Item 1A. Risk Factors 16
Item 1B. Unresolved Staff Comments 39
Item 1C. Cybersecurity 39
Item 2. Properties 39
Item 3. Legal Proceedings 39
Item 4. Mine Safety Disclosures 39
Part II
Item 6. Selected Financial Data 40
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 47
Item 8. Financial Statements and Supplementary Data F-1
Item 9A. Controls and Procedures 48
Item 9B. Other Information 48
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 48
Part III
Item 10. Directors, Executive Officers and Corporate Governance 49
Item 11. Executive Compensation 54
Item 14. Principal Accounting Fees and Services 63
Part IV
Item 15. Exhibits, Financial Statement Schedules 63
Signatures 68
PART
I
In
this Annual Report on Form 10-K, unless the context requires otherwise, the terms “we,” “our,” “us,”
or “the Company” refer to MySize, Inc., a Delaware corporation, and its subsidiaries, including MySize Israel 2014 Ltd. My
Size LLC, Orgad International Marketing Ltd., or Orgad, and Naiz Bespoke Technologies, S.L, or Naiz Fit, taken as a whole.
References
to “U.S. dollars” and “$” are to currency of the United States of America, and references to “NIS”
are to New Israeli Shekels. Unless otherwise indicated, U.S. dollar translations of NIS amounts presented in this Annual Report on Form
10-K for the year ended on December 31, 2023 are translated using the rate of NIS 3.6270 to $1.00.
All
information in this Annual Report on Form 10-K relating to shares or price per share reflects the 1-for-25 reverse stock split effected
by us on December 8, 2022.
CAUTIONARY
NOTE ON FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Any statements in Annual Report on Form 10-K about our expectations, beliefs, plans, objectives, assumptions
or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always,
made through the use of words or phrases such as “believe,” “will,” “expect,” “anticipate,”
“estimate,” “intend,” “plan” and “would.” For example, statements concerning financial
condition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management,
markets for our common stock and future management and organizational structure are all forward-looking statements. Forward-looking statements
are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results,
levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements
expressed or implied by any forward-looking statement.
Any
forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout this Annual Report on
Form 10-K. Some of the risks, uncertainties and assumptions that could cause actual results to differ materially from estimates or projections
contained in the forward-looking statements include but are not limited to:
● risks related to our ability to continue as a going concern;
● the new and unproven nature of the measurement technology markets;
● our ability to achieve customer adoption of our products;
● our ability to realize the benefits of our acquisitions of Orgad and Naiz;
● our dependence on assets we purchased from a related party;
● our ability to enhance our brand and increase market awareness;
● the success of our strategic relationships with third parties;
● information technology system failures or breaches of our network security;
● competition from competitors;
● our reliance on key members of our management team;
● current or future litigation;
The
foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any forward-looking
statements. You should read this Annual Report on Form 10-K and the documents that we reference herein and have filed as exhibits to
the Annual Report on Form 10-K, completely and with the understanding that our actual future results may be materially different from
what we expect. You should assume that the information appearing in this Annual Report on Form 10-K is accurate as of the date hereof.
Because the risk factors referred to in this Annual Report on Form 10-K, could cause actual results or outcomes to differ materially
from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking
statements.
Further,
any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot
assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statements. We qualify all of the information presented in this Annual
Report on Form 10-K, and particularly our forward-looking statements, by these cautionary statements.
ITEM
1. BUSINESS
Overview
We
are an omnichannel e-commerce platform and provider of AI-driven SaaS measurement solutions, including MySizeID and our recently acquired
subsidiaries, Naiz Fit, which provides SaaS technology solutions that solve size and fit issues and AI solutions for smarter design through
data driven decisions for fashion ecommerce companies, and Orgad, an online retailer operating in the global markets. To date, we have
generated almost all our revenue as a third-party seller on Amazon. Our advanced software and solutions assists us in supply chain, identifying
products that can drive growth and provides a user-friendly experience and best customer service.
We are currently focused on driving the commercialization of the Naiz Fit
technology which, enables shoppers to generate highly accurate measurements of their body to find the accurate
fitting apparel by using our Naiz Fit Widget, a simple questionnaire which uses a database collected over the years and allows buyers
to know what size to pick when buying online, reducing returns and increasing conversion rates of sellers.
Naiz
Fit syncs the user’s measurement data to a sizing model generated with our proprietary Garment Modelling technology for each item
sold on the ecommerce, and only presents items for purchase that match their measurements to ensure a correct fit.
We
are positioning ourselves as a consolidator of sizing solutions and new digital experience due to new developments for the fashion industry
needs. Our other product offerings include First Look Smart Mirror for physical stores and Smart Catalog to empower brand design teams,
which are designed to increase end consumer satisfaction, contributing to a sustainable world and reduce operation costs. We also recently
launched True Feedback, a Go-To-market solution that extracts data from our Naiz Community mystery shoppers to fine-tune the customer
experience offered to fashion buyers, both online and offline.
Recent
Developments
August
2023 Warrant Repricing
On
August 24, 2023, we entered into an inducement offer letter agreement, or the Inducement Letter, with a certain holder, or the Holder,
of certain of our then-existing warrants to purchase up to (i) 1,963,994 shares of our common stock issued on January 12, 2023 at an
exercise price of $2.805 per share, or the January 2023 Warrants, (ii) 6,864 shares of our common stock issued on January 17, 2020 at
an exercise price of $94.00 per share, or the January 2020 Warrants, and (iii) 47,153 shares of our common stock issued on October 28,
2021 at an exercise price of $31.50 per share, having terms ranging from 28 months to five and one-half years, or the October 2021 Warrants,
and together with the January 2023 Warrants and the January 2020 Warrants, the Exercised Warrants).
Pursuant
to the Inducement Letter, the Holder agreed to exercise for cash the Exercised Warrants to purchase an aggregate of 2,018,012 shares
of our common stock at a reduced exercise price of $2.09 per share in consideration of our agreement to issue new common stock purchase
warrants, or the New Warrants, to purchase up to an aggregate of 5,367,912 shares of our common stock, at an exercise price of $2.09
per share. The New Warrants became immediately exercisable upon the approval of our stockholders at our annual general meeting of stockholders
in December 2023, or the Stockholder Approval Date, until either the five and one-half years with respect to 2,755,800 New Warrants and
twenty-eight months with respect to 2,612,112 New Warrants, from the Stockholder Approval Date.
The
aggregate gross proceeds from the exercised of the Exercised Warrants was approximately $4.2 million, before deducting placement agent
fees and other offering expenses payable by us.
January
2023 Financing
On
January 10, 2023, we entered into a securities purchase agreement, or the RD Purchase Agreement, pursuant to which we agreed to sell
and issue in the RD Offering an aggregate of 162,000 of our shares of common stock, or the RD Shares, and pre-funded warrants, or the
Pre-funded Warrants, to purchase up to 279,899 shares of common stock and, in a concurrent private placement, unregistered warrants to
purchase up to 883,798 shares of common stock, or the RD Warrants, consisting of Series A warrants, or Series A Warrants, to purchase
up to 441,899 shares of common stock and Series B warrants, or Series B Warrants, to purchase up to 441,899 shares of common stock, at
an offering price of $3.055 per RD Share and associated Series A and Series B Warrants and an offering price of $3.054 per Pre-funded
Warrant and associated Series A and Series B Warrants.
In
addition, we entered into a securities purchase agreement, or the PIPE Purchase Agreement, and together with the RD Purchase Agreement,
the Purchase Agreements, pursuant to which we agreed to sell and issue in the PIPE Offering an aggregate of up to 540,098 unregistered
Pre-funded Warrants and unregistered warrants to purchase up to an aggregate of 1,080,196 shares of common stock, or the PIPE Warrants
and together with the RD Warrants, the Warrants, consisting of Series A Warrants to purchase up to 540,098 shares of common stock and
Series B Warrants to purchase up to 540,098 shares of common stock at an offering price of $3.054 per Pre-funded Warrant and associated
Series A and Series B Warrants.
The
Pre-funded Warrants are immediately exercisable at an exercise price of $0.001 per share and will not expire until exercised in full.
The Warrants are immediately exercisable upon issuance at an exercise price of $2.805 per share, subject to adjustment as set forth therein.
The Series A Warrants have a term of five and one-half years from the date of issuance and the Series B Warrants have a term of 28 months
from the date of issuance. The Warrants may be exercised on a cashless basis if there is no effective registration statement registering
the shares underlying the warrants.
Nasdaq
Minimum Bid Price Deficiency
On
November 3, 2023, we were notified, or the Notification Letter, by the Nasdaq Listing Qualifications that we are not in compliance with
the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2), or the Rule, for continued listing on The Nasdaq Capital
Market.
The
Notification Letter provides that the Company has 180 calendar days, or until May 1, 2024, to regain compliance with the Rule. To regain
compliance, the bid price of our common stock must have a closing bid price of at least $1.00 per share for a minimum of 10 consecutive
business days. In the event we do not regain compliance by May 1, 2024, we may then be eligible for additional 180 days if we meet the
continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital
Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency
during the second compliance period. If we do not qualify for the second compliance period or fail to regain compliance during the second
compliance period, then Nasdaq will notify us of its determination to delist our common stock, at which point we will have an opportunity
to appeal the delisting determination to a Hearings Panel.
Warehouse
Fire
On
January 2, 2023, Orgad experienced a fire at its warehouse in Israel. We are not aware of any casualties or injuries associated with
the fire. We shifted Orgad’s operation to its headquarters. The value of the inventory that was in the warehouse was approximately
$640,000. We believe that this incident did not affect the future sales results of Orgad for the year of 2023. The inventory was not
insured, we and the lessor signed an agreement to settle the issue in which we paid to the lessor an amount of $50,000 to cover his loss.
Our
Solution
Our
cloud-based software platform provides highly accurate sizing and measurement with broad applications including the online fashion/apparel
industry, logistics and courier services and home DIY. Currently, we are mainly focusing on the e-commerce fashion/apparel industry.
This proprietary technology is driven by several patented algorithms which are able to calculate and record measurements in a variety
of novel ways. Although specific functionality varies by product, we believe that our core solutions address the need for highly accurate
measurements in a variety of consumer friendly, every day uses. On top of this anthropometric technologies, understanding the complexity
of the fashion industry, we have also developed our own garment modelling technologies based on both products specifications and physical
garment try-ons, guaranteeing the scalability of our solution while maximizing accuracy and adaptability of our technology for each retailer
and e-tailer.
We
have developed a complete Platform that includes several solutions or products inside it, such as, Naiz Fit Size Form for the ecommerce
team, Smart catalogue for the product & design team,True Feedback for the Go-to-Market and Marketing teams and First Look Smart Mirror
plus bring Your own Device for the Retail teams.
The
following are some select key features of our solutions:
Our
Growth Strategy
We
aim to drive revenue primarily through penetration of the U.S., Europe and Latin American markets through a business to business (B2B)
model in the verticals we are targeting. We are pursuing the following growth strategies:
Market
Opportunity
The
global e-commerce market is expected to total $8.8 trillion in 2024, and the industry is expected to grow significantly in the coming
years with no signs of slowing down. Market specialists expect a compound annual growth rate of 15.80% from 2024 to 2029: according to
data from Mordor Intelligence, the market is expected to reach $18.81 trillion by 2029. In addition, it is expected that by 2024, 21.2%
of total retail sales will happen online. While many sectors have found ways to increase revenue through e-commerce, e-commerce is still
plagued by issues that cut into profits and negatively impact the bottom line, such as customer returns, low consumer conversion, and
associated restocking and shipping costs.
Fashion/Apparel
Since
the onset of the COVID-19 pandemic, an immense shift to digital was recorded, with 85.9% growth vs. pre-pandemic, according to Mastercard,
and over 2 billion people worldwide who shop online, according to data from Oberlo. In November 2023, online shoppers broke records with
$12.4 billion in spending on Cyber Monday, driving 9.6% year-over-year growth and making the day the biggest online shopping day of all
time, according to Adobe Analytics.
In
2021, fashion companies invested between 1.6% and 1.8% of their revenues in technology, according to McKinsey, and are expected to double
the investment by 2030 in order to keep up with digital natives and keep a competitive edge. Personalization in e-commerce and hybrid
connectivity in brick-and-mortar retail are two key themes in the future of fashtech, according to McKinsey’s 2022 State of Fashion
Technology.
In
the upcoming years, inflation is expected to impact the fashion world. As prices for goods increase, the challenge will be to inspire
confidence in consumers, via different smart digital tools. Brands will need to embrace creative digital tools and new channels to deepen
customer relationships, and as McKinsey forecasts in their State of Fashion report for 2023, they will need to execute on priorities
such as sustainability and digital acceleration.
The
global fashion e-commerce market size is expected to grow from $744.4 billion in 2022 to $821.19 billion in 2023 at a compound annual
growth rate of 10.3%. In 2027, the market size is expected to grow to $1,222.32 billion, at a compound annual growth rate of 10.5%, according
to BRC.
Based
on the importance which shoppers attribute to free shipping - 50% of cart abandonment rate is due to extra shipping costs (Baymard Institute)
- the need for fashion retailers to substantiate the optimal size for a customer, thus minimizing returns, has never been more crucial.
As
brands move online or significantly expand their online presence, we believe that developing innovative ways to connect with shoppers,
both online and offline, has become a top priority.
Naiz
Fit
Naiz
Fit has a unique value proposition, based on a robust subscription B2B SaaS model, by being the only size and fit solution in
the market giving brands an all in-one solution to address not only the ecommerce sizing challenge, but having a solution for each
phase in the garment value chain.
Figure
1: Screenshot of the Solution Suite of Naiz Fit Platform
In
2023, we released the Naiz Fit Platform, moving from being a product to a platform with the ability to address many more challenges
that fashion companies are facing throughout their whole value chain, increasing the potential contract value of each lead.
Figure
2: Diagra showing the data flow and technologies operating all over the value chain of any fashion retailer
Orgad
Overview
Orgad is a technology-enabled consumer products company that uses machine
learning and data analytics to develop, market and sell products in e-commerce retailing in the global markets. Orgad has been operating
as a third-party seller on www.amazon.com since 2016. To date, Orgad has generated practically all of its revenue as
a third-party seller on www.amazon.com and only a negligible amount of revenue from operations on other channels. We
manage more than 5,000 stock-keeping units (“SKUs”). Product categories include footwear, apparels, and accessories. Our primary
strategy is to bring most of our vendors product selections to the customers. We have advanced software that assists us in identifying
product gaps so we can keep such products in stock year-round including the entirety of the last quarter (holiday season) of the calendar
year.
Business
Model
There
are three main types of business models on Amazon: wholesale, private label and retail arbitrage. Our business model is wholesale, also
known as reselling, which refers to buying products in bulk directly from the brand or manufacturer at a wholesale price and making a
profit by selling the product on Amazon. We sell merchandise on Amazon and the sales are fulfilled by Amazon. We pay Amazon fees for
allowing us to sell on their platform.
The
advantages of selling via a wholesale model:
The
challenges of selling via a wholesale model:
● Fierce competition on listing for Buy Box on amazon.com (as described below).
● Developing and maintaining relationships with brand manufacturers.
Market
Description/Opportunities
According
to Statista, total retail sales increased 23% to $7.24 trillion in 2023 from $5.57 trillion in 20201. U.S. ecommerce sales
increased 18% to $960.15 billion in 2021 from $811.56 billion in 2020.
Amazon
accounted for nearly 40% of all e-commerce in the United States and that makes Amazon the biggest ecommerce giant currently in the market.
Among
more than 2.5 million active third-party sellers on Amazon in 20233, we believe we have several competitive advantages:
Research
and Development
Our
research and development team are responsible for the research, algorithm, design, development, and testing of all aspects of our measurement
platform technology. We invest in these efforts to continuously improve, innovate, and add new features to our solutions.
We
incurred research and development expenses of approximately $1.0 million in 2023 and $1.7 million in 2022, relating to the development
of its applications and technologies. The decrease from the corresponding period primarily resulted from to a decrease in salaries expenses
due to reduced headcount and a decrease in subcontractor expenses.
In
2023, the R&D department experienced significant success in their efforts to improve the performance of their size recommendation
system. Through a combination of optimized algorithms and the incorporation of cutting-edge technologies, the team was able to achieve
a threefold increase in the system’s speed. This breakthrough not only makes the system one of the fastest and most accurate on
the market, but also reduced the operation costs, making it more cost-effective for businesses to use. Additionally, the solution is
now highly scalable, allowing it to easily adapt to the needs of businesses of any size. The R&D team is now focused on further improving
the system and exploring new applications for the technology.
Proprietary
Rights
We
rely on a combination of patent, copyright, trademark and trade secret laws in the United States and other jurisdictions, as well as
contractual protections, to protect our proprietary technology.
As
of December 31, 2023, we owned 16 issued patents:
six in Europe, four in the U.S., three in Japan two in Canada and one in Israel which expire between January 20, 2033 and August
18, 2036, and we have two additional patent applications in process. As of such date, we do not have any registered
trademarks.
We
cannot provide any assurance that our proprietary rights with respect to our products will be viable or have value in the future since
the validity, enforceability and type of protection of proprietary rights in software-related industries are uncertain and still evolving.
Despite
our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use
information that we regard as proprietary. Policing unauthorized use of our products is difficult, and while we are unable to determine
the extent to which piracy of our software products exists, software piracy can be expected to be a persistent problem. In addition,
the laws of some foreign countries do not protect proprietary rights to as great an extent as do the laws of the United States, and effective
copyright, trademark, trade secret and patent protection may not be available in those jurisdictions. Our means of protecting our proprietary
rights may not be adequate to protect us from the infringement or misappropriation of such rights by others.
Further,
in recent years, there has been significant litigation in the United States involving patents and other intellectual property rights,
particularly in the software and Internet-related industries. We can become subject to intellectual property infringement claims as the
number of our competitors grows and our products and services overlap with competitive offerings. These claims, even if not meritorious,
could be expensive to defend and could divert management’s attention from operating our business. If we become liable to third
parties for infringing their intellectual property rights, we could be required to pay a substantial award of damages and to develop
non-infringing technology, obtain a license or cease selling the products that contain the infringing intellectual property. We may be
unable to develop non-infringing technology or obtain a license on commercially reasonable terms, if at all.
Government
Regulation
We
are subject to a number foreign and domestic laws and regulations that involve matters central to our business. These laws and regulations
may involve privacy, data protection, intellectual property, or other subjects. Many of the laws and regulations to which we are subject
are still evolving and being tested in courts and could be interpreted in ways that could harm our business. In addition, the application
and interpretation of these laws and regulations often are uncertain, particularly in the new and rapidly evolving industry in which
we operate. Because global laws and regulations have continued to develop and evolve rapidly, it is possible that we, our products, or
our platform may not be, or may not have been, compliant with each such applicable law or regulation.
In
particular, we are subject to a variety of federal, state and international laws and regulations governing the processing of personal
data. Many U.S. states have passed laws requiring notification to data subjects when there is a security breach of personally identifiable
data. There are also a number of legislative proposals pending before the U.S. Congress, various state legislative bodies and foreign
governments concerning data protection. In addition, data protection laws in Europe and other jurisdictions outside the United States
can be more restrictive than those within the United States, and the interpretation and application of these laws are still uncertain
and in flux.
For
example, the General Data Protection Regulation, or GDPR, which took effect on May 25, 2018, enhances data protection obligations for
entities that process personal data about individuals, including obligations to cooperate with European data protection authorities,
implement security measures and keep records of personal data processing activities. Noncompliance with the GDPR can trigger fines equal
to the greater of €20 million or 4% of global annual revenue. In addition, the California Consumer Privacy Act of 2018, or CCPA,
effective as of January 1, 2020, gives California residents expanded rights to access and require deletion of their personal information,
opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA
provides for civil penalties for violations, as well as a private right of action for data breaches, that is expected to increase data
breach litigation. Further, failure to comply with the Israeli Privacy Protection Law of 1981, and its regulations, as well as the guidelines
of the Israeli Privacy Protection Authority, may expose us to administrative fines, civil claims (including class actions) and in certain
cases criminal liability. Current pending legislation may result in a change of the current enforcement measures and sanctions. Given
the breadth and depth of changes in data protection obligations, meeting the requirements of GDPR and other applicable laws and regulations
has required significant time and resources, including a review of our technology and systems currently in use against the requirements
of GDPR and other applicable laws and regulations. We have taken various steps to prepare for complying with GDPR and other applicable
laws and regulations however there can be no assurance that these steps are sufficient to assure compliance. Further, additional EU laws
and regulations (and member states’ implementations thereof) further govern the protection of individuals and of electronic communications.
If our efforts to comply with GDPR or other applicable laws and regulations are not successful, we may be subject to penalties and fines
that would adversely impact our business and results of operations, and our ability to use personal data of individuals could be significantly
impaired.
Competition
We
operate in a highly competitive industry that is characterized by constant change and innovation. Changes in the applications and the
programing languages used to develop applications, devices, operating systems, and technology landscape result in evolving customer requirements.
Our competitors include True Fit, Fit analytics and 3DLook.
The
principal competitive factors in our market include the following:
● Integration
● Technical Advantages
○ Ultra-Fast loading and size recommendation presenting
○ Restful API option (API integration with any website or app)
● Optimizations
○ Widget usage analysis by Brands Specialists and BI teams
● User Experience
○ Easy to use interface (10-15 seconds to receive size recommendations)
○ Option to add/deduct questions to/from widget wizards
● Digital operations expertise;
● Ease of use of products and platform capabilities included in Naiz Platform;
● Total cost of ownership;
● Adherence to industry standards and certifications;
● Focus on customer success with dedicated team
We
believe we generally compete favorably with our competitors on the basis of these factors. We expect competition to increase as other established and emerging companies enter our
markets, as customer requirements evolve, and as new products and technologies are introduced. We expect this to be particularly true
as size recommendation for online fashion is a big challenge for the whole industry, making it attractive for new companies to join this
space.
Many
of our competitors have substantially greater financial, technical, and other resources, greater name recognition, larger sales and marketing
budgets, broader distribution, and larger and more mature intellectual property portfolios.
Human
Capital Management
As
of March 9, 2024, we had a total of 25 employees, of which 22 were full-time employees, including 11 in sales and marketing, 4 in
technology and development and 10 in administration and finance.
None
of our employees are represented by a collective bargaining agreement, nor have we experienced any work stoppage. We consider our relationship
with our employees to be good. Our future success depends on our continuing ability to attract and retain highly qualified engineers,
sales and marketing, account management, and senior management personnel.
We
also believe we have built a strong sales team focused on expanding into new markets through the acquisition of Naiz Fit and our
current team.
We
believe that our future success will depend, in part, on our continued ability to attract, hire and retain qualified personnel. In particular,
we depend on the skills, experience and performance of our senior management and research personnel. We compete for qualified personnel
with other hi-tech companies, as well as universities and non-profit research institutions.
We
provide competitive compensation and benefits programs to help meet the needs of our employees. In addition to salaries, these programs
(which vary by country/region and employment classification) include incentive compensation plan, pension, and insurance benefits, paid
time off, among others. We also use targeted equity-based grants with vesting conditions to facilitate retention of personnel, particularly
for our key employees.
The
success of our business is fundamentally connected to the well-being of our people. Accordingly, we implemented an hybrid work policy
in which the employees can work from home twice a week.
We
consider our employees to be a key factor to our success and we are focused on attracting and retaining the best employees at all levels
of our business. Inclusion and diversity is a strategic, business priority. We employ people based on relevant qualifications, demonstrated
skills, performance and other job-related factors. We do not tolerate unlawful discrimination related to employment, and strive to ensure
that employment decisions related to recruitment, selection, evaluation, compensation, and development, among others, are not influenced
by race, color, religion, gender, age, ethnic origin, nationality, sexual orientation, marital status, or disability. Continuous monitoring
to ensure pay equity has been a focus in 2023. We have continued to improve gender balance in 2023 with a focus on increasing the representation
of women hired as new college graduates. We are committed to creating a trusting environment where all ideas are welcomed and employees
feel comfortable and empowered to draw on their unique experiences and backgrounds.
We
consider our relations with our employees to be good.
Company
Information
Our
principal executive offices are located at HaYarden 4 St., POB 1026, Airport City, Israel 7010000, and our telephone number is +972-3-600-9030.
Our website address is www.mysizeid.com. Any information contained on, or that can be accessed through, our website is not incorporated
by reference into, nor is it in any way a part of, this Annual Report on Form 10-K.
We
use our website (www.mysizeid.com) as a channel of distribution of Company information. The information we post through this channel
may be deemed material. Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and
public conference calls and webcasts. The contents of our website are not, however, a part of this Annual Report on Form 10-K.
Corporate
History
We
were incorporated in the State of Delaware on September 20, 1999 under the name Topspin Medical, Inc. In December 2013, we changed our
name to Knowledgetree Ventures Inc. Subsequently, in February 2014, we changed our name to MySize, Inc. In 2020, we created a subsidiary
in the Russian Federation, My Size LLC.
From
inception through 2012, we were engaged in research and development of a medical magnetic resonance imaging, or MRI, technology for interventional
cardiology and in the development of MRI technology for use in the diagnosis and treatment of prostate cancer. In January 2012, we acquired
Metamorefix Ltd., or Metamorefix. Metamorefix was incorporated in 2007, and was engaged in the development of innovative solutions for
the rehabilitation of tissues, particularly skin tissues. By the end of 2012, we ceased operations and in January 2013, we sold our entire
ownership interest in Metamorefix.
In
September 2013, Ronen Luzon, our Chief Executive Officer, acquired control of the Company from Asher Shmuelevitch, according to which
Mr. Luzon purchased 70,238 shares of common stock from Mr. Shmuelevitch, which shares represented approximately 40% of the issued and
outstanding capital stock of the Company at such time, thus becoming a controlling shareholder of the Company. In connection with the
acquisition, Mr. Luzon reached a settlement with our then creditors pursuant to which the main creditor, Mr. Shmuelevitch, was paid a
total sum of approximately $140,000 in consideration for a full and final waiver of any and all his claims that he may have relating
to any monetary indebtedness of the Company to the creditors.
In
February 2014, My Size Israel, our wholly owned subsidiary, entered into a Purchase Agreement, or the Purchase Agreement, with Shoshana
Zigdon, who at the time was a beneficial owner of more than 20% of our outstanding shares, with respect to the acquisition by us of certain
rights related to the collection of data for measurement purposes including rights in the venture, the method and a patent application
that had been filed by the Seller (PCT/IL2013/050056), or the Assets. In consideration for the sale of the Assets, we agreed to pay to
Ms. Zigdon, 18% of our operating profit, directly or indirectly connected with the Assets together with value-added tax in accordance
with the law for a period of seven years from the end of the development period of the aforementioned venture. In addition to the foregoing,
the Purchase Agreement provided that all developments, improvements, knowledge and know-how developed and/or accumulated by us after
the execution of the Purchase Agreement will be owned by us. Further, Ms. Zigdon agreed not to compete, directly or indirectly, with
us in any matter relating to the Assets for a period of seven years from the end of the development period of the venture.
On
May 26, 2021, we, My Size Israel, and Ms. Zigdon entered into an Amendment to Purchase Agreement, or the Amendment, which made certain
amendments to the Purchase Agreement. Pursuant to the Amendment, Ms. Zigdon agreed to irrevocably waive (i) the right to repurchase certain
assets related to the collection of data for measurement purposes that My Size Israel acquired from Ms. Zigdon under the Purchase Agreement
and upon which our business is substantially dependent, or the Assets, and (ii) all past, present and future rights in any of the intellectual
property rights sold, transferred and assigned to My Size Israel under the Purchase Agreement and any modifications, amendments or improvements
made thereto, including, without limitation, any compensation, reward or any rights to royalties or to receive any payment or other consideration
whatsoever in connection with such intellectual property rights, or the Waiver. In consideration of the Waiver, we issued 100,000 shares
of common stock to Ms. Zigdon.
In February 2022, we completed the acquisition of Orgad and in October 2022, we completed the acquisition of Naiz
Fit.
In
September 2005, we commenced trading on the Tel Aviv Stock Exchange, or TASE. Between 2007 and 2012 we reported as a public company with
the SEC. In August 2012, we suspended our reporting obligations. In mid-2015 we resumed reporting as a public company. On July 25, 2016,
our common stock began publicly trading on the Nasdaq Capital Market, or Nasdaq, under the symbol “MYSZ”.
On December 27, 2023 our shareholders approved a voluntary delisting of our common stock from trading on the TASE.
On January 11, 2024, the TASE issued a notice confirming our request to delist our common stock from the TASE, noting that the last day
of trading of our common stock on the TASE will be with the last day of trading on March 27, 2024 and that the delisting our common stock
is expected to take effect on March 31, 2024. All of the shares of our common stock on the TASE are expected to be transferred to the
Nasdaq where they will continue to be traded.
ITEM
1A. RISK FACTORS
An
investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors and the other
information in this Annual Report on Form 10-K before investing in our common stock. Our business and results of operations could be
seriously harmed by any of the following risks. The risks set out below are not the only risks we face. Additional risks and uncertainties
not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition
and/or operating results. If any of the following events occur, our business, financial condition and results of operations could be
materially adversely affected. In such case, the value and trading price of our common stock could decline, and you may lose all or part
of your investment.
Summary
Risk Factors
The
principal factors and uncertainties that make investing in our ordinary shares risky, include, among others:
Risks
Related to Our Financial Position and Capital Requirements
Risks
Related to Our Company and Our Business
Risks
Related to Our Operations in Israel
Risks
Related to Our Common Stock
Risks
Related to Our Financial Position and Capital Requirements
We
have historically incurred significant losses and there can be no assurance when, or if, we will achieve or maintain profitability.
We
realized a net loss of approximately $6.4 million and $8.3 million for the years ended December 31, 2023 and 2022 and had an accumulated
deficit of $60 million as of December 31, 2023. Because of the numerous risks and uncertainties associated with the development and commercialization
of our products and business, we are unable to predict the extent of any future losses or when we will become profitable, if at all.
Expected future operating losses will have an adverse effect on our cash resources, shareholders’ equity and working capital. Our
failure to become and remain profitable could depress the value of our stock and impair our ability to raise capital, expand our business,
maintain our development efforts, or continue our operations. A decline in our value could also cause you to lose all or part of your
investment in us.
It
is difficult to forecast our future performance, which may cause our financial results to fluctuate unpredictably.
We
have been developing measurement technology since 2014. Since then, our operating history has been primarily limited to research and
development, pilot studies, raising capital, and more recently acquisitions and sales and marketing efforts. Because we do not yet
have an established commercial operating history, and because the market for our products may rapidly evolve, it is hard for us to
predict our future performance. Therefore, it may be difficult to evaluate our business and prospects. We have not yet demonstrated
an ability to profitably commercialize our products. Consequently, any predictions about our future performance may not be accurate,
and you may not be able to fully assess our ability to complete development and/or commercialize our products, and any future
products.
We
will need to raise additional capital to meet our business requirements in the future, which is likely to be challenging, could be highly
dilutive and may cause the market price of our common stock to decline.
Based
on our projected cash flows and the cash balances as of the date of this Annual Report on Form 10-K, our existing cash is insufficient
to fund operations for a period of more than 12 months. As a result, there is substantial doubt about our ability to continue as a going
concern. In order to meet our business objectives in the future, we will need to raise additional capital, which may not be available
on reasonable terms or at all. Additional capital would be used to accomplish the following:
● finance our current operating expenses;
● pursue growth opportunities;
● hire and retain qualified management and key employees;
● respond to competitive pressure;
● comply with regulatory requirements; and
● maintain compliance with applicable laws.
Current
conditions in the capital markets are such that traditional sources of capital may not be available to us when needed or may be available
only on unfavorable terms. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets, economic
conditions, and a number of other factors, many of which are outside our control, and on our financial performance. Accordingly, we cannot
assure you that we will be able to successfully raise additional capital at all or on terms that are acceptable to us. If we cannot raise
additional capital when needed, it may have a material adverse effect on our business, results of operations and financial condition.
To
the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities
could result in substantial dilution for our current stockholders. The terms of any securities issued by us in future capital transactions
may be more favorable to new investors, and may include preferences, superior voting rights and the issuance of warrants or other derivative
securities, which may have a further dilutive effect on the holders of any of our securities then-outstanding. We may issue additional
shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock in connection with hiring
or retaining personnel, option or warrant exercises, future acquisitions or future placements of our securities for capital-raising or
other business purposes. The issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may
cause the market price of our common stock to decline and existing stockholders may not agree with our financing plans or the terms of
such financings. In addition, we may incur substantial costs in pursuing future capital financing, including investment banking fees,
legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required
to recognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely
impact our financial condition. Furthermore, any additional debt or equity financing that we may need may not be available on terms favorable
to us, or at all. If we are unable to obtain such additional financing on a timely basis, we may have to curtail our development activities
and growth plans and/or be forced to sell assets, perhaps on unfavorable terms, or we may have to cease our operations, which would have
a material adverse effect on our business, results of operations and financial condition.
Management
has concluded that there is substantial doubt about our ability to continue as a going concern which could prevent us from obtaining
new financing on reasonable terms or at all.
We
have incurred significant losses and negative cash flows from operations and have an accumulated deficit that raises substantial doubt
about its ability to continue as a going concern. Our audited consolidated financial statements for the year ended December 31, 2023
were prepared under the assumption that we would continue our operations as a going concern. Our independent registered public accounting
firm has included a “going concern” explanatory paragraph in its report on our financial statements for the year ended December
31, 2023. If we are unable to improve our liquidity position, by, among other things, raising capital through public or private offerings
or reducing our expenses, we may exhaust our cash resources and will be unable to continue our operations. If we cannot continue as a
viable entity, our shareholders would likely lose most or all of their investment in us.
Risks
Related to Our Company and Our Business
The
market for our measurement technology is new and unproven, may experience limited growth.
The
market for our measurement technology is relatively new and unproven and is subject to a number of risks and uncertainties. We believe
that our future success will depend in large part on market adoption of Naiz Fit and
online third-party resellers. In order to grow our business, we intend to focus on educating retailers and resellers and other potential
customers about the benefits of our measurement technology, expanding the functionality of our products and bringing new products to
market to increase market acceptance and use of our technology. Our ability to develop and expand the market that our products address
depends upon a number of factors, including the cost savings, performance and perceived value associated with such products. The market
for our products could fail to develop or there could be a reduction in interest or demand for our products as a result of a lack of
consumer acceptance, technological challenges, competing products and services, weakening economic conditions and other causes. We may
never successfully commercialize our products and if our products fail to achieve market acceptance, this would have a material adverse
effect on our business, results of operations and financial condition.
Failure
to effectively develop and expand our sales and marketing capabilities could harm our ability to grow our business and achieve broader
market acceptance of our products.
Our
ability to achieve customer adoption, especially among U.S. retailers will depend, in part, on our ability to effectively organize, focus
and train our sales and marketing personnel. We have limited experience selling to U.S. retailers and only recently established a U.S.
sales force. We believe that there is significant competition for experienced sales professionals with the skills and industry knowledge
that we require. Our ability to achieve significant revenue growth in the future will depend, in part, on our ability to recruit, train
and retain a sufficient number of experienced sales professionals, particularly those with experience selling to U.S. retailers. In addition,
even if we are successful in hiring qualified sales personnel, new hires require significant training and experience before they achieve
full productivity, particularly for sales efforts targeted at U.S. retailers and new markets. Because we only recently started sales
efforts, we cannot predict whether, or to what extent, our sales efforts will be successful.
We
expect our sales cycle to be long and unpredictable and require considerable time and expense before executing a customer agreement,
which may make it difficult to project when, if at all, we will obtain new customers and when we will generate revenue from those customers.
In
this market segment, the decision to adopt our products may require the approval of multiple technical and business decision makers,
including security, compliance, procurement, operations and IT. In addition, while U.S. retailers may be willing to deploy our products
on a limited basis, before they will commit to deploying our products at scale, they often require extensive education about our products
and significant customer support time, engage in protracted pricing negotiations and seek to secure readily available development resources.
As a result, it is difficult to predict when we will obtain new customers and begin generating revenue from these customers. As part
of our sales cycle, we may incur significant expenses before executing a definitive agreement with a prospective customer and before
we are able to generate any revenue from such agreement. We have no assurance that the substantial time and money spent on our sales
efforts will generate significant revenue. If conditions in the marketplace generally or with a specific prospective customer change
negatively, it is possible that no definitive agreement will be executed, and we will be unable to recover any of these expenses. If
we are not successful in targeting, supporting and streamlining our sales processes and if revenue expected to be generated from a prospective