My Size, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Amounts are in U.S. dollars, in thousands, except per-share and share data. The company develops AI-driven measurement and sizing solutions and operates an omnichannel e-commerce business; it says almost all revenue to date has come from third-party sales on Amazon.
Financial results
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $2,984 | $720 |
| Gross profit (loss) | $1,196 | $(427) |
| Gross margin | 40.1% | Not meaningful; gross loss |
| Operating loss | $(1,071) | $(2,492) |
| Net loss | $(1,016) | $(2,654) |
| Basic and diluted loss per share | $(1.88) | $(13.42) |
| Net cash used in operating activities | $(1,417) | $(2,313) |
- Revenue rose about 314%, primarily from increased Orgad sales. The fashion and equipment e-commerce platform generated $2,807 of revenue and a $582 operating loss; SaaS Solutions generated $177 of revenue and a $489 operating loss.
- Cost of revenue was $1,788, up from $1,147. Q1 2023 included a $643 inventory write-down related to an Orgad warehouse fire, contributing to the prior-period gross loss.
- Operating expenses totaled $2,267, versus $2,065: R&D declined to $132 from $342, sales and marketing increased to $1,102 from $679, and G&A was $1,033 versus $1,044. Management attributed higher sales and marketing expense mainly to Amazon fees as sales grew.
- Financial income was $55 versus expense of $146. Q1 2024 had no equity-method loss or income tax benefit, compared with a $34 equity-method loss and an $18 tax benefit in Q1 2023.
Liquidity, debt and balance sheet
- At March 31, cash and cash equivalents were $1,136, restricted cash was $75, and total cash, cash equivalents and restricted cash were $1,211, down from $2,264 at December 31, 2023. Operating cash use was partly offset by $407 of financing cash flow, including a $500 loan, and $60 of investing cash inflow.
- Current assets were $4,754 and current liabilities $2,699. Total liabilities were $2,917; bank overdraft and short-term loans were $582 and long-term loans were $218. The company received a $500 commercial loan in February at a fixed 6% rate, repayable in installments over six months.
- Management expects continuing losses and negative operating cash flow and says existing cash is insufficient to fund operations for more than 12 months. The filing identifies substantial doubt about the company’s ability to continue as a going concern; additional financing may be unavailable or dilutive.
Changes, outlook and risks
- Management reported a 57% reduction in operating loss and a lower net loss year over year, alongside sharply higher revenue. The prior-year comparison is affected by the $643 warehouse-fire inventory write-down.
- No formal revenue or earnings guidance is provided. Management plans to commercialize products and seek equity, debt or strategic-partner financing. It warns that failure to raise capital could require curtailing plans, selling assets or ceasing operations.
- In February, the company paid $700 to Orgad’s former owners, net of a $275 settlement amount. It also gave notice to end an office lease early, reducing the recorded right-of-use asset and lease liabilities by $181. The Brazil joint venture was closed in March, with $38 of proceeds from the investment reported in investing activities.
- The Hamas-Israel war had not materially affected operations or results as of the filing, according to management; the company says most operations are in Spain. Escalation could nevertheless disrupt business or financing. The company has shut down Russian operations and expects to close that subsidiary.
- A long-running North Empire dispute remains pending. The company seeks at least $616, while North Empire’s counterclaims allege damages of approximately $10,959. The company says it believes the counterclaims are more likely than not to be denied; a pre-trial conference was scheduled for May 31, 2024. The filing does not state a clear estimated loss or accrual for this matter.
- After quarter-end, a 1-for-8 reverse stock split took effect on April 19, 2024. The company reported that Nasdaq confirmed on May 7 that it had regained minimum bid-price compliance. These are subsequent events, not Q1 operating results.
Important facts for investors to verify
- Available financing, cash runway and the company’s going-concern status, including repayment of the six-month loan.
- Whether Orgad sales growth and the reported gross margin can be sustained, and the company’s reliance on Amazon and limited SaaS revenue.
- The status and potential financial effect of the North Empire litigation and counterclaims.
- Post-split share count and potential dilution from equity awards, warrants and future fundraising. The filing reports 641,459 shares outstanding at March 31 and 641,498 as of May 10, 2024, after reflecting the reverse split.
- Whether regional hostilities or other operating risks affect staff, supply chains, sales or access to capital.