10-Q: My Size Reports Q2 Loss, Acquires Percentil Amid Revenue Decline

My Size, Inc. reported a reduced net loss in Q2 2025, driven by lower operating expenses and financial income, despite a significant revenue decrease for the six-month period, while also acquiring resale platform Percentil.

Summary

• Net loss for the six months ended June 30, 2025, decreased to $1.51 million from $1.98 million in the prior year.
• Net loss for the three months ended June 30, 2025, significantly decreased to $0.45 million from $0.96 million in the prior year.
• Revenues for the six months ended June 30, 2025, decreased by 29.8% to $3.485 million, primarily due to lower Orgad sales.
• Revenues for the three months ended June 30, 2025, slightly increased by 1.4% to $2.006 million, aided by the inclusion of New Percentil.
• Operating loss improved by 15.5% for the six-month period and 33.2% for the three-month period.
• Acquired Percentil, a resale platform, on May 9, 2025, for approximately $679,000, expanding into the secondhand apparel market.
• Recorded a $144,000 goodwill impairment charge for the Fashion and equipment e-commerce platform segment in Q2 2025.
• Raised $1.987 million net through an At The Market (ATM) offering as of June 30, 2025, with an additional $295,000 gross raised subsequently.
• Cash and cash equivalents decreased to $4.282 million as of June 30, 2025, from $4.880 million at December 31, 2024.

Sentiment

Score: 3

Explanation: While net losses decreased and operating expenses were managed, the significant revenue decline for the six-month period, the goodwill impairment, increased cash burn from operations, and the explicit 'going concern' warning indicate a challenging financial position. The capital raise provides some liquidity but also signals ongoing financial needs and potential dilution.

Positives

• Net loss significantly reduced for both the three-month ($450,000 vs $964,000) and six-month ($1.51 million vs $1.98 million) periods ended June 30, 2025, compared to the prior year.
• Operating loss improved by 33% for the three-month period and 16% for the six-month period.
• Financial income, net, turned positive at $136,000 for both periods, compared to net expenses in the prior year.
• Successful acquisition of Percentil, a resale platform, expanding market reach and product offerings.
• Transition to Fulfillment by Amazon for Orgad sales led to a decrease in cost of revenues and improved operating efficiencies.
• Reduced operating expenses across Research and Development, Sales and Marketing, and General and Administrative for the six-month period due to reduced headcount and other cost-saving measures.

Negatives

• Revenues for the six months ended June 30, 2025, decreased by 29.8% to $3.485 million from $4.963 million in the prior year, primarily due to lower Orgad sales.
• Incurred a $144,000 non-deductible goodwill impairment charge for the Fashion and equipment e-commerce platform segment in Q2 2025.
• Cash used in operating activities increased to $2.306 million for the six months ended June 30, 2025, from $2.076 million in the prior year.
• Cash and cash equivalents decreased by $598,000 from December 31, 2024, to June 30, 2025.
• Accumulated deficit increased to $65.386 million as of June 30, 2025.
• Basic and diluted loss per share, while improved, remains negative at $0.58 for the six-month period and $0.15 for the three-month period.

Risks

• Substantial doubt about the ability to continue as a going concern, as existing cash is not expected to fund operations for more than 12 months.
• Inability to obtain additional capital on acceptable terms or at all, which could lead to curtailment of development activities, growth plans, asset sales, or cessation of operations.
• Dilution for current stockholders if additional capital is raised through equity or convertible debt securities.
• New and unproven nature of the measurement technology markets.
• Ability to achieve customer adoption of products.
• Ability to realize the benefits of acquisitions (Orgad, Naiz, and New Percentil).
• Dependence on assets purchased from a related party.
• Information technology system failures or breaches of network security.
• Competition from competitors.
• Reliance on key members of the management team.
• Current or future litigation, such as the Shimon Shukron lawsuit for $510,000.
• Current or future unfavorable economic and market conditions, including volatility in foreign currency exchange rates, inflation, changing interest rates, and trade control laws.
• Impact of the political and security situation in Israel, including potential escalation of hostilities, military service call-ups, economic boycotts, and political instability, despite current immaterial effects.

Future Outlook

Management expects to continue generating losses and negative cash flows from operations for the foreseeable future. Plans include continued commercialization of products, acquisition of technology/businesses, and securing sufficient financing through equity sales, debt, or strategic partnerships. The company is actively seeking additional technology and commercial opportunities to increase cash flow. There is substantial doubt about the company's ability to continue as a going concern, as existing cash is not expected to fund operations for more than 12 months.

Management Comments

• Management is of the opinion that there is an uncertainty that its existing cash will be sufficient to fund operations for a period of more than 12 months.
• Managements plans include the continued commercialization of the Companys products and acquisition of technology, intellectual property or businesses and securing sufficient financing through the sale of additional equity securities, debt or capital inflows from strategic partnerships.
• Management is actively looking for additional technology and commercial opportunities that will increase the companys cashflow.

Industry Context

My Size, Inc. operates in the evolving e-commerce and fashion technology sectors, focusing on AI-driven measurement solutions and online retail. The acquisition of Percentil positions the company to capitalize on the growing secondhand apparel market, a segment driven by sustainability trends and consumer demand for value. The company's emphasis on reducing returns and increasing conversion rates through its Naiz Fit technology aligns with broader industry efforts to optimize online shopping experiences and address inefficiencies in the fashion supply chain. The shift to Fulfillment by Amazon for Orgad reflects a common strategy among e-commerce retailers to leverage established logistics networks for cost efficiency and reduced inventory risk.

Management Changes

Corporate Governance

Legal Proceedings

• A legal complaint was filed by Shimon Shukron in July 2024 for a monetary award of approximately $510,000 (NIS 1,895,345) due to a fire at Orgad's warehouse in January 2023 that allegedly spread to the plaintiff's business, causing damage and loss of profits. The company filed its statement of defense in September 2024, and a third-party appraiser was appointed in June 2025 to assess damages. The company evaluates the claim at approximately $51,000 (NIS 175,000) at this stage.

Stakeholder Impact

• Shareholders: Potential for significant dilution due to ongoing At The Market (ATM) equity offerings and future capital raises. The 'going concern' warning poses a substantial risk to investment value.
• Employees: Option repricing on June 4, 2025, could benefit employees with existing options. The acquisition of Percentil included the transfer of 17 former employees, ensuring their continued employment. Reduced headcount in Research and Development and Sales and Marketing indicates some job reductions.
• Customers: Expansion into the resale platform (Percentil) offers new product categories. Naiz Fit technology aims to improve customer experience by reducing returns and increasing conversion rates.
• Creditors: The 'going concern' warning and need for additional financing could raise concerns about the company's ability to meet future obligations.
• Suppliers: The shift to Fulfillment by Amazon for Orgad's inventory may alter relationships with traditional warehousing and logistics suppliers.

Next Steps

• Continued commercialization of the company's products.
• Acquisition of additional technology, intellectual property, or businesses.
• Securing sufficient financing through equity sales, debt, or strategic partnerships.
• Actively looking for additional technology and commercial opportunities to increase cash flow.
• Evaluating the impact of ASU 2025-05 on consolidated financial statements if the practical expedient is applied.
• Closing down the My Size LLC subsidiary in Russia in the near future.
• Further assessment of damages by a third-party appraiser in the Shimon Shukron legal case.
• Integration of the newly acquired Percentil resale platform into the company's segments.
• Marketing and distribution of global apparel and shoe brands in Israel through the newly established Ten Peacks Ltd.

Key Dates

Recommendation

The company faces significant challenges, including a substantial decline in six-month revenues, increased cash burn from operations, and an explicit 'going concern' warning, indicating that current cash reserves are insufficient for more than 12 months. While net losses have decreased, this is partly due to cost cutting and financial income, not a robust increase in core business revenue. The goodwill impairment further highlights issues in the e-commerce segment. Although the Percentil acquisition and ATM offering provide some strategic expansion and liquidity, the fundamental financial health and the high risk of dilution or cessation of operations make the stock a 'sell' for a seasoned investor.

Keywords

My Size Inc, MYSZ, SEC Filing, 10-Q, Quarterly Report, Financial Results, E-commerce, AI Measurement Solutions, Naiz Fit, Orgad, Percentil Acquisition, Resale Platform, Goodwill Impairment, Going Concern, Capital Raise, Stock-Based Compensation, Israel Geopolitics, Financial Performance, Operating Loss, Net Loss, Revenue Decline, Cost Reduction, Nasdaq Capital Market