What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-08-15 · 246 added, 175 removed, 398 unchanged (51% of the section changed)

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and Subsidiaries

of June 30, 2022

of September 30, 2022

Dollars in Thousands

AND ITS SUBSIDIARIES

Consolidated Interim Financial Statements as of June 30, 2022 (Unaudited)

Consolidated Interim Balance Sheets (Unaudited)

Consolidated Interim Statements of Comprehensive Loss (Unaudited)

Consolidated Interim Statements of Changes in Stockholders’ Equity (Unaudited)

Consolidated Interim Statements of Cash flows (Unaudited)

to Condensed Consolidated Interim Financial Statements (Unaudited)

Consolidated Interim Financial Statements as of September 30, 2022 (Unaudited)

Condensed Consolidated Interim Balance Sheets (Unaudited)

Condensed Consolidated Interim Statements of Comprehensive Loss (Unaudited)

Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity (Unaudited)

Condensed Consolidated Interim Statements of Cash flows (Unaudited)

Notes to Condensed Consolidated Interim Financial Statements (Unaudited)

AND ITS SUBSIDIARIES

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dollars in thousands (except share data and per share data)

September 30,

Current Assets:

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Inventory, net

Accounts receivable

Account receivables

Other receivables and prepaid expenses

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Issued and outstanding:

25,551,906 and 23,982,503 as of June 30, 2022 and December 31, 2021, respectively

25,726,284 and 23,982,503 as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

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dollars in thousands (except share data and per share data)

Six-Months Ended

Nine-Months Ended

September 30,

Three-Months Ended

September 30,

Cost of revenues

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Total comprehensive loss

Balance as of June 30, 2022

Balance as of September 30, 2022

Additional paid-in

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Stock-based compensation related to options granted to employees and consultants

Exercise of options granted to employees ( *)

Restricted shares issued to shareholder

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Total comprehensive loss

Balance as of June 30, 2021

Additional paid-in

Accumulated other comprehensive

Total stockholders’

Balance as of April 1, 2022

Stock-based compensation related to options granted to employees and consultants

Issuance of shares in Business Combination (*)

Total comprehensive loss

Balance as of June 30, 2022

Balance as of September 30, 2021

an amount less than $1

other comprehensive

stockholders’

as of July 1, 2022

compensation related to options granted to employees and consultants

of shares in Business Combination ( * )

of shares in Business Combination

comprehensive loss

as of September 30, 2022

Represents an amount less than $1

Additional paid-in

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Total stockholders’

Balance as of April 1, 2021

Balance as of July 1, 2021

Stock-based compensation related to options granted to employees and consultants

Restricted shares issued to shareholder

Issuance of shares, net of issuance cost of $ 32

Issuance of shares, net of issuance cost

Exercise of options granted to employees *

Exercise of warrants

Total comprehensive loss

Balance as of June 30, 2021

Balance as of September 30, 2021

an amount less than $1

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dollars in thousands

Six-Months Ended

Nine-Months Ended

September 30,

Cash flows from operating activities:

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Depreciation and amortization

Amortization of right-of-use asset

Noncash lease expenses

Revaluation of derivatives

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(Increase) in account receivables

Decrease (Increase) in other receivables and prepaid expenses

Decrease in other receivables and prepaid expenses

(Increase) in inventory

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(Decrease) in deferred tax liabilities

(Decrease) in trade payables

(Decrease) Increase in trade payables

Increase in account payables

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Shares issued in Acquisition of a subsidiary

Restricted shares issued to shareholder

relates to change in cash and cash equivalents and $ 11 to change in restricted cash.

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dollars in thousands (except share data and per share data)

is developing unique measurement technologies based on algorithms with applications in a variety of areas, from the apparel

e-commerce market to the courier services market and to the Do It Yourself smartphone and tablet apps market.

The technology is driven

by proprietary algorithms which are able to calculate and record measurements in a variety of novel ways.

is developing unique measurement technologies based on algorithms with applications

in a variety of areas, from the apparel e-commerce market to the courier services market

and to the Do It Yourself smartphone and tablet apps market.

The technology is driven by

proprietary algorithms which are able to calculate and record measurements in a variety of

the acquisition of Orgad International Marketing Ltd.

(“Orgad”) in February 2022 (see note 6), the Company also operates an omnichannel

e-commerce platform.

Company has four subsidiaries, My Size Israel 2014 Ltd (“My Size Israel”), Topspin Medical (Israel) Ltd., and Orgad all

of which are incorporated in Israel, and My Size LLC which was incorporated in the Russian Federation.

References to the Company

include the subsidiaries unless the context indicates otherwise.

the six-month period ended June 30, 2022, the Company has incurred significant losses and negative cash flows from operations and

has an accumulated deficit of $ 49,095 .

The Company has financed its operations mainly through fundraising from various investors.

(“Orgad”) in February 2022 (see note 6), the Company also operates

an omnichannel e-commerce platform.

Company has five subsidiaries, My Size Israel 2014 Ltd (“My Size Israel”), Topspin Medical (Israel) Ltd., and Orgad all

of which are incorporated in Israel, and My Size LLC which was incorporated in the Russian Federation and Naiz Bespoke Technologies,

S.L., a limited liability company incorporated under the laws of Spain (see note 9).

References to the Company include the subsidiaries unless

the context indicates otherwise.

the nine-month period ended September 30, 2022, the Company has incurred significant losses

and negative cash flows from operations and has an accumulated deficit of $ 51,121 .

has financed its operations mainly through fundraising from various investors.

Company’s management expects that the Company will continue to generate losses and negative cash flows from operations for

the foreseeable future.

Based on the projected cash flows and cash balances as of June 30, 2022, management is of the opinion that

its existing cash will be sufficient to fund operations for a period less than 12 months.

As a result, there is substantial doubt

about the Company’s ability to continue as a going concern.

Based on the projected cash flows and cash balances as of September 30, 2022, management is of the opinion

that its existing cash will be sufficient to fund operations for a period less than 12 months.

As a result, there is substantial

doubt about the Company’s ability to continue as a going concern.

plans include the continued commercialization of the Company’s products and securing sufficient financing through the sale

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the Company fail to operate as a going concern.

In late 2019, a novel strain of COVID-19, also known as coronavirus,

was reported in Wuhan, China.

While initially the outbreak was largely concentrated in China, it spread globally.

Many countries

around the world, including Israel, have from time to time implemented significant governmental measures to control the spread

of the virus, including temporary closure of businesses, severe restrictions on travel and the movement of people, and other

material limitations on the conduct of business.

While the COVID-19 pandemic did not materially adversely affect the Company’s

consolidated financial results and operations during the three and six months ended June 30, 2022, the COVID-19 pandemic affected

the Company’s operations in 2020 and 2021.

The pandemic may continue to have an impact on the Company’s business,

operations, and financial results and conditions, directly and indirectly, including, without limitation, impacts on the health of

the Company’s management and employees, its operations, marketing and sales activities, and on the overall economy.

to which COVID-19 impacts the Company’s operations will depend on future developments, which are highly uncertain

and cannot be predicted with confidence, including the duration and severity of the outbreak, and the actions that may be required

to contain COVID-19 or treat its impact.

late 2019, a novel strain of COVID-19, also known as coronavirus, was reported in Wuhan, China.

While initially the outbreak was

largely concentrated in China, it spread globally.

Many countries around the world, including Israel, have from time to time implemented

significant governmental measures to control the spread of the virus, including temporary closure of businesses, severe restrictions

on travel and the movement of people, and other material limitations on the conduct of business.

While the COVID-19 pandemic did

not materially adversely affect the Company’s consolidated financial results and operations during the three and nine months

ended September 30, 2022, the COVID-19 pandemic affected the Company’s operations in 2020 and 2021.

The pandemic may continue

to have an impact on the Company’s business, operations, and financial results and conditions, directly and indirectly, including,

without limitation, impacts on the health of the Company’s management and employees, its operations, marketing and sales activities,

and on the overall economy.

The extent to which COVID-19 impacts the Company’s operations will depend on future developments,

which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, and the

actions that may be required to contain COVID-19 or treat its impact.

2 - Significant Accounting Policies

Unaudited condensed consolidated financial statements:

condensed consolidated financial statements:

accompanying unaudited condensed consolidated interim financial statements included herein have been prepared by the Company in accordance

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or omitted in accordance with rules and regulations of the SEC.

Operating results for the six months ended June 30, 2022 are not

necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2021.

unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated

financial statements and the notes thereto for the year ended December 31, 2021.

Operating results for the nine months ended September 30, 2022 are

not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2022.

unaudited condensed consolidated financial statements should be read in conjunction with

the Company’s audited consolidated financial statements and the notes thereto for the

year ended December 31, 2021.

AND ITS SUBSIDIARIES

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are identical to those applied in the preparation of the latest annual financial statements, except the following new policies which

was adopted following the business combination (see note 6):

were adopted following the business combination (see note 6):

are measured at the lower of cost or net realizable value.

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do not result in the restoration or increase in that newly established cost basis.

Revenue Recognition

the acquisition of Orgad (see note 6 - Business combination), the Company’s revenues are comprised of two main categories:

selling products to customers (2) licensing cloud-enabled software subscriptions, associated software maintenance and support.

selling products to customers, and (2) licensing cloud-enabled software subscriptions, associated software maintenance and support.

from sale of products

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Therefore, the revenues are recorded on a gross basis.

Business combinations

Company applies the provisions of ASC 805, “Business Combination” and allocates the fair value of purchase consideration

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2 - Significant Accounting Policies (cont.)

Intangible assets

assets consist of identifiable intangible assets that the Company has acquired from previous business combinations.

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warrant a revision to the remaining period of amortization

Use of estimates:

of estimates:

preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the

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3 - Financial Instruments

carrying amounts of cash and cash equivalents, accounts receivable, other receivables, trade payables and accounts payable

approximate their fair value due to the short-term maturities of such instruments.

In addition, the carrying amounts of a long term

loan is approximate to its fair value because there was no change in the market conditions since its exceptions.

carrying amounts of cash and cash equivalents, accounts receivable, other receivables, trade payables and accounts payable approximate

their fair value due to the short-term maturities of such instruments.

Company holds share certificates in iMine Corporation (“iMine”) formerly known as Diamante Minerals, Inc., a publicly traded

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Schedule of Significant Assets and Liabilities Measured at Fair Value on Recurring Basis

June 30, 2022

September 30, 2022

Fair value hierarchy

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Investment in marketable securities (*)

June 30, 2022

September 30, 2022

Fair value hierarchy

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Investment in marketable securities (*)

the six and three-month periods ended June 30, 2022 and 2021, the recognized gain (loss) (based on quoted market prices with a discount

due to security restrictions on iMine shares) of the marketable securities was ($ 11 ) and $ 3 , and $ ( 22 ) and $ ( 27 ) respectively.

the nine and three-month periods ended September 30, 2022 and 2021, the recognized gain (loss) (based on quoted market prices with

a discount due to security restrictions on iMine shares) of the marketable securities was ($ 28 ) and $( 17 ), and $ 46 and $ 24 respectively.

December 31, 2021

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of Stock Based Compensation Expenses

Six months ended

Nine months ended

September 30,

Three months ended

September 30,

Stock-based compensation expense – Cost of revenues

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Stock-based compensation expense - General and administrative

Stock-based compensation expense

Stock-based compensation

issued to consultants:

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Unexercised options shall expire 5 years from the effective date.

the six and three-month period ended June 30,2022 and 2021, an amount of $ 7

and $ 7 and $ 4 respectively, were recorded by the Company as stock-based equity awards with respect to Consultants.

the nine and three-month period ended September 30,2022 and 2021, an amount of $ 7

respectively, were recorded by the Company as

stock-based equity awards with respect to Consultant 14.

Option Plan for Employees:

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price equal to or less than the stock’s fair market value at the date of grant.

May 25, 2020, the compensation committee of the Board of Directors of the Company reduced the exercise price of outstanding options

of employees and directors of the Company for the purchase of an aggregate of 140,237

shares of common stock of the Company (with exercise prices ranging between $ 18.15

per share, which was the closing price for the Company’s common stock on May 22, 2020, and extended the term of the foregoing

options for an additional one year from the original date of expiration.

The incremental compensation cost resulting from the

repricing was $ 53 ,

and the expenses during the six-month period ended June 30, 2022 and 2021 were $ 2

respectively and the expenses during the three months ended June 30, 2022 and 2021 were $ 47

respectively.

August 10, 2020, the Company’s shareholders approved an increase in the shares available for issuance under the 2017 Employee

Plan from 200,000

As a result, and pursuant to approval of the Company’s compensation committee that was contingent on the foregoing

shareholder approval, the number of shares available for issuance under the Company’s 2017 Consultant Incentive Plan was

reduced from 466,667

On December 30, 2021, the Company’s shareholders approved an increase in the shares available for issuance under

the 2017 Equity Incentive Plan from 1,450,000 shares to 5,770,000 shares.

the six and three-month period ended June 30, 2022, the Company did not grant any stock options under the 2017 Employee Plan, no

options were exercised and options to purchase 51,873

shares of common stock, expired.

total stock option compensation expense during the six and three-month period ended June 30, 2022 and 2021 which was recorded was $ 44

respectively.

May 25, 2020, the compensation committee of the Board of Directors of the Company reduced the exercise price of outstanding options of

employees and directors of the Company for the purchase of an aggregate of 140,237

shares of common stock of the Company (with exercise

prices ranging between $ 18.15

per share, which was the closing price for the

Company’s common stock on May 22, 2020, and extended the term of the foregoing options for an additional one year from the original

date of expiration.

The incremental compensation cost resulting from the repricing was $ 53 ,

and the expenses during the nine-month period ended September 30, 2022 and 2021 were $ 2

August 10, 2020, the Company’s shareholders approved an increase in the shares available for issuance under the 2017 Employee Plan

from 200,000 to 1,450,000 shares.

As a result, and pursuant to approval of the Company’s compensation committee that was contingent

on the foregoing shareholder approval, the number of shares available for issuance under the Company’s 2017 Consultant Incentive

Plan was reduced from 466,667 to 216,667 shares.

On December 30, 2021, the Company’s shareholders approved an increase in the shares

available for issuance under the 2017 Equity Incentive Plan from 1,450,000 shares to 5,770,000 shares.

September 29, 2022, the Compensation Committee of the Company approved grants of restricted share awards under the Company’s

2017 Equity Incentive Plan to Ronen Luzon (CEO), Or Kles (CFO), Billy Pardo (COO), Ilia Turchinsky (CTO) and Ezequiel Javier

Brandwain (CCO), pursuant to which were issued 2,500,000

restricted shares, 600,000

restricted shares, 400,000

restricted shares and 300,000

restricted shares, respectively.

Each restricted share awarded under section 102 Capital Gain Restricted Stock Award Agreement (the

“Agreement”).

restricted shares shall vest in three equal installments on January 1, 2023, January 1, 2024 and January 1, 2025 for Ronen Luzon, Or

Kles, Billy Pardo and Ilia Turchinsky and on January 27, 2023, January 27, 2024 and January 27, 2025 for Ezequiel Javier Brandwain,

conditioned upon continuous employment with the Company, and subject to accelerated vesting upon a change in control of the

On the same day, the Company

granted five-year

options to purchase up to 250,000

ordinary shares to other employees of the Company at an exercise price of $ 0.21

The options vest in over three years in three equal portions from the vesting commencement date.

fair value of each option award is estimated on the date of grant using the Binomial option-pricing model that used the weighted average

assumptions in the following table.

The risk free rate for the expected term of the option is based on the U.S.

Treasury yield curve

in effect at the time of grant.

Schedule of Fair Value

Assumptions of Stock Options

Dividend yield

Expected volatility

Risk-free interest

Contractual term of up to (years)

Suboptimal exercise multiple (NIS)

the nine and three-month period ended September 30, 2022, the Company granted 4,650,000 restricted stock and stock options under the

2017 Employee Plan, no options were exercised and options to purchase 51,873 shares

of common stock, expired.

total stock option compensation expense during the nine and three-month period ended September 30, 2022 and 2021 which was recorded was

$ 53 and $ 234 , and $ 9 and $ 312 , respectively.

AND ITS SUBSIDIARIES

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State of New York, County of New York for breach of a Securities Purchase Agreement (the “Agreement”) in which it is

seeking damages in an amount to be determined at trial, but in no event less than $ 616 thousands .

On August 2, 2018, North Empire filed a Summons with Notice against the Company, also in the same Court, in which they allege

damages in an amount of $ 11.4

seeking damages in an amount to be determined at trial, but in no event less than $ 616

On August 2, 2018, North Empire filed a Summons with Notice against the Company, also in the same Court, in which they

allege damages in an amount of $ 11.4

million arising from an alleged breach of the Agreement.

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judgment decision.

The appeal must be fully perfected and filed by September 24, 2022.

The Company filed its appellant brief on or about October 26, 2022.

On February 3, 2022, the Company filed a

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North Empire filed its opposition papers to the Company’s motion to reargue.

On or about May 20, 2022 the Company filed its

reply papers, in further support of its motion to reargue.

That motion is now fully briefed and the Company is waiting on a decision from

On or about September 12, 2022 the Court issued

its decision and order denying the Company’s motion to reargue.

North Empire is due to file its opposing brief on or about December 7, 2022.

Company believes it is more likely than not that the counterclaims will be denied.

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under a certain consulting agreement dated July 2, 2014, in an amount of NIS 819,000 (approximately $ 256 ).

Additionally, the

plaintiffs allege that the Company should compensate them for losses allegedly incurred by them following their investment in the

Company’s shares issued under a certain private offering.

In the alternative, the plaintiffs move that the court will declare

the investment agreement void with full restitution of plaintiffs’ original investment in an amount of NIS 1,329,650 (approximately

Additionally, the plaintiffs

allege that the Company should compensate them for losses allegedly incurred by them following their investment in the Company’s

shares issued under a certain private offering.

In the alternative, the plaintiffs move that the court will declare the investment

agreement void with full restitution of plaintiffs’ original investment in an amount of NIS 1,329,650 (approximately $ 415 ).

The Company filed its statement of defense on October 25, 2021.

The first court preliminary hearing was held on March 1, 2022.

Following the first preliminary hearing and the Court’s comments and recommendation, the plaintiffs filed a motion

to strike out the claim without prejudice.

the first preliminary hearing and the Court’s comments and recommendation, the plaintiffs filed a motion to strike out the

claim without prejudice.

On March 8, 2022 the Court ordered dismissal without prejudice of the claim.

also ruled that to the extent the plaintiffs will not move within 7 days to revise their motion do dismiss their claim “with

prejudice”, the Company will be entitled to request an order for costs.

On April 11, 2022 the Court ordered the plaintiffs

to pay the Company’s costs in the amount of NIS 15,000 , within 30 days.

The Court also ruled that to

the extent the plaintiffs will not move within 7 days to revise their motion do dismiss their claim “with prejudice”,

the Company will be entitled to request an order for costs.

On April 11, 2022 the Court ordered the plaintiffs to pay the Company’s

costs in the amount of NIS 15,000 , within 30 days.

AND ITS SUBSIDIARIES

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results of operations of Orgad have been included in the consolidated financial statements since the acquisition date of February 7,

Orgad revenues included in the Company’s consolidated statement of operations from February 7, 2022 through June 30, 2022

and for the three-month period ended June 30,

2022 were $ 752 .

If the acquisition had occurred on January 1, 2021,

management estimates that the consolidated pro forma revenues for the year would have been $ 2,768 ,

and the net loss would have been $ 2,272 .

Orgad revenues included in the Company’s consolidated statement of operations from February 7, 2022 through September 30,

2022 were $ 1,797 and for the three-month period ended

September 30, 2022 were $ 685 .

If the acquisition

had occurred on January 1, 2021, management estimates that the consolidated pro forma revenues for the year would have been $ 2,768 , and

the net loss would have been $ 2,272 .

Consideration

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of Fair value of the Acquisition

Issuance of shares of common stock ( 1,395,025

shares) ( ** ) (**)

Total consideration transferred

of shares of common stock ( 1,743,781 shares) (**)

consideration transferred

cash payment is subject to working capital adjustments.

price as of acquisition date

price as of the acquisition date

addition, the Company agreed to pay to the former owners of Orgad, on the two-year and the three-year anniversary of the closing, $ 350,000

in each of these years provided that in the case of the second and third instalments certain revenue targets are met and subject

further to certain downward post-closing adjustment.

Furthermore, 1,395,024

shares of common stock will be issued in eight equal quarterly instalments until the lapse of two years from closing.

earn-out payments of 10 %

of the operating profit of Orgad for the years 2022 and 2023 will also be paid.

All of these payments are subject to the former

owners being actively engaged with Orgad at the date such payment is due, and therefore were not taken as part of the consideration

for the business combination.

During the six and three-month period

ended June 30, 2022 an amount of $ 111

was recorded in respect of the cash instalments respectively, and $ 127

in respect of stocks issuance, respectively.

assets acquired and liabilities assumed

in each of these years provided that in the case of the second and third instalments certain revenue targets are met and subject further

to certain downward post-closing adjustment.

Furthermore, 1,743,781 shares of common stock will be issued in eight equal quarterly instalments

until the lapse of two years from closing.

Additional earn-out payments of 10 % of the operating profit of Orgad for the years 2022 and

2023 will also be paid.

All of these payments are subject to the former owners being actively engaged with Orgad at the date such payment

is due, and therefore were not taken as part of the consideration for the business combination.

the nine and three-month period ended September 30, 2022 an amount of $ 328 and $ 201 was recorded in respect of the cash instalments respectively,

and $ 267 and $ 156 in respect of stocks issuance, respectively.

Identifiable assets acquired and liabilities assumed

the preliminary purchase price allocation, the Company allocated the purchase price to tangible and identified intangible assets acquired

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following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date:

of Fair Value of Assets Acquired and Liabilities

Schedule of Fair Value of Assets Acquired and Liabilities

Cash and Cash Equivalent

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Total net assets acquired

estimated useful lives of the selling platform are three

During the six and three-month period ended June 30,2022 an amount of $ 52

was recorded in respect of amortization expenses.

estimated useful life of the selling platform is three years .

During the nine and three-month period ended September 30,2022 an

amount of $ 84 and $ 32 was recorded in respect of amortization expenses.

Acquisition-related

Company incurred transaction costs of approximately $ 55

and none during the six-month and three-month period ended June 31, 2022 which were included

in general and administrative expenses in the consolidated statements of income (loss), (the total amount recorded during the first

quarter of the year).

Company incurred transaction costs of approximately $ 55 and none during the nine-month and three-month period ended September 30, 2022

which were included in general and administrative expenses in the consolidated statements of income

(loss), (the total amount recorded during the first quarter of the year).

AND ITS SUBSIDIARIES

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7 – Operating Segments

As a result of the business

combination in the reporting period (see note 6), the company has two reportable segments:

(i) fashion and equipment e-commerce

platform and (ii) SaaS based innovative artificial intelligence driven measurement

The fashion and equipment e-commerce platform which represent Orgad’s activity that was acquired by the Company,

mainly operates on Amazon.

The SaaS based innovative artificial intelligence driven measurement solutions, or SaaS Solutions

operating segment consists of My Size Inc and My Size Israel.

a result of the business combination in the reporting period (see note 6), the Company has two reportable segments:

(i) fashion and equipment

e-commerce platform, and (ii) SaaS based innovative artificial intelligence driven measurement solutions.

The fashion and equipment e-commerce

platform which represent Orgad’s activity that was acquired by the Company, mainly operates on Amazon.

The SaaS based innovative

artificial intelligence driven measurement solutions, or SaaS Solutions operating segment consists of My Size Inc and My Size Israel.

related to the operations of the Company’s reportable operating segments is set forth below:

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Fashion and equipment e-commerce platform

For the six months ended June 30, 2022

For the nine months ended September 30, 2022

Operating (loss) income

For the three months ended June 30, 2022

For the three months ended September 30, 2022

Operating (loss) income

Fashion and equipment e-commerce platform

For June 30, 2022:

and equipment e-commerce platform

September 30, 2022:

Note 8 – Significant events during the reporting

In July 2022, Amazon deactivated Orgad’s Amazon U.S.

result of complaints submitted due to an error in the listed manufacturer of certain products on Orgad’s store.

Orgad resolved

the complaints and the account was reinstated during September.

During the deactivation period, Orgad generated revenues through

other sales channels.

In August 2022, the Company established a joint venture

(“JV”) in Brazil with Santista Têxtil.

The Company holds 51% and Santista Têxtil holds 49% of the JV.

purpose of the JV is to serve the Brazilian market according to the business plan that was set.

Both parties agree to make an initial investment in the JV of 1 million

BRL per the holding percentage.

As of the reporting date, the JV is in process of establishing its operation.

9 – Subsequent events

July 2022, Amazon deactivated Orgad’s Amazon U.S.

store as a result of complaints submitted due to an error in the listed

manufacturer of certain products on Orgad’s store.

Orgad resolved the complaints and is presently in the process of having its

account reinstated.

On October 7, 2022, the Company entered into Share Purchase Agreement

(the “Agreement”) with the five shareholders of Naiz Fit (the “Sellers”), pursuant to which the Sellers agreed to

sell to the Company all of the issued and outstanding shares of Naiz Bespoke Technologies, S.L., a limited liability company incorporated

under the laws of Spain (“Naiz”).

The acquisition of Naiz was completed on October 11, 2022.

In consideration of the purchase

of the shares of Naiz, the agreement provides that the Sellers are entitled to receive (i) an aggregate amount of 6,000,000

shares (the “Equity Consideration”) of the Company’s common stock (the “Shares”), representing in the

aggregate, immediately prior to the issuance of such shares at the closing of the transaction, not more than 19.9 %

of the issued and outstanding Shares and (ii) up to US$ 2,050,000

in cash (the “Cash Consideration”).

The Company shall make an additional

cash payment (the “Shortfall Value”) of $ 459,240 to the Sellers within 45 days of the Company’s receipt of Naiz’s

2025 audited financial statements;

provided that certain revenue targets are met.

The Cash Consideration will be paid to the

Sellers in five installments, according to the following payment schedule:

(i) US$500,000 at closing, (ii) up to US$500,000 within 45

days of the Company’s receipt of Naiz’s 2022 audited financial statements, (iii) up to US$350,000 within 45 days of the Company’s

receipt of Naiz’s unaudited financial statements for the six months ended June 30, 2023, (iv) up to US$350,000 within 45 days of

the Company’s receipt of Naiz’s unaudited financial statements for the six months ended December 31, 2023, and (v) up to US$350,000

within 45 days of the Company’s receipt of Naiz’s 2024 audited financial statements;

provided that in the case of the second,

third, fourth and fifth installments certain revenue targets are met.

The payment of the second, third,

fourth and fifth cash installments are further subject to the continuing employment or involvement of two of the shareholders which

holds key position by or with Naiz at the date such payment is due (except if a Key Person is terminated from Naiz due to a Good

Reason (as defined in the Agreement).

The required information for purchase price allocation in accordance with

the FASB ASC Topic 805 is not fully presented because the initial accounting of the business combination not yet completed as of the date

of the financial statements, due to the short period since acquisition and since the acquiree accounting records are not yet final.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements