreement shall be effective as of September 1, 2018 and shall continue until such time either party provides written notice to the other party at least 75 days in advance of the termination of such agreement. The Company may also terminate Mr. Walles’ employment without prior written notice (or payment in lieu of such notice) for Cause (as defined in the Walles Employment Agreement). Pursuant to the terms of the Walles Employment Agreement and subject to certain conditions, payments made by the Company to the Pension Fund or to the Insurance Fund, including a combination of payments to a Pension Fund and an Insurance Fund, shall be made in lieu of severance payments due to Mr. Walles.

The foregoing descriptions of the Luzon Employment Agreement, Kles Employment Agreement, Pardo Employment Agreement and Walles Employment Agreement are not complete and are qualified in their entireties by reference to the full text of the Luzon Employment Agreement, Kles Employment Agreement, Pardo Employment Agreement and Wales Employment Agreement, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, to this Quarterly Report on Form 10-Q and are incorporated by reference herein.

Item 6. Exhibits.

* Filed herewith

+ Indicates a management contract or any compensatory plan, contract or arrangement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.