My Size, Inc. — 2023 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023. The filing is an annual report, not a standalone fourth-quarter report. Unless stated otherwise, financial amounts below are in U.S. dollars; financial statements present amounts in thousands.
Business context
My Size combines an e-commerce retailer, Orgad, with AI-driven SaaS sizing and fit solutions, including Naiz Fit and MySizeID. The company says it has generated almost all revenue to date through third-party selling on Amazon, while its strategic focus is commercializing Naiz Fit’s software platform for fashion retailers.
Financial performance
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $6.996 million | $4.459 million |
| Gross profit | $2.731 million | $0.634 million |
| Gross margin | 39.0% | 14.2% |
| Operating loss | $6.741 million | $8.110 million |
| Net loss | $6.380 million | $8.310 million |
| Cash used in operating activities | $6.106 million | $7.290 million |
- Revenue rose 56.9%, driven mainly by higher Orgad sales and a full year of Naiz Fit consolidation in 2023 versus only part of 2022. Orgad contributed $6.367 million of 2023 revenue; SaaS solutions contributed $629,000.
- Gross profit improved substantially, although cost of revenue rose to $4.265 million from $3.825 million. The reported gross-margin improvement reflects revenue growth and mix; verify the inventory-related charges noted elsewhere in the filing.
- Research and development expense fell 42.7% to $974,000, attributed mainly to lower headcount and subcontractor costs. Sales and marketing expense increased 22.7% to $3.856 million, principally due to higher Amazon selling fees. General and administrative expense was $3.971 million, up 1.8%.
- The company recorded a $671,000 goodwill impairment in its SaaS Solutions reporting unit. Net loss narrowed year over year, but the company remained materially loss-making.
- Cash, cash equivalents and restricted cash totaled $2.264 million at year-end, compared with $2.363 million a year earlier. Financing activities provided $6.134 million in 2023, primarily from equity and warrant transactions; operating activities used $6.106 million.
- Current assets were $6.627 million and current liabilities $3.878 million. Total liabilities were $4.256 million. Financial borrowings were approximately $407,000, in addition to $287,000 of lease liabilities.
- Accumulated deficit was $59.881 million. The company reported shareholders’ equity of $4.735 million.
Material changes and transactions
- In January 2023, the company completed registered direct and private placements with approximately $3.0 million gross proceeds, or about $2.6 million net. In August, warrant exercises at a reduced price generated approximately $4.2 million gross proceeds, or about $3.6 million net, and included issuance of new warrants.
- Outstanding common shares increased from 1,464,117 at December 31, 2022 to 3,621,792 at December 31, 2023. The filing reports 5,091,668 shares outstanding as of March 10, 2024; warrant exercises and other potential share issuances create substantial dilution risk.
- In May 2023, the company transferred support, development and customer-success operations to Spain and reduced Israeli headcount by 13. Management expects lower future costs and said the restructuring did not materially affect 2023 results.
- The company reorganized its reportable segments in July 2023, combining SaaS activities into one segment; comparative segment information was restated.
- Orgad’s warehouse in Israel was damaged by a January 2023 fire. The company reported approximately $640,000 of inventory in the warehouse, which was uninsured, and paid the lessor $50,000. It also disclosed neighboring-property damage claims for which potential loss could not be reasonably estimated.
Outlook, risks and contingencies
- Going concern and capital: Management expects continued losses and negative operating cash flows and says year-end cash is insufficient to fund operations for more than 12 months. The auditor’s report includes a substantial-doubt going-concern paragraph. Additional financing may be unavailable or dilutive; failure to obtain it could require curtailing operations or ceasing them.
- No quantified financial guidance: The filing provides no specific revenue, earnings or cash-flow forecast. Management’s stated priorities include commercializing Naiz Fit, expanding sales channels and continuing product development.
- Nasdaq listing: The company received a minimum-bid-price deficiency notice in November 2023, with a May 1, 2024 deadline to regain compliance by maintaining a closing bid of at least $1.00 for 10 consecutive business days. Delisting could reduce liquidity and access to capital.
- Business concentration and execution: Orgad relies heavily on Amazon, and the measurement-software market is described as new and unproven. Adoption, long sales cycles, competition, customer concentration and the ability to realize acquisition benefits are material risks. The United States represented 86.45% of 2023 revenue.
- Legal matter: North Empire’s counterclaims allege damages of approximately $10.958 million. The matter remained pending; a further pretrial conference was scheduled for May 31, 2024. The company intends to defend the claims and believes they are more likely than not to be denied.
- Geopolitical and operational risks: The company reported no material operational or financial effect from the Israel-Hamas war through the filing date, but warned that escalation could affect operations and financing. It had ceased most Russian operations and expected to dissolve its Russian subsidiary.
- Other risks: Data privacy and cybersecurity obligations, reliance on third-party platforms and cloud providers, competition, and possible future financing dilution remain significant. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an internal-control attestation.
Important facts for investors to verify
- Confirm current cash runway, subsequent financing, and management’s plans to address the going-concern uncertainty.
- Check current Nasdaq bid-price compliance and any subsequent listing notices or corporate actions.
- Reconcile the fire-related inventory disclosures: MD&A cites a $643,000 inventory markdown, while the accounting policy note cites a $39,000 2023 inventory markdown. The filing text does not provide a clear reconciliation.
- Review outstanding warrants, new warrant terms, actual post-year-end exercises, and fully diluted share count; the filing’s share and warrant counts differ by date and should be reconciled.
- Track Orgad and Naiz revenue, profitability, earn-outs and remaining acquisition-related payments, including the reported February 2024 Orgad payment and Naiz revenue-target conditions.
- Monitor the North Empire litigation, neighboring-warehouse fire claims, and any resulting liability or settlement disclosures.