My Size Inc
For the period ended Mar 31, 2024. Filed May 15, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 15, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Notes to Condensed Consolidated Interim Financial Statements
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
Note 1 -General
| a. | My Size, Inc (the “Company”). is developing unique measurement technologies based on algorithms with applications in a variety of areas, from the apparel e-commerce market, to the courier services market and to the Do It Yourself (“DIY”) smartphone and tablet apps market. The technology is driven by proprietary algorithms, which are able to calculate and record measurements in a variety of novel ways. Following the acquisition of Naiz Fit Bespoke Technologies, S.L (“Naiz”) in October 2022, the Company expanded its offering outreach and customer base. Following the acquisition of Orgad International Marketing Ltd. (“Orgad”) in February 2022, the Company also operates an omnichannel e-commerce platform. The Company has six subsidiaries, My Size Israel 2014 Ltd (“My Size Israel”), Topspin Medical (Israel) Ltd., Orgad and Rotrade Ltd all of which are incorporated in Israel, My Size LLC which was incorporated in the Russian Federation and Naiz., a limited liability company incorporated under the laws of Spain. References to the Company include the subsidiaries unless the context indicates otherwise. My Size, Inc., was incorporated and commenced operations in September 1999, as Topspin Medical Inc. (“Topspin”), a private company registered in the State of Delaware. In December 2013, the Company changed its name to Knowledgetree Ventures Inc. Subsequently, in February 2014, the Company changed its name to My Size, Inc. Topspin was engaged, through its Israeli subsidiary, in research and development in the field of cardiology and urology. From September 1, 2005 to March 27, 2024, the Company’s common stock were traded on the Tel Aviv Stock Exchange. |
| b. | Since inception, the Company incurred significant losses and negative cash flows from operations and had an accumulated deficit of $60,897. The Company has financed its operations mainly through fundraising from various investors. The Company’s management expects that the Company will continue to generate losses and negative cash flows from operations for the foreseeable future. Based on the projected cash flows and cash balances as of March 31, 2024, management is of the opinion that its existing cash will be sufficient to fund operations for a period less than 12 months. As a result, there is substantial doubt about the Company’s ability to continue as a going concern. Management’s plans include the continued commercialization of the Company’s products and securing sufficient financing through the sale of additional equity securities, debt or capital inflows from strategic partnerships. Additional funds may not be available when the Company needs them, on terms that are acceptable to it, or at all. If the Company is unsuccessful in commercializing its products and securing sufficient financing, it may need to cease operations. 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. On April 15, 2024, the Company’s board of directors approved a 1-for-8 reverse stock split of the Company’s issued and outstanding shares of common stock. The reverse stock split was effected on April 19, 2024 with the Company’s shares beginning trading on a post-split basis on the Nasdaq Capital Market (“Nasdaq”) on April 23, 2024. The exercise prices of the Company’s outstanding warrants and net loss per share amounts were adjusted retroactively for all periods presented in these financial statements. |
| c. | In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas and other terrorist organizations in parallel to their continued rocket and terror attacks. In addition, since the commencement of these events, there have been continued hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization) and southern border (with the Houthi movement in Yemen). It is possible that hostilities with Hezbollah in Lebanon will escalate, and that other terrorist organizations, including Palestinian military organizations in the West Bank as well as other hostile countries will join the hostilities. In addition, Iran recently launched a direct attack on Israel involving hundreds of drones and missiles and has threatened to continue to attack Israel and is widely believed to be developing nuclear weapons. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. Such clashes may escalate in the future into a greater regional conflict. |
| The war with Hamas has had an immaterial effect on its operations and financial results so far. This is attributable to its global footprint and the offices in Spain which has become a hub for the Company’s sizing solutions business. The majority of Orgad’s inventory utilizes fulfillment by Amazon rather than fulfilling directly. Inventory is now maintained and orders are shipped from regional Amazon warehouses, thereby reducing exposure to inventory risk and contributing to operating efficiencies. On February 24, 2022, Russia invaded Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region. Following Russia’s actions, various countries, issued broad-ranging economic sanctions against Russia. Such sanctions included, among other things, a prohibition on doing business with certain Russian companies, officials and oligarchs; a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications (SWIFT) electronic banking network that connects banks globally; and restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions. The Company shut down its operation in Russia and expects to close down the subsidiary in the near future therefore the impact from the current situation is very limited. |
Note 2 -Significant Accounting Policies
| a. | Unaudited condensed consolidated financial statements: |
| The accompanying unaudited condensed consolidated interim financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and 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. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2024. | |
| These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023. | |
| b. | Significant Accounting Policies: |
| The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements. | |
| c. | Critical accounting estimates: |
| ASC 350 requires goodwill to be tested for impairment at the reporting unit level at least annually, or between annual tests under certain circumstances, and written down when impaired. Goodwill is tested for impairment by comparing the fair value of the reporting unit with it carrying value. | |
| Impairment charge of $671 as the carrying value of SaaS Solution reporting segment exceeded its expected fair value, as determined using a discounted cash flow model which is primarily based on management’s future revenue and cost estimates. This impairment charge was recorded within Impairment of Goodwill, within the Consolidated Statement of Operations, and within the SaaS Solution segment for the year ended December 31, 2023. | |
| During the first quarter of 2024, there was no more likely than not indication of impairment, therefore no further impairment testing was required. | |
| d. | Recent adopted accounting pronouncements: |
| In June 2022, the FASB issued ASC 2022-03 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring its fair value. The ASU also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The ASU also introduces new disclosure requirements for equity securities subject to contractual sale restrictions. The ASU do not have a material impact on the Company consolidated financial statements. | |
| In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock and amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related earnings per share guidance. This standard became effective for the Company beginning on January 1, 2024. Adoption is either a modified retrospective method or a fully retrospective method of transition. The Company adopted this guidance effective January 1, 2024, and the adoption of this standard did not have a material impact on its consolidated financial statements. |
Note 3 -Financial Instruments
The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, other receivables, 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.
Due to sales restrictions on the sale of the iMine shares, 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.
| Fair value hierarchy | |||
|---|---|---|---|
| Level 1 | Level 2 | Level 3 | |
| Financial assets | |||
| Investment in marketable securities (*) | - | 11 | - |
Note 3 - Financial Instruments (Cont.)
| Fair value hierarchy | |||
|---|---|---|---|
| Level 1 | Level 2 | Level 3 | |
| Financial assets | |||
| Investment in marketable securities (*) | - | 6 | - |
| (*) | For the three-month period ended March 31, 2024 and 2023, the Company recognized gain (loss) (based on quoted market prices with a discount due to security restrictions on iMine shares) of the marketable securities was $5 and $(14), respectively. |
|---|
Note 4 -Stock Based Compensation
The stock-based expense equity awards recognized in the financial statements for services received is related to Cost of Revenues, Research and Development, Sales and Marketing and General and Administrative expenses as shown in the following table:
| Three months ended March 31, | ||
|---|---|---|
| 2024 | 2023 | |
| Stock-based compensation expense – Cost of revenues | 1 | 9 |
| Stock-based compensation expense - Research and development | 13 | 23 |
| Stock-based compensation expense - Sales and marketing | 16 | 40 |
| Stock-based compensation expense - General and administrative | 111 | 64 |
| Stock-based compensation expense | 141 | 136 |
Note 4 - Stock Based Compensation (Cont.)
Stock Option Plan for Employees:
In March 2017, the Company adopted the My Size, Inc. 2017 Equity Incentive Plan (the “2017 Employee Plan”) pursuant to which the Company’s Board of Directors may grant stock options and other equity awards to officers and key employees. The total number of shares of common stock which may be granted to directors, officers, employees under this plan, is limited to 130,000 shares. Stock options can be granted with an exercise price equal to or less than the stock’s fair market value at the date of grant.
The fair value of each option award is estimated on the date of grant using the Binomial option-pricing model that used the weighted average assumptions in the following table. The risk free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant
| 2024 Grants | |
|---|---|
| Dividend yield | 0% |
| Expected volatility | 86.22% |
| Risk-free interest | 4.3% |
| Contractual term | 2.0-2.8 |
On December 27, 2023, the Company’s stockholders approved an increase in the shares available for issuance under the 2017 Equity Incentive Plan from 36,125 shares to 130,000 shares.
On February 14, 2024, the Compensation Committee of the Company granted restricted common stock awards under the Company’s 2017 Equity Incentive Plan to Ronen Luzon, Or Kles and Billy Pardo, pursuant to which they were issued 37,500 restricted shares,18,750 restricted shares and 18,750 restricted shares, respectively. The restricted shares shall vest in three equal installments on January 1, 2025, January 1, 2026 and January 1, 2027, conditioned upon continuous employment with the Company and subject to accelerated vesting upon a change in control of the Company. On the same day, the Company granted a total of 10,000 restricted stock units (“RSUs”) to its directors that will vest on January 1, 2025 andfive-years options to purchase up to 6,875 shares of common stock to other employees of the Company at an exercise price of $3.832 per share. The options vesting period is over three years in three equal portions from the vesting commencement date.
During the three-month period ended March 31, 2024, the Company granted options, restricted stock and RSUs to purchase 91,875 shares of common stock under the 2017 Employee Plan (as described above), no options were exercised and no options were expired.
The total stock option compensation expense for employees during the three-month period ended March 31, 2024 and 2023 which was recorded was $67, and $101, respectively.
The total stock option compensation expense relating to the Orgad acquisition during the three-month period ended March 31, 2024 and 2023 which was recorded was $3 and $35, respectively.
Options issued to consultants:
In July 2023, the Company entered into a six month agreement (the “Consultant Agreement”) with a consultant (the “Consultant”) to provide services to the Company, including assisting the Company to promote, market and sell the Company’s technology to potential customers and make strategic introductions and inquiries with interested parties in the financial community. Pursuant to the Consultant Agreement and in partial consideration for such consulting services, the Company agreed to issue to Consultant(i) 5,000 shares of restricted common stock of the Company, (ii) a warrant to purchase 12,500 shares of common stock at an exercise price of $4.00 per share and exercisable for a term of 36 months from the date of issuance, and (iii) a warrant to purchase 12,500 shares of common stock at an exercise price of $6.00 per share and exercisable for a term of 36 months from the date of issuance.
The issuance was approved by the Company’s board of directors in February 2024.
During the three-month period ended March 31, 2024 and 2023, the Company recorded $71, and $0, respectively, as stock-based equity awards with respect to the Consultant.
Note 5 -Contingencies and Commitments
On August 7, 2018, the Company commenced an action against North Empire LLC (“North Empire”) in the Supreme Court of the State of New York, County of New York for breach of a Securities Purchase Agreement (the “Agreement”) in which it is seeking damages in an amount to be determined at trial, but in no event less than $616. On August 2, 2018, North Empire filed a Summons with Notice against the Company, also in the same Court, in which they allege damages in an amount of $11,400 arising from an alleged breach of the Agreement. On September 6, 2018 North Empire filed a Notice of Discontinuance of the action it had filed on August 2, 2018. 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 to North Empire causing damage to North Empire in the amount of $10,958. North Empire also filed a third-party complaint against the Company’s CEO and now former Chairman of the Board 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, the Company’s CEO and now former Chairman of the Board filed a motion to dismiss North Empire’s third-party complaint. On January 6, 2020, the Court granted the motion and dismissed the third-party complaint. Discovery has been completed and both parties have filed motions for summary judgment in connection with the claims and counterclaims. On December 30, 2021, the Court denied both the Company and North Empire’s motions for summary judgment, arguing there were factual issues to be determined at trial. On January 26, 2022, the Company filed a notice of appeal of the summary judgment decision. On February 3, 2022, the Company filed a motion to reargue the Court’s decision denying the Company’s motion for summary judgment. North Empire will file its opposition papers on or before March 31, 2022, and the Company will file reply papers on April 29, 2022. On or about September 12, 2022, the Court issued its Decision and Order denying the Company’s motion to reargue. North Empire filed its opposing brief on December 7, 2022. Both sides were given an opportunity to file a reply brief. The Company filed a reply brief on January 4, 2023 and North Empire filed its reply brief on January 13, 2023. The Appellate Court has scheduled oral argument for the appeal for February 7, 2023. Oral argument was held before the Appellate Court on February 7, 2023. On or about February 28, 2023, the Appellate Court filed its Decision and Order, which affirmed the lower court’s decisions regarding both the Company and North Empire’s motions for summary judgment and sent the case back to the Supreme Court. On March 13, 2023, the Supreme Court referred the case to its Alternative Dispute Program and ordered the cases to mediate. The mediation was held on July 26, 2023 and various settlement options were explored but the mediation did not lead to settlement. On December 21, 2023, a conference with the Court was held and the parties were given dates for various pre-trial filings. The next pre-trial conference is scheduled to be held on May 31, 2024, at which point the Court will schedule the matter for trial on the ultimate claims. The Company intends to vigorously defend any claims made by North Empire. The Company believes it is more likely than not that the counterclaims will be denied.
Note 6 -Goodwill
During the third quarter of 2023, the Company merged its two software-as-a-service (“SaaS”) segments into one segment (see Note 7), which also resulted in a change in the Company’s composition of reporting units. In the Company’s financial reporting for March 31, 2024, comparative information for 2023 was restated to reflect the changes in reportable segments.
After the restructuring, the aggregate carrying amounts of goodwill allocated to each reporting unit are as follows:
| 2024 | 2023 | |
|---|---|---|
| SaaS Solutions | 609 | 1,276 |
| Fashion and equipment e-commerce platform | 132 | 136 |
| Total | 741 | 1,412 |
Note 7 –Operating Segments
Effective July 1, 2023 the Company merged its two SaaS segments into one segment, reducing its reportable segments from three to the following two segments: (i) fashion and equipment e-commerce platform, and (ii) SaaS based innovative artificial intelligence driven measurement solutions. This realignment reflects the way resources are allocated and performance is assessed by the Chief Operating Decision Maker. The fashion and equipment e-commerce platform which represents Orgad’s activity that was acquired by the Company in 2022, mainly operates on Amazon. The SaaS based innovative artificial intelligence driven measurement solutions, or SaaS Solutions operating segment consists of My Size Inc., My Size Israel, My Size LLC and Naiz Fit.
In the Company’s financial reporting for March 31, 2024, comparative information for 2023 was restated to reflect the changes in reportable segments.
Information related to the operations of the Company’s reportable operating segments is set forth below:
| Fashion and equipment e-commerce platform | SaaS Solutions | Total | |
|---|---|---|---|
| Revenues from external customers | 2,807 | 177 | 2,984 |
| Operating loss | (582) | (489) | (1,071) |
| Significant non-cash items: | |||
| Amortization | (27) | (49) | (76) |
| Fashion and equipment e-commerce platform | Saas Solution | |
|---|---|---|
| As of March 31, 2024: | ||
| Assets | 4,251 | 2,419 |
| Fashion and equipment e-commerce platform | SaaS Solutions | Total | |
|---|---|---|---|
| Revenues from external customers | 578 | 142 | 720 |
| Operating loss | (1,677) | (815) | (2,492) |
| Significant non-cash items: | |||
| Amortization | (27) | (46) | (73) |
| Fashion and equipment e-commerce platform | Saas Solution | |
|---|---|---|
| As of March 31, 2023: | ||
| Assets | 5,236 | 3,232 |
| Fashion and equipment e-commerce platform | SaaS Solutions | Total | |
|---|---|---|---|
| Revenues from external customers | 6,367 | 629 | 6,996 |
| Operating loss | (3,356) | (3,385) | (6,741) |
| Significant non-cash items: | |||
| Amortization | (111) | (191) | (302) |
| Impairment of goodwill | - | (671) | (671) |
Note 7 – Operating Segments (Cont.)
| Fashion and equipment e-commerce platform | SaaS Solutions | |
|---|---|---|
| As of December 31, 2023: | ||
| Assets | 6,352 | 2,639 |
Long-lived assets, which includes investment in JV, property, plant and equipment and right of use assets, by geographic region are as follows:
| March 31, | ||
|---|---|---|
| 2024 | 2023 | |
| Israel | 376 | 995 |
| Spain | 1,521 | 2,393 |
| Other | - | 66 |
| Total Assets | 1,897 | 3,454 |
For the three-month period ended March 31, 2024,80.06% of the Company’s total revenues were generated in the United states, no other foreign destination comprised 10.0% or more of the Company’s total revenues.
Note 8 –Significant events during the reporting period
| a. | Further to note 16 to the Company’s 10-K for the year ended December 31, 2023, the Company agreed to pay to the former owners of Orgad, on the two-year and the three-year anniversary anniversaries of the closing of the transaction pursuant to which the Company acquired 100% of the shares and voting interests in Orgad, $350 in each of these years provided that in the case of the second and third instalments certain revenue targets are met and subject further to certain downward post-closing adjustment. In February 2024, the amount of $700 was fully paid to the former owners of Orgad net of a settlement amount of $275. |
| b. | On January 8, 2024, the Company provided a notice of six month termination to the lessor that the office lease agreement will end on July 8, 2024 instead of August 20, 2025. |
| As a result the Company reduced its “Right of use asset” against current liabilities as “Operating lease liability” and in the non-current liabilities as “Operating lease liability – long term” on the Company’s March 31, 2024 consolidated balance sheets in an amount of $181. | |
| c. | During February 2024, the Company received a loan from commercial lender in an amount of $500. The loan bears interest at a fix rate of 6% of the principal and payable in installments during six month term. |
Note 9 –Subsequent events
| a. | On April 15, 2024, the Company announced that the Board approved a one-for-eight reverse stock split of its common stock (the “Reverse Stock Split”). Upon the Reverse Stock Split every eight shares of the Company’s issued and outstanding common stock is automatically converted into one share of common stock, without any change in the par value per share. The reverse stock split was effected on April 19, 2024 with the Company’s shares beginning trading on a post-split basis on the Nasdaq on April 23, 2024. In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding options and warrants entitling the holders to purchase common stock. Any fraction of a share of common stock that would otherwise have resulted from the Reverse Stock Split was rounded up to the next whole number. |
| b. | On November 3, 2023, the Company was notified, by the Nasdaq Listing Qualifications that the Company is not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) (the “Rule”) for continued listing on the Nasdaq. The Notification Letter provided that the Company had 180 calendar days, or until May 1, 2024, to regain compliance with the Rule. To regain compliance, the bid price of the Company’s common stock must have had a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days. On May 7, 2024, the Company received a letter from Nasdaq that, for the 10 consecutive business days from April 23, 2024 to May 6, 2024, the closing bid price of the Company’s common stock had been at $1.00 per share or greater. Accordingly, the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2) and Nasdaq considers the prior bid price deficiency matter now closed. |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.