My Size(MYSZ) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the unaudited condensed consolidated interim financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Condensed Consolidated Interim Financial Statements (Unaudited) This section presents the unaudited condensed consolidated interim financial statements, including the balance sheets, statements of comprehensive loss, changes in stockholders' equity, and cash flows, along with detailed notes. Key financial highlights include a decrease in total assets and stockholders' equity, a significant drop in revenues and gross profit, and a net loss for the quarter, alongside a reduction in cash used in operating activities Condensed Consolidated Interim Balance Sheets The balance sheets show a decrease in total assets and stockholders' equity from December 31, 2024, to March 31, 2025, primarily due to reductions in cash and inventory Condensed Consolidated Interim Balance Sheets (U.S. dollars in thousands) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 3,695 | 4,880 | | Inventory | 2,504 | 2,796 | | Account receivables | 534 | 278 | | Total current assets | 7,804 | 9,072 | | Total assets | 8,751 | 10,059 | | Total current liabilities | 2,587 | 2,996 | | Total liabilities | 2,722 | 3,150 | | Total stockholders' equity | 6,029 | 6,909 | - Total assets decreased by $1,308 thousand (13.0%) from December 31, 2024, to March 31, 2025, primarily due to a reduction in cash and cash equivalents and inventory[12] - Total stockholders' equity decreased by $880 thousand (12.7%) from December 31, 2024, to March 31, 2025[12] Condensed Consolidated Interim Statements of Comprehensive Loss The statements of comprehensive loss indicate a significant year-over-year decline in revenues and gross profit, resulting in a slight increase in net loss for the quarter Condensed Consolidated Interim Statements of Comprehensive Loss (U.S. dollars in thousands) | Item | Three-Months Ended March 31, 2025 | Three-Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenues | 1,479 | 2,984 | | Cost of revenues | (1,059) | (1,788) | | Gross profit | 420 | 1,196 | | Total operating expenses | (1,480) | (2,267) | | Operating loss | (1,060) | (1,071) | | Net loss | (1,060) | (1,016) | | Total comprehensive loss | (1,039) | (1,123) | | Basic and diluted loss per share | (0.51) | (1.88) | - Revenues decreased by 50.4% year-over-year, from $2,984 thousand in Q1 2024 to $1,479 thousand in Q1 2025[13] - Gross profit declined by 64.9% year-over-year, from $1,196 thousand in Q1 2024 to $420 thousand in Q1 2025[13] - Net loss increased slightly to $1,060 thousand in Q1 2025 from $1,016 thousand in Q1 2024, while total comprehensive loss improved from $(1,123) thousand to $(1,039) thousand[13] Condensed Consolidated Interim Statements of Changes in Stockholders' Equity Total stockholders' equity decreased primarily due to a comprehensive loss, partially offset by share issuance and stock-based compensation Condensed Consolidated Interim Statements of Changes in Stockholders' Equity (U.S. dollars in thousands) | Item | Balance as of Jan 1, 2025 | Stock-based compensation | Issuance of shares | Total comprehensive loss | Balance as of Mar 31, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Common stock (Number) | 2,040,159 | 10,000 | 60,589 | - | 2,110,748 | | Common stock (Amount) | 2 | * | * | - | 2 | | Additional paid-in capital | 71,608 | 22 | 137 | - | 71,767 | | Accumulated other comprehensive loss | (825) | - | - | 21 | (804) | | Accumulated deficit | (63,876) | - | - | (1,060) | (64,936) | | Total stockholders' equity | 6,909 | 22 | 137 | (1,039) | 6,029 | - Total stockholders' equity decreased from $6,909 thousand at January 1, 2025, to $6,029 thousand at March 31, 2025, primarily due to a total comprehensive loss of $1,039 thousand, partially offset by $137 thousand from share issuance and $22 thousand from stock-based compensation[15] Condensed Consolidated Interim Statements of Cash Flows Net cash used in operating activities decreased, while net cash provided by financing activities significantly declined year-over-year Condensed Consolidated Interim Statements of Cash Flows (U.S. dollars in thousands) | Cash Flow Activity | Three-Months Ended March 31, 2025 | Three-Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | (1,268) | (1,417) | | Net cash provided by investing activities | - | 60 | | Net cash provided by financing activities | 95 | 407 | | Effect of exchange rate fluctuations | (12) | (103) | | Decrease in cash, cash equivalents and restricted cash | (1,185) | (1,053) | | Cash, cash equivalents and restricted cash at end of period | 3,695 | 1,211 | - Net cash used in operating activities decreased by $149 thousand (10.5%) from $1,417 thousand in Q1 2024 to $1,268 thousand in Q1 2025[18] - Net cash provided by financing activities significantly decreased from $407 thousand in Q1 2024 to $95 thousand in Q1 2025, primarily from proceeds from share issuance[18] Notes to Condensed Consolidated Interim Financial Statements These notes provide critical context to the financial statements, detailing the company's business, significant accounting policies, financial instruments, stock-based compensation, contingencies, goodwill, operating segments, and significant events during and subsequent to the reporting period, including a going concern uncertainty and recent acquisition Note 1 - General This note describes the company's business, its going concern uncertainty, management's plans to address it, and the immaterial impact of geopolitical conflicts - My Size, Inc. develops AI-driven measurement technologies for apparel e-commerce, expanded by acquiring Naiz Fit (sizing solutions) and Orgad (omnichannel e-commerce platform)[20] - The company has an accumulated deficit of $64,936 thousand and expects continued losses and negative cash flows, raising substantial doubt about its ability to continue as a going concern for more than 12 months[25] - Management plans to address going concern uncertainty through continued commercialization, technology/business acquisitions, and securing sufficient financing via equity sales, debt, or strategic partnerships[26] - Geopolitical conflicts in Israel and Russia/Ukraine have had an immaterial effect on operations so far, attributed to the company's global footprint, Spanish hub for sizing solutions, and use of Amazon fulfillment for Orgad's inventory[29][30][32] Note 2 - Significant Accounting Policies This note confirms the financial statements adhere to GAAP and SEC rules, with consistent accounting policies from the prior annual statements - The unaudited condensed consolidated interim financial statements are prepared in accordance with GAAP for interim financial information and SEC rules, with all intercompany accounts and transactions eliminated[34] - Significant accounting policies applied in these interim statements are identical to those used in the latest annual financial statements for the year ended December 31, 2024[35] Note 3 - Financial Instruments This note details the fair value approximation of financial instruments and the gain recognized from marketable securities - The carrying amounts of cash, receivables, payables, and short/long-term loans approximate their fair value due to short-term maturities[36] - Investment in marketable securities (MYCB shares) is measured at fair value (Level 2) based on quoted market prices with a discount for sales restrictions[37] - The company recognized a gain of $7 thousand from marketable securities for the three months ended March 31, 2025, compared to $5 thousand in the prior year period[39] Note 4 - Stock Based Compensation This note details a significant decrease in stock-based compensation expense year-over-year and recent restricted stock and option grants Stock-Based Compensation Expense (U.S. dollars in thousands) | Expense Category | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Cost of revenues | - | 1 | | Research and development | 6 | 13 | | Sales and marketing | - | 16 | | General and administrative | 16 | 111 | | Total | 22 | 141 | - Total stock-based compensation expense decreased significantly from $141 thousand in Q1 2024 to $22 thousand in Q1 2025, primarily due to reductions in general and administrative, sales and marketing, and R&D categories[40] - In February 2024, the company granted restricted common stock awards to executives and directors, and options to purchase 6,875 shares to other employees, with a total compensation cost of approximately $314 thousand to be recognized over 3 years[42][43] Note 5 - Contingencies and Commitments This note discloses a legal complaint for approximately $510 thousand related to a warehouse fire, with the outcome currently uncertain - The company is a defendant in a legal complaint for NIS 1,895,345 (approximately $510 thousand) filed in July 2024, alleging damages from a fire at Orgad's warehouse in January 2023. The company cannot evaluate the chances of the claim's success at this preliminary stage[47] Note 6 - Goodwill This note shows a decrease in goodwill allocated to SaaS Solutions, while the fashion and equipment e-commerce platform's goodwill remained constant Goodwill by Reporting Unit (U.S. dollars in thousands) | Reporting Unit | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | SaaS Solutions | - | 609 | | Fashion and equipment e-commerce platform | 133 | 133 | | Total | 133 | 742 | - Goodwill allocated to SaaS Solutions decreased from $609 thousand in March 2024 to $0 in March 2025, while goodwill for the fashion and equipment e-commerce platform remained constant at $133 thousand[48] Note 7 – Operating Segments This note outlines the company's two operating segments and details their revenue and loss performance for the reporting periods - The company operates in two segments: (i) fashion and equipment e-commerce platform (Orgad) and (ii) SaaS based innovative artificial intelligence driven measurement solutions (SaaS Solutions, including My Size Israel, My Size LLC, and Naiz)[50] Segment Performance for Three Months Ended March 31, 2025 (U.S. dollars in thousands) | Metric | Fashion and equipment e-commerce platform | SaaS Solutions | Total | | :--- | :--- | :--- | :--- | | Revenues from external customers | 1,307 | 172 | 1,479 | | Cost of revenues | (1,051) | (8) | (1,059) | | Research and development expenses | - | (82) | (82) | | Segment loss | (825) | (235) | (1,060) | Segment Performance for Three Months Ended March 31, 2024 (U.S. dollars in thousands) | Metric | Fashion and equipment e-commerce platform | SaaS Solutions | Total | | :--- | :--- | :--- | :--- | | Revenues from external customers | 2,807 | 177 | 2,984 | | Cost of revenues | (1,766) | (22) | (1,788) | | Research and development expenses | - | (132) | (132) | | Segment loss | (582) | (489) | (1,071) | - The fashion and equipment e-commerce platform segment saw a significant revenue decrease from $2,807 thousand in Q1 2024 to $1,307 thousand in Q1 2025, while SaaS Solutions revenues remained relatively stable[54][56] Note 8 – Significant events during the reporting period. This note details the At The Market Offering Agreement initiated in January 2025 and shares sold during the quarter - On January 21, 2025, the company entered an At The Market Offering Agreement to sell up to $4.1 million in common stock. As of March 31, 2025, 60,589 shares were sold for approximately $142 thousand in gross proceeds[58] Note 9 – Events subsequent to the balance sheet date This note reports additional share sales under the ATM agreement and the acquisition of the 'Percentil' production unit by a new subsidiary - As of May 15, 2025, the company sold an additional 992,328 shares under the At The Market Offering Agreement, generating approximately $1,995 thousand in aggregate gross proceeds[62] - On May 9, 2025, a newly-formed subsidiary, New Percentil, S.L., acquired the 'Percentil' production unit from Casi Nuevo Kids, S.L. for approximately $679 thousand, including warehouse infrastructure, logistics equipment, an AI-powered pricing engine, inventory, and the transfer of 17 employees[62][60][75][76][77] Item 2. Management's Discussion & Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance and condition, highlighting a significant decrease in revenues and gross profit year-over-year, alongside reductions in operating expenses. It also discusses the company's business model, recent acquisition, macroeconomic factors, and critical liquidity concerns, including substantial doubt about its ability to continue as a going concern Overview This overview describes the company's business model, focusing on AI-driven SaaS measurement solutions and its strategy to consolidate sizing solutions for the fashion industry - The company operates an omnichannel e-commerce platform and provides AI-driven SaaS measurement solutions, primarily generating revenue as a third-party seller on Amazon[70] - Current focus is on commercializing Naiz Fit technology, which uses a widget and proprietary Garment Modelling to help shoppers find accurate apparel sizes, aiming to reduce returns and increase conversion rates[71][72] - The company is positioning itself as a consolidator of sizing solutions and new digital experiences for the fashion industry, with offerings like First Look Smart Mirror, Smart Catalog, and True Feedback[73] New Percentil This section details the acquisition of the 'Percentil' production unit, including its assets and the transfer of key employees, by a new subsidiary - On May 9, 2025, the company's new subsidiary, New Percentil, S.L., acquired the 'Percentil' production unit from Casi Nuevo Kids, S.L. for approximately $679 thousand[74][77] - The acquisition includes warehouse infrastructure, process and logistics equipment (e.g., proprietary quality control, picking systems), an AI-powered pricing engine, garment assessment tools, computer equipment, and inventory[75] - As part of the acquisition, 17 former employees of Casi Nuevo, including its chief executive officer and chief marketing officer, transferred to New Percentil[76] Macroeconomic and Geopolitical Environment This section discusses the company's exposure to global economic and geopolitical risks, noting that current conflicts have not materially impacted operations or financial results - The company's global operations expose it to economic downturns, foreign currency volatility, inflation, interest rate changes, trade control laws, tariffs, and geopolitical conflicts[79] - To date, geopolitical conflicts (Russia-Ukraine, Middle East) have not materially limited product development or support, nor had a material impact on financial results, liquidity, or cash flows[81] - The business model provides some resilience, but the company continues to monitor the direct and indirect impacts of these circumstances[82] Results of Operations This section analyzes the significant year-over-year decrease in revenues and gross profit, alongside reductions in operating expenses, leading to a slight increase in net loss Results of Operations (Three Months Ended March 31, U.S. dollars in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | 1,479 | 2,984 | (1,505) | -50.4% | | Cost of revenues | (1,059) | (1,788) | 729 | -40.8% | | Gross profit | 420 | 1,196 | (776) | -64.9% | | Research and development expenses | (82) | (132) | 50 | -37.9% | | Sales and marketing | (567) | (1,102) | 535 | -48.5% | | General and administrative | (831) | (1,033) | 202 | -19.5% | | Operating loss | (1,060) | (1,071) | 11 | -1.0% | | Financial income (expenses), net | - | 55 | (55) | -100.0% | | Net loss | (1,060) | (1,016) | (44) | +4.3% | - Revenues decreased by $1,505 thousand (50.4%) for Q1 2025 compared to Q1 2024, primarily due to a decrease in Orgad sales[86] - Operating expenses (R&D, Sales & Marketing, G&A) collectively decreased by $787 thousand, leading to a slight improvement in operating loss by $11 thousand (1%)[88][89][90][91] - Net loss increased by $44 thousand (4.3%) to $1,060 thousand for Q1 2025, mainly due to the decline in financial income (expenses), net[92][93] Liquidity and Capital Resources This section details the decrease in cash, cash equivalents, and restricted cash, the reduction in cash used in operations, and the ongoing need for additional capital, raising going concern doubts - Cash, cash equivalents, and restricted cash decreased from $4,880 thousand at December 31, 2024, to $3,695 thousand at March 31, 2025[95] - Net cash used in operating activities decreased to $1,268 thousand for Q1 2025, from $1,417 thousand in Q1 2024, primarily due to a decrease in net loss offset by changes in account receivables and trade payables[97] - The company raised approximately $1,995 thousand in gross proceeds from an At The Market Offering Agreement as of May 15, 2025[96][62] - Management has substantial doubt about the company's ability to fund operations for more than 12 months, necessitating additional capital, which may not be available on reasonable terms or at all, posing a risk of substantial dilution to current stockholders[99][100][101] Critical Accounting Estimates This section highlights that financial statement preparation involves significant management estimates and assumptions, particularly for revenue recognition - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, with actual results potentially differing under various conditions[105] - Revenue from contracts with customers is identified as a critical accounting policy, requiring significant management estimates and assumptions[106] Item 3. Quantitative and Qualitative Disclosure About Market Risk As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[107] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2025, and concluded they were effective. No material changes in internal control over financial reporting occurred during the quarter - Management, under the supervision of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[109] - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[111] - Control systems provide only reasonable, not absolute, assurance of achieving objectives due to inherent limitations and resource constraints[110] PART II - OTHER INFORMATION This section covers legal proceedings, updated risk factors, unregistered sales of equity, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings The company is involved in a legal complaint filed by Shimon Shukron for approximately $510,000, alleging damages from a fire at Orgad's warehouse. The company has filed a defense but cannot yet evaluate the claim's success Shimon Shukron This section details a legal complaint for approximately $510 thousand against the company, alleging damages from a warehouse fire, with the outcome currently uncertain - The company was served with a legal complaint in July 2024 for NIS 1,895,345 (approximately $510 thousand) by Shimon Shukron[115] - The plaintiff alleges heavy damage to his business, structure, contents, inventory, and loss of profits due to a fire at Orgad's warehouse in January 2023[115] - The company filed its statement of defense in September 2024 but cannot evaluate the claim's success at this preliminary stage due to insufficient documentation from the plaintiff[115] Item 1A. Risk Factors This section updates risk factors, primarily focusing on the significant political, economic, and military conditions in Israel, where the company's headquarters and some operations are located. It details the ongoing conflicts, potential for escalation, and the associated risks to business operations, capital raising, and market price of common stock, while noting that operations have not been adversely affected so far - The company's operations in Israel expose it to political, economic, and military conditions in the region, including ongoing armed conflicts and hostilities, which could adversely affect business and capital raising[117][118][119] - Despite the ongoing war and hostilities since October 7, 2023, the company's operations have not been adversely affected, largely due to most operations being in Spain[120] - Future escalation of conflicts, economic boycotts against Israel, and internal political instability within Israel could negatively impact the company's business, financial condition, and stock price[120][122][123][124][125] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds occurred during the reporting period[127] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report during the period - No defaults upon senior securities occurred during the reporting period[128] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[129] Item 5. Other information No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the quarter ended March 31, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025[130] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, as well as Inline XBRL documents - Exhibits include certifications from the Principal Executive Officer (31.1, 32.1) and Principal Financial Officer (31.2, 32.2) as required by the Sarbanes-Oxley Act of 2002[131] - Various Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbases, and Cover Page Interactive Data File) are filed as exhibits[131] SIGNATURES The report is signed by Ronen Luzon, Chief Executive Officer, and Oren Elmaliah, Chief Financial Officer, on May 15, 2025, certifying its submission - The report was signed on May 15, 2025, by Ronen Luzon, Chief Executive Officer, and Oren Elmaliah, Chief Financial Officer[134]