You should read the following discussion along with our financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions, including those discussed under "Risk Factors." Our actual results, performance and achievements may differ materially from those expressed in, or implied by, these forward-looking statements.
Overview
We are a creator of mobile device measurement solutions that has developed innovative solutions designed to address shortcomings in multiple verticals, including the e-commerce fashion/apparel, shipping/parcel and do it yourself, or DIY, industries. Utilizing our sophisticated algorithms within our proprietary technology, we can calculate and record measurements in a variety of novel ways, and most importantly, increase revenue for businesses across the globe.
Our solutions can be utilized to accurately take measurements of a variety of items via a mobile device. By downloading the application to a smartphone, the user is then able to run the mobile device over the surface of an item the user wishes to measure. The information is then automatically sent to a cloud-based server where the dimensions are calculated through our proprietary algorithms, and the highly accurate measurements (+ or - 2 centimeters) are then sent back to the user's mobile device. We believe that the commercial applications for this technology are significant in many areas.
Currently, we are mainly focusing on the e-commerce fashion/apparel industry. In addition, our solutions address the shipping/parcel and DIY uses markets.
While we rollout our products to major retailers and apparel companies, there is a lead time for new customers to ramp up before we can recognize revenue. This lead time varies between customers, especially when the customer is a tier 1 retailer, where the integration process may take longer. Generally, first we integrate our product into a customer's online platform, which is followed by piloting and implementation, and, assuming we are successful, commercial roll-out, all of which takes time before we expect it to impact our financial results in a meaningful way. While we have begun generating initial sales revenue, we do not expect to generate meaningful revenue during 2022 from MySizeID. Because of the numerous risks and uncertainties associated with the success of our market penetration and our dependence on the extent to which MySizeID is adopted and utilized, we are unable to predict the extent to which we will recognize revenue. We may be unable to successfully develop or market any of our current or proposed products or technologies, those products or technologies may not generate any revenues, and any revenues generated may not be sufficient for us to become profitable or thereafter maintain profitability.
In
40 Results of Operations
The table below provides our results of operations for the periods indicated.
Year ended December 31 2021 2020 (dollars in thousands) Revenues 131 142 Cost of revenues - (2 ) Gross profit 131 140
Research and development expenses (4,248 ) (1,523 ) Sales and marketing
(2,336 ) (2,196 ) General and administrative (4,124 ) (2,567 ) Operating loss (10,577 ) (6,146 ) Financial income (expenses), net 57 (11 ) Net loss$ (10,520 ) $ (6,157 )
Year Ended
Revenues
From inception through
Research and Development Expenses
Our research and development expenses for the year ended
Sales and Marketing Expenses
Our sales and marketing expenses for the year ended
General and Administrative Expenses
Our general and administrative expenses for the year ended
Operating Loss
As a result of the foregoing, for the year ended
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Financial Income (Expenses), net
Our financial income, net for the year ended
Net Loss
As a result of the foregoing, research and development, marketing general and
administrative expenses, and initial revenues, our net loss for the year ended
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through public and
private offerings of debt and equity in
As of
On
Also on
In addition, on
Net cash used in operating activities was
Net cash provided by investing activities for the year ended
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We had positive cash flow from financing activities net of issuance costs of
We do not have any material commitments for capital expenditures during the next
twelve months. Taking into account the proceeds from warrant exercises and our
financing in
? finance our current operating expenses; ? pursue growth opportunities; ? hire and retain qualified management and key employees; ? respond to competitive pressures; ? 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, the impact of
the COVID-19 pandemic, the Russian invasion of
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.
We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.
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Recently Issued Accounting Pronouncements
Certain recently issued accounting pronouncements are discussed in Note 2, Significant Accounting Policies, to the consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Critical Accounting Estimates
Our management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which we have prepared in
accordance with
Our significant accounting policies were revenue from contracts with customers which are more fully described in the notes to our financial statements appearing elsewhere in this Annual Report on Form 10-K. We believe that these accounting policies discussed are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management's estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate; and (2) changes in the estimate could have a material impact on our financial condition or results of operations.
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