My Size, Inc. — Q1 2018 Form 10-Q
Business context and reporting period. The unaudited filing covers the three months ended March 31, 2018. My Size develops measurement technology for apparel e-commerce, courier services and DIY applications. The company reported no operating revenue since inception and had no commercial products as of the filing.
Financial results and liquidity
Amounts below are in U.S. dollars, thousands, except per-share data. The filing does not provide a clear revenue or gross-margin figure; it reports no operating revenue.
| Metric | Q1 2018 | Q1 2017 |
|---|---|---|
| Research and development expense | $265 | $207 |
| Marketing, general and administrative expense | $1,612 | $879 |
| Total operating expenses / operating loss | $1,877 | $1,086 |
| Net financial expense | $3,546 | $308 |
| Net loss | $5,423 | $1,394 |
| Basic and diluted loss per share | $0.20 | $0.08 |
| Net cash used in operating activities | $1,192 | $1,012 |
Balance sheet and liquidity: At March 31, cash and cash equivalents were $9,395 and restricted cash was $69, versus $1,802 and $70, respectively, at December 31, 2017. Total current assets were $9,564; total current liabilities were $4,943. The company reported total assets of $9,905 and positive stockholders’ equity of $4,962, compared with a deficit of $1,152 at year-end. The short-term loan balance was zero, down from $558. Warrants, derivatives and stock-based compensation liabilities totaled $4,307, up from $2,431.
Cash, cash equivalents and restricted cash increased by $7,592 during the quarter. Financing provided net cash of $8,994, including $3,626 from warrant exercises and $5,923 from issuance of shares, warrants and loans; operating activities used $1,192 and investing activities used $1.
Changes, outlook and notable items
- Net loss rose by $4,029 year over year. Management attributed higher operating expenses mainly to share-based payments, professional services and increased subcontractor costs. The increase in financial expense reflected remeasurement of warrant, derivative and stock-based compensation liabilities; this was partly offset by a $188 gain on marketable securities.
- Q1 included a February public offering of 3.0 million shares and warrants for 1.5 million shares, generating $6.0 million gross and approximately $5.464 million net proceeds. Warrant exercises also generated proceeds and increased the share count. Shares outstanding were 29,145,927 at March 31 and 29,552,667 at May 11, 2018.
- The company repaid the remaining short-term note balance in February. Management stated that cash on hand was expected to cover obligations for more than 12 months, while also noting significant accumulated losses, negative operating cash flows and expected further losses to fund research and development. Accumulated deficit was $22.471 million.
- A settlement-related payment of approximately $62,000 was paid in March. Separately, a shareholder class-action proceeding alleging damages of NIS 18.8 million was suspended pending Israeli Supreme Court decisions on related legal issues. The company stated management believed denial of the class-action motion was more likely than approval.
- Management reported disclosure controls and procedures were effective as of March 31, 2018, and no material change in internal control over financial reporting occurred during the quarter.
Investor facts to verify
- How and when the company expects to commercialize products and generate revenue, given its stated lack of revenue and early-stage development.
- Cash runway assumptions underlying management’s expectation that funds will cover obligations for more than 12 months, particularly against ongoing operating cash burn.
- Potential dilution and repricing exposure from outstanding warrants, including their price-protection provisions, and the valuation volatility of warrant and other compensation liabilities.
- Status and potential financial impact of the stayed shareholder class-action matter and any other contingencies.