My Size, Inc. — FY2020 Form 10-K Summary
Business context and reporting period
The filing covers the fiscal year ended December 31, 2020; it is an annual report, not a standalone fourth-quarter report. My Size develops smartphone-based measurement software for online apparel sizing (MySizeID), parcel measurement (BoxSize), and DIY measurement (SizeUp). Revenue is primarily from cloud-enabled software subscriptions, support, and usage fees. The company remains in the commercialization phase, with limited sales to date.
- MySizeID delivered more than 12 million size recommendations during 2020. SizeUp had more than 1.21 million downloads by March 1, 2021; download revenue remained minimal.
- Management reported commercial agreements and platform integrations, but customer rollout requires integration, pilots, and implementation, with potentially long sales cycles.
Financial performance and liquidity
Amounts below are in U.S. dollars; income statement and cash flow figures are in thousands unless otherwise stated.
| Metric | FY2020 | FY2019 | Change |
|---|---|---|---|
| Revenue | $142 | $63 | Up $79, primarily from greater MySizeID usage and customer project fees |
| Gross profit | $140 | $42 | Up $98; cost of revenue was $2 and $21, respectively |
| Operating loss | $6,146 | $5,990 | Loss widened $156 |
| Net loss | $6,157 | $5,497 | Loss widened $660 |
| Research and development | $1,523 | $1,516 | Nearly unchanged |
| Sales and marketing | $2,196 | $1,929 | Up $267 |
| General and administrative | $2,567 | $2,587 | Down $20 |
| Net cash used in operating activities | $5,679 | $5,418 | Use increased $261 |
- At December 31, 2020, cash and cash equivalents were $1.689 million, restricted cash $85,000, and a restricted deposit $184,000. Total current assets were $2.468 million versus current liabilities of $911,000.
- Cash used in investing activities was $211,000, compared with $1.073 million provided in 2019. Financing activities provided $6.094 million, principally from securities offerings and warrant exercises.
- Total liabilities were $1.490 million, including $708,000 of operating lease liabilities. The filing does not report conventional borrowings as a material debt balance.
- Accumulated deficit was $34.671 million. The company reported a 2020 basic and diluted loss per share of $1.11; per-share figures reflect the reverse stock split.
Material changes, outlook, and risks
- Revenue more than doubled from a low base, but losses and operating cash use remained substantial. Sales and marketing costs rose while 2019 financial income of $493,000 shifted to a net financial expense of $11,000 in 2020.
- Management said it did not expect meaningful revenue in the upcoming quarters and expected R&D expense to increase in 2021. It estimated available cash would fund obligations through January 2022 and stated that additional capital would be needed. The auditor included a going-concern explanatory paragraph, citing recurring losses, negative operating cash flows, and substantial doubt about continuing as a going concern.
- After year-end, the company reported net proceeds of approximately $1.700 million from a January 2021 offering, $2.904 million from a March 2021 offering, and approximately $798,000 from warrant exercises in January and February. These proceeds are subsequent events, not FY2020 operating results.
- Critical asset repurchase risk: A former related party, Shoshana Zigdon, had a contractual right to repurchase measurement-related assets because revenue did not meet the agreement’s threshold. The right ran for 90 days from February 16, 2021. The company intended to seek a waiver, potentially for cash, equity, or both; the amount and form were undetermined. Exercise could materially impair commercialization and, the company warned, could lead it to cease operations.
- COVID-19: Management cited halted international retailer pilots, restricted in-person sales activity, and delayed or canceled sales processes, despite increased demand for MySizeID. The duration and financial impact were uncertain.
- Litigation: In a dispute with North Empire LLC, the company seeks at least $616,000; North Empire counterclaims approximately $10.96 million. The company said discovery was complete, both sides had moved for summary judgment, and it believed the counterclaims were more likely than not to be denied. The former third-party complaint against the CEO was dismissed.
- Other material risks include dependence on customer adoption and third-party platforms, long sales cycles, financing availability and dilution, data privacy and cybersecurity compliance, competition, and political and security conditions in Israel. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal controls.
Important facts for investors to verify
- Whether the Zigdon asset repurchase right was waived, exercised, or otherwise resolved, and any resulting cash or dilution cost.
- Current liquidity and actual cash runway after the January and March 2021 offerings and warrant exercises, compared with the stated January 2022 runway.
- Whether retailer pilots resumed and converted to paying, scaled deployments, and whether usage-based revenue is growing beyond the reported $142,000.
- The outcome and potential financial exposure of the North Empire litigation and summary judgment motions.
- Current share count and potential dilution from subsequent offerings, outstanding warrants, options, and performance-based awards.