What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-04-14 compared with 2022-03-18 · 902 added, 515 removed, 574 unchanged (71% of the section changed)

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DOLLARS IN THOUSANDS

of Independent Registered Public Accounting Firm (PCAOB ID:

Balance Sheets

Statements of Comprehensive Loss

Statements of Shareholders’ Equity

Statements of Cash Flows

to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

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the two-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of

December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December

In our opinion,

the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31,

2022, in conformity with U.S.

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statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit

The communication of critical audit matters

does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the

critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they

Acquisition-date

fair value of customer relationships

discussed in Note 16 to the consolidated financial statements, on October 11, 2022, the Company acquired Naiz Bespoke Technologies SL

As a result of the transaction, the Company acquired customer relationships intangible assets (“customer

relationships”) representing the generation of future income from Naiz’s existing customers.

The acquisition date fair value

of the customer relationships was $726 thousand.

identified the evaluation of the acquisition-date fair value of the Naiz customer relationships as a critical audit matter.

A high degree

of subjective auditor judgment was required to evaluate the following internally developed assumptions used to estimate the fair value

of such asset, for which there were limited observable inputs:

(i) forecasted revenues attributable to existing customers, (ii) forecasted

earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margins for the acquired business, (iii) estimated

annual customer attrition rates and (iv) estimated discount rate.

The determined fair value was sensitive to changes in these key assumptions.

Additionally, specialized skills and knowledge were needed to evaluate the discount rate used.

primary procedures we performed to address this critical audit matter included the following.

We evaluated the design of certain internal

controls over the Company’s acquisition-date fair value estimation process, including controls over the development of key assumptions.

We performed a sensitivity analysis to assess the impact of reasonably possible changes to forecasted revenues, EBITDA margins, annual

customer attrition rates, and the discount rate.

We evaluated the forecasted revenue growth rates from existing customers by comparing

the growth assumptions to those of the Company’s peers and industry reports.

In connection with our assessment of the forecasts

used in the valuation, we compared (1) forecasted revenue and EBITDA to Naiz’s historical actual results and (2) estimated annual

customer attrition rates to historical Naiz customer attrition data.

We tested the Company’s determined weighted average cost of

capital (“WACC”), which was used to determine the discount rate, by involving valuation professionals with specialized skills

and knowledge, who assisted in:

the selected discount rate by comparing it against a discount rate range that was independently

developed using publicly available market data for comparable companies, and;

the Company’s WACC calculation, by comparing it against an independently estimated

WACC range based on inputs obtained through published surveys and studies.

impairment assessment

discussed in Note 16 to the consolidated financial statements, during 2022 the Company recorded goodwill of $1,257 thousand related to

the acquisition of Naiz Bespoke Technologies, S.L.

The Company performed an annual quantitative impairment test

of goodwill at the reporting unit level.

Based on this analysis, the Company determined that the fair value of its reporting unit exceeded

its carrying value and no impairment charge was required.

identified the evaluation of the goodwill impairment assessment for the Naiz reporting unit as a critical audit matter.

A high degree

of subjective auditor judgment was required to evaluate the following assumptions used to estimate the fair value of the Company’s

reporting unit, for which there were limited observable inputs:

(i) forecasted reporting unit cash flows, (ii) long-term growth rates,

and (iii) discount rates.

The fair value was sensitive to changes in these key assumptions.

Additionally, specialized skills and knowledge

were needed to evaluate the discount rates.

primary procedures we performed to address this critical audit matter included the following.

We evaluated the design of certain internal

controls over the Company’s goodwill impairment evaluation process.

We performed sensitivity analyses to assess the impact of reasonably

possible changes to forecasted cash flows, long-term growth rates, and discount rates.

We evaluated the Company’s forecasted growth

rates by comparing the growth assumptions to those of the Company’s peers and industry reports.

We compared the Company’s

forecasted revenue, cost of sales, and operating expense margins to historical actual results to assess the reasonableness of the forecasts.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

Assessing the Company’s WACC calculation, by comparing it against an estimated WACC range based on inputs obtained through published

surveys and studies

Evaluating the discount rates used by the Company by comparing them against discount rate ranges that were developed using publicly available

market data for comparable companies, and;

Performing an arithmetic recalculation regarding the fair value of the Company’s reporting unit, using the Company’s cash

flow forecasts and the independently developed discount rates, and comparing the results to the Company’s fair value estimates.

Somekh Chaikin

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have served as the Company’s auditor since 2017.

April 14, 2023

AND ITS SUBSIDIARIES

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Restricted cash

Restricted deposit

Accounts receivable

Other receivables and

prepaid expenses

current assets

Account receivables

Other receivables and prepaid expenses

Total current assets

Long term deposits

Property and equipment, net

Right-of-use asset

Investment in marketable

Operating right-of-use asset

Intangible assets

Investment in JV

Investment in marketable securities

Total non-current asset

Liabilities and shareholders’

Liabilities and shareholders’ equity

Current liabilities

Operating lease liability

Short-term loans

Trade payables

Accounts payable

Warrants and derivatives

current liabilities

Liabilities to Related parties

Other payables

Total current liabilities

Long-term loans

Deferred tax liabilities

Operating lease liability

non-current liabilities

Total non-current liabilities

CONTINGENCIES AND COMMITMENTS

Total Liabilities

Shareholders’ equity

Stock capital -

Common stock of $ 0.001 par value - Authorized:

100,000,000 shares;

Common stock of $ 0.001

par value - Authorized:

and 100,000,000 shares as of

December 31,2022 and 2021;

Issued and outstanding:

23,982,503 and 7,232,836 , respectively

and 959,297 as of December 31,2022 and

2021 , respectively (*)

Additional paid-in capital

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Accumulated deficit

shareholders’ equity

liabilities and shareholders’ equity

Total shareholders’ equity

Total liabilities and shareholders’ equity

to give retroactive effect of 1:25 reverse stock split, see Note 13 (g)

accompanying notes are an integral part of the consolidated financial statements.

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Operating loss

Financial income (expense),

Other comprehensive income

Foreign currency translation

comprehensive loss

Basic and diluted loss

Basic and diluted weighted average number

of shares outstanding

Financial income (expense), net

Loss before taxes

Taxes on income

Net loss for the year

Other comprehensive income (loss):

Foreign currency translation differences

Total comprehensive loss

Basic and diluted loss per share ( * )

Basic and diluted weighted average number of shares outstanding ( * )

to give retroactive effect of 1:25 reverse stock split, see Note 13 (g)

accompanying notes are an integral part of the consolidated financial statements.

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stockholders’

Balance as of December 31, 2019

Stock-based compensation related to options

granted to employees and consultants

Balance as of January 1, 2021

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

Exercise of options granted to employees

Exercise of options granted to employees, shares

Restricted shares issued to shareholder (***)

Restricted shares issued to shareholder

(***) , shares

Issuance of shares, net of issuance cost of $ 1,160

Exercise of warrants and pre funded warrants

Liability reclassified to equity ( ** )

Exercise of warrants

Exercise of warrants , shares

Total comprehensive

Total comprehensive income (loss)

Balance as of December 31, 2021

Stock-based compensation related to options

granted to employees and consultants

Exercise of options granted to employees

Restricted shares issued to shareholder ( *** )

Issuance of shares, net of issuance cost of $ 1,160

Exercise of warrants

Total comprehensive

income (loss)

Stock-based compensation related to options and restricted shares granted to employees and

Issuance of shares in Business Combination (**)

Issuance of shares post Business Combination (**)

Effect of reverse stock split (Note 13 g)

Total comprehensive income (loss)

Balance as of December 31, 2022

Represents an amount of less than

an amount of less than $1.

accompanying notes are an integral part of the consolidated financial statements.

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dollars in thousands

Cash flows from

operating activities:

Adjustments to reconcile net loss to net cash

used in operating activities:

Amortization of operating lease right-of-use

Revaluation of warrants and derivatives

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Change in operating lease right-of-use asset

Amortization of intangible assets

foreign exchange differences

Change in liabilities to related parties

Interest on long term liabilities

Interest paid

Revaluation of investment in marketable securities

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Stock based compensation

(Increase) decrease in accounts receivable

Increase in other receivables and prepaid expenses

(Decrease) increase in trade payables

(Decrease) increase

in accounts payables

Net cash used in operating

Cash flows from

investing activities:

Proceeds from short-term deposits, net

Proceeds from (investment in) restricted deposits,

Investment in right to use asset

Purchase of property

and equipment

Net cash provided by

(used in) investing activities

Cash flows from

financing activities:

Proceeds from issuance of shares, net of issuance

Proceeds from exercise of warrants and

pre funded warrants

Proceeds from exercise

Net cash provided by

financing activities

Effect of exchange rate fluctuations on cash

and cash equivalents

Increase (Decrease) in cash and cash equivalents

and restricted cash

Cash and cash equivalents

and restricted cash at the beginning of the year

Cash and cash equivalents

and restricted cash at the end of the year

Issuance of shares post Business Combination

Change in inventory

Change in deferred tax liabilities

Change in account receivable

Changes in operating lease liabilities

Change in other receivables and prepaid expenses

Change in trade payables

Change in other payables

Net cash used in operating activities

Cash flows from investing activities:

Acquisition of a subsidiary, net of cash acquired

Proceeds from restricted deposits, net

investing in other receivable

Investment in equity accounted investee

Purchase of property and equipment

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Proceeds from issuance of shares, net of issuance costs

Repayment of loans

Proceeds from exercise of warrants

Net cash (used in) provided by financing activities

Effect of exchange rate fluctuations on cash and cash equivalents

Change in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at the beginning of the year

Cash and cash equivalents and restricted cash at the end of the year

Aggregate cash flows derived for the Company as a result of the Orgad acquisition (note 16)

Noncash or Part Noncash Acquisitions

Trade and other receivables

Long-term deposits

Selling Platform

Short-term credit

Trade payables

Other payables

Long-term loan

Long-term provision

Deferred Tax Liability

Issuance of shares

Total acquisition of subsidiary, net of cash

Aggregate cash flows derived for the Company as a result of the Naiz acquisition (note 16)

Noncash or Part Noncash Acquisitions

Trade receivables and other receivables

Long-term financial investment

Customer Relationships

Short Term accruals and deferrals

Trade payables

Short-term provision

Short term debt

Long term debt

Deferred Taxes

Issuance of shares

Total acquisition of subsidiary, net of cash

accompanying notes are an integral part of the consolidated financial statements.

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

NOTE 1 - GENERAL

is developing unique measurement technologies based on algorithms with applications

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in a variety of novel ways.

Company has three subsidiaries, My Size Israel 2014 Ltd.

(“My Size Israel”) and Topspin Medical (Israel) Ltd., both of

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

References to the Company include

the subsidiaries unless the context indicates otherwise.

Following the acquisition of Naiz Bespoke Technologies, S.L (“Naiz”)

in October 2022 (see note 16), the Company expanded its offering outreach and customer base.

the acquisition of Orgad International Marketing Ltd.

(“Orgad”) in February 2022 (see note 16), 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 16).

References to the Company include the subsidiaries

unless the context indicates otherwise.

Size, Inc., was incorporated and commenced operations in September 1999, as Topspin Medical Inc.

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using a mobile device to ensure the purchase of clothing with the best possible fit without the need to try them on.

February 2014, the Company established a wholly owned subsidiary, My Size (Israel) 2014 Ltd., a company registered in Israel, which

is currently engaged in the development of the Venture described above.

February 2014, the Company established a wholly owned subsidiary, My Size (Israel) 2014 Ltd., a company registered in Israel, which is

currently engaged in the development of the Venture described above.

return for purchasing an interest in the Venture, the Company undertook to pay the Seller 18 % of the Company’s operating profit,

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

NOTE 1 - GENERAL (Cont.)

July 25, 2016, the Company’s common stock began publicly trading on the Nasdaq Capital Market under the symbol “MYSZ”.

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foreseeable future.

Taking into account the proceeds from warrant exercises and the Company’s financing in October 2021 described

in note 10c and 10f below managements believes that cash on hand will be sufficient to meet its obligations.

Nevertheless, due to the recent acquisition of Orgad (as described in note 16a below) there is uncertainty regarding

the expected cash burn in the foreseeable future, and as such there is substantial doubt about the Company’s ability to continue

as a going concern.

Management’s plans include the continued

commercialization of the Company’s products and securing sufficient financing through the sale of additional equity securities,

debt or capital inflows from strategic partnerships.

Additional funds may not be available when the Company needs them, on terms that

are acceptable to it, or at all.

If the Company is unsuccessful in commercializing its products and securing sufficient financing, it

may need to cease operations.

The financial statements include no

adjustments for measurement or presentation of assets and liabilities, which may be required should the Company fail to operate as a

going concern.

Company operates in one reportable segment and all of its long-lived assets are located in Israel.

late 2020, 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 has now spread to Israel and the United States, and infections have been reported globally.

countries around the world, including in Israel, have significant governmental measures being implemented 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.

These measures have resulted in work stoppages and other disruptions.

The Company has implemented

remote working and work place protocols for its employees in accordance with government requirements.

In addition, while the Company

has seen an increased demand for MySizeID, the COVID-19 pandemic has had a particularly adverse impact on the retail industry and

this has resulted in an adverse impact on the Company’s marketing and sales activities.

The extent to which COVID-19 continues to impact 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.

ACCOUNTING POLICIES

Based on the projected cash flows and cash balances as of December 31, 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 of additional

equity securities, debt or capital inflows from strategic partnerships.

Additional funds may not be available when the Company needs

them, on terms that are acceptable to it, or at all.

If the Company is unsuccessful in commercializing its products and securing sufficient

financing, it may need to cease operations.

financial statements include no adjustments for measurement or presentation of assets and liabilities, which may be required should the

Company fail to operate as a going concern.

The Company has three reportable segments:

(i) fashion and equipment e-commerce

platform, and (ii) SaaS based innovative artificial intelligence driven measurement solutions (iii) Naiz 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 My Size Israel and LLC.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S.

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Actual results could differ from those estimates.

The currency of the primary economic

environment in which the operations of the Company is conducted is the United States Dollar and thus it is the Company’s

functional currency.

The reporting currency according to which these financial statements are prepared is the U.S.

The currency of the primary economic

environment in which the operation of the Subsidiary, My Size Israel functional currency is the New Israeli Shekel (“NIS”).

The currency of the primary economic

environment in which the operation of the Subsidiary, My Size LLC, functional currency is Russian Ruble.

Information about assumptions made by the

Company with respect to the future and other reasons for uncertainty with respect to estimates that have a significant risk of resulting

in a material adjustment to carrying amounts of assets and liabilities in the next financial year are included in the following notes:

Acquisitions of subsidiaries

The Company measures the fair value of the consideration

transferred (including contingent consideration) and fair value of the assets acquired and liabilities assumed, in business combination

transactions.

For information on details on fair value measurement in acquisition of subsidiaries, see Note 16 regarding business combinations.

Estimated impairment of non-financial

Company examines on an annual basis whether there is an impairment of goodwill, intangibles and property, plant and equipment that are

allocated to cash generating units, in accordance with the accounting policy presented in Note 1(h) below.

Recoverable amounts of cash-generating

units are determined on the basis of value-in-use calculations.

These calculations require the use of estimates.

For information on key assumptions used in calculation of the recoverable

amount, see note 7 – Goodwill and other Intangible assets.

currency of the primary economic environment in which the operations of the Company is conducted is the United States Dollar and thus

it is the Company’s functional currency.

The reporting currency according to which these financial statements are prepared is the

currency of the primary economic environment in which the operation of the Subsidiary, My Size Israel and Orgad International Marketing

functional currency is the New Israeli Shekel (“NIS”).

currency of the primary economic environment in which the operation of the Subsidiary, My Size LLC, functional currency is Russian Ruble.

currency of the primary economic environment in which the operation of the Subsidiary, Naiz fit, functional currency is Euro.

AND ITS SUBSIDIARIES

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

ACCOUNTING POLICIES (Cont.)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

of consolidation :

consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

All intercompany balances

and transactions have been eliminated upon consolidation.

All intercompany balances and

transactions have been eliminated upon consolidation.

equivalents :

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less at the date acquired.

cash are deposits for rent, credit card and for hedging activities.

Inventories :

include finished goods and are measured at the lower of cost or net realizable value.

The cost of inventories comprises of the costs

incurred in bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price in

the ordinary course of business.

At the point of the loss recognition, a new, lower-cost basis for that inventory is established,

and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

The costs of purchase of inventories comprise the purchase price and other costs directly attributable to the acquisition of

finished goods.

In 2022, the Company recorded an inventory mark-down of $48.

and equipment :

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During the periods ended December 31, 2022 and 2021, no impairment losses have been

combinations :

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

to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.

excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as

When determining the fair values of assets acquired and liabilities assumed, the Company estimated the future expected

cash flows from acquired platform, customer relationships, Technology and trademark from a market participant perspective, useful

lives and discount rates.

In addition, management makes significant estimates and assumptions, which are uncertain, but believed to

be reasonable.

Acquisition-related

costs are recognized separately from the acquisition and are expensed as incurred.

MY SIZE, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands (except share data and

per share data)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination.

Under ASC 350, “Intangible - Goodwill and Other”, goodwill is not amortized, but rather is subject to an annual impairment

350 requires goodwill to be tested for impairment at the reporting unit level at least annually, the fourth quarter, or between

annual tests in certain circumstances, and written down when impaired.

Goodwill is tested for impairment by comparing the fair value

of the reporting unit with it carrying value.

Goodwill from Orgad acquisition was allocated to the fashion and equipment e-commerce

platform segment and Goodwill from the Naiz acquisition was allocated to Naiz segment based innovative artificial intelligence

driven measurement solutions.

Alternatively,

ASC 350 permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step

of the goodwill impairment test.

There were no impairment charges to goodwill during the period presented.

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

Intangible assets

are recorded at costs, net of accumulated amortization.

The Company amortizes its intangible assets reflecting the pattern in which the

economic benefits of the intangible assets are consumed.

When a pattern cannot be reliably determined, the Company uses a straight-line

amortization method.

Amortization is calculated by the straight-line method over the estimated

useful lives of the following assets.

estimated useful lives of the company’s intangible assets are as follows:

SCHEDULE OF INTANGIBLE ASSETS ESTIMATED USEFUL LIVES

Customer Relationships

Selling Platform

period the Company evaluates the estimated remaining useful lives of its intangible assets and whether events or changes in circumstances

warrant a revision to the remaining period of amortization

Subsidiary’s liability for severance pay is covered by Section 14 of the Israeli Severance Pay Law (“Section 14”).

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contribution plans and expenses are recorded based on actual deposits.

Other than the My Size Israel’s liability there are no additional

severance pay liabilities.

AND ITS SUBSIDIARIES

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

ACCOUNTING POLICIES (Cont.)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

and development costs :

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Company implements a two-step approach to recognize and measure the benefit of its tax positions.

The first step is to evaluate the tax

position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely

than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related

appeals or litigation processes.

The second step is to measure the tax benefit as the largest amount that is greater than 50 percent

(cumulative basis) likely to be realized upon settlement .

The Company believes that its tax positions are all highly certain of being

upheld upon examination.

As such, as of December 31, 2021 and 2020 the Company has no t recorded a liability for unrecognized tax benefits.

The first step is to evaluate the

tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is

more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including

resolution of any related appeals or litigation processes.

The second step is to measure

the tax benefit as the largest amount that is greater than 50 percent (cumulative basis) likely to be realized upon

The Company believes that its

tax positions are all highly certain of being upheld upon examination.

As of December 31, 2022 and 2021 the Company recorded a

liability for unrecognized tax benefits of $ 328 and none respectively.

for stock-based compensation :

Company accounts for its employees’ stock-based compensation as an expense in the financial statements based on ASC 718.

awards are equity classified and therefore such costs are measured at the grant date fair value of the award and graded vesting

attribution approach to recognize compensation cost over the vesting period.

The Company estimates stock option grant date fair

value using the Binomial and Black Scholes option pricing-model.

are equity classified and therefore such costs are measured at the grant date fair value of the award and graded vesting attribution

approach to recognize compensation cost over the vesting period.

The Company estimates stock option grant date fair value using the Binomial

and Black Scholes option pricing-model.

Company recorded stock options issued to non-employees at the grant date fair value, and recognizes expenses over the related service

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

ACCOUNTING POLICIES (Cont.)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

value of financial instruments :

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based on inputs that are unobservable and significant to the overall fair value measurement.

expected volatility of the share prices reflects the assumption that the historical volatility of the share prices is reasonably indicative

of expected future trends.

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

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and diluted net loss per share :

Basic net loss per share is computed

based on the weighted average number of shares of common stock outstanding during each year.

Diluted net income per share is computed

based on the weighted average number of shares of common stock outstanding during each year plus dilutive potential equivalent common

stock considered outstanding during the year, in accordance with ASC 260, “Earnings per Share”.

For the years ended

December 31, 2021 and 2020, all outstanding options and warrants have been excluded from the calculation of the diluted net loss

per share since their effect was anti-dilutive.

net loss per share is computed based on the weighted average number of shares of common stock outstanding during each year.

income per share is computed based on the weighted average number of shares of common stock outstanding during each year plus dilutive

potential equivalent common stock considered outstanding during the year, in accordance with ASC 260, “Earnings per Share”.

For the years ended December 31, 2022 and 2021, all outstanding options and warrants have been excluded from the calculation of the diluted

net loss per share since their effect was anti-dilutive.

Concentrations

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cash equivalents.

and cash equivalents are invested in banks in Israel and United States.

Such deposits in Israel may be in excess of insured limits and

are not insured in other jurisdictions.

and cash equivalents are invested in banks in Israel, Spain and United States.

Such deposits in United States may be in excess of insured limits

and are not insured in other jurisdictions.

Management believes that the financial institutions that hold the Company’s investments

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

ACCOUNTING POLICIES (Cont.)

from contracts with customers :

Company implemented ASC 606, Revenue from Contract with Customers.

recognize revenue under ASC 606, the Company applies the following five steps:

the contract with a customer.

A contract with a customer exists when the Company enters into an enforceable contract with a customer

and the Company determines that collection of substantially all consideration for the services is probable.

the performance obligations in the contract.

the transaction price.

The transaction price is determined based on the consideration to which the Company will be entitled in exchange

for providing the service to the customer.

the transaction price to performance obligations in the contract.

If a contract contains a single performance obligation, the entire

transaction price is allocated to the single performance obligation.

revenue when or as the Company satisfies a performance obligation.

When the Company provides a service, revenue is recognized over

the service term.

Company’s revenue is derived from License cloud-enabled software subscriptions, associated software maintenance and support.

is recognized when a contract exists between the Company and a customer (business) and upon transfer of control of promised products

or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.

The Company enters into contracts that can include various combinations of products and services, which may be capable of being distinct

and accounted for as separate performance obligations.

In case of offerings such as cloud-enabled license services, other service elements

in the contract are generally delivered concurrently with the subscription services and therefore revenue is recognized in a similar

manner as the subscription services.

Subscription and Services Offerings

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Recognition :

Company’s revenues are comprised of two main categories:

(1) selling products to customers, and (2) licensing cloud-enabled software

subscriptions, associated software maintenance and support.

Company recognizes revenue in accordance with ASC Topic 606, Revenues from Contracts with Customers (“ASC 606”).

with a customer exists only when:

the parties to the contract have approved it and are committed to perform their respective obligations,

the Company can identify each party’s rights regarding the distinct goods or services to be transferred (“performance obligations”),

the Company can determine the transaction price for the goods or services to be transferred, the contract has commercial substance and

it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that

will be transferred to the customer.

from sale of products is recognized at the time the related performance obligation is satisfied by transferring a promised good to a

Revenue is recognized net of allowances for refunds and any taxes collected from customers, which are subsequently remitted

to governmental authorities.

Refunds are estimated at contract inception and updated at the end of each reporting period if additional

information becomes available.

Revenue is recognized when control of the product is transferred to the customer.

Company maintains a returns policy that allows its customers to return product within a specified period of time.

The estimate of the

provision for returns is based upon historical experience with actual returns.

versus Agent Considerations

Company follows the guidance provided in ASC 606 for determining whether it is a principal or an agent in arrangements with customers,

by assessing whether the nature of the Company’s promise is a performance obligation to provide the specified goods (principal)

or to arrange for those goods to be provided by the other party (agent).

With regard to products being sold by Orgad through Amazon,

this determination involves judgment.

The Company determines it is the principle when it has control over promised

product before it is transferred to the end customers.

and Services Offerings

performance obligations include cloud enabled subscriptions, software maintenance and technical support.

hosted subscription services (SaaS) allow customers to access hosted software during the contractual term without taking possession of

the software.

Cloud-hosted subscription services are sold on a fee-per-subscription that is based on consumption or usage (per fit recommendation).

hosted subscription services (SaaS) allow customers to access hosted software during the contractual term without taking possession

of the software.

Cloud hosted subscription services are sold on a fee per subscription that is based on consumption or usage (per

fit recommendation).

Company recognizes revenue ratably over the contractual service term for hosted services that are priced based on a committed number

11 unchanged sentences

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

ACCOUNTING POLICIES (Cont.)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Contingencies

5 unchanged sentences

Company accounts for its derivative instruments as either assets or liabilities and measures them at fair value through profit or loss.

The Company implemented ASU 2016-02, Leases

(Topic 842) (“ASU 2016-02”).

ASU 2016-02 is intended to increase transparency and comparability of accounting for lease transactions.

For all leases with terms greater than twelve months, the guidance requires lessees to recognize right-of-use assets and corresponding

lease liabilities on the balance sheet and to disclose qualitative and quantitative information about lease transactions.

maintains a distinction between finance leases and operating leases.

The Company leases include an office space lease agreement for 36

months, with an option to extend for an additional 36 months and 36 months cancelable operating lease agreements on behalf of personnel

The lease term includes a non-cancellable period of the lease plus any additional periods covered by either a Company option

to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate)

the lease controlled by the lessor.

For the office rent lease, the

Company has elected to account for the lease and non-lease maintenance components as a single lease component.

Therefore, the lease payments

used to measure the lease liability include all of the fixed consideration in the contract, including in-substance fixed payments, owed

over the lease term.

cash are deposits for rent, credit card and for hedging activities.

Company leases include an office space lease agreement for 36 months, with an option to extend for an additional 36 months and 36 months

cancelable operating lease agreements on behalf of personnel vehicles.

The lease term includes a non-cancellable period of the lease

plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably

certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation

to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on

the present value of lease payments over the lease term.

The company generally use its incremental borrowing rate based on the estimated

rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date.

Lease expense for lease

payments is recognized on a straight-line basis over the lease term.

the office rent lease, the Company has elected to account for the lease and non-lease maintenance components as a single lease component.

Therefore, the lease payments used to measure the lease liability include all of the fixed consideration in the contract, including in-substance

fixed payments, owed over the lease term.

of recently issued accounting standard

June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

Instruments”, which requires companies to measure credit losses of financial instruments, including customer accounts receivable,

utilizing a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable

information to inform credit loss estimates.

Subsequent to the issuance of ASU 2016-13, the FASB issued several additional Accounting

Standard Updates to clarify implementation guidance, provide narrow-scope improvements and provide additional disclosure guidance.

an Emerging Growth Company, ASU 2016-13 is effective for fiscal years beginning after December 15, 2022.

The Company does not expect

this ASU to have a material impact on its consolidated financial statements.

AND ITS SUBSIDIARIES

1 unchanged sentence

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

AND CASH EQUIVALENTS

NOTE 3 - CASH AND CASH EQUIVALENTS

Company’s cash and cash equivalents balance at December 31, 2022 and 2021 is denominated in the following currencies:

1 unchanged sentence

New Israeli Shekels

RECEIVABLES AND PREPAID EXPENSES

Cash and cash equivalents

NOTE 4 - OTHER RECEIVABLES AND PREPAID EXPENSES

OF OTHER RECEIVABLES AND PREPAID EXPENSES

Prepaid expenses and other current

Prepaid expenses and other current assets

Government authorities

AND EQUIPMENT, NET

NOTE 5 - PROPERTY AND EQUIPMENT, NET

OF PROPERTY AND EQUIPMENT, NET

Balance as at January 1, 2021

Business combination

Translation adjustments

1 unchanged sentence

Balance as at January 1, 2022

Business combination

Translation adjustments

13 unchanged sentences

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

NOTE 6 - LEASES

August 2019, The Company entered into an office space lease agreement.

1 unchanged sentence

ending on August 20, 2022 , with an option to extend for an additional 36 months .

Monthly rent payments including utilities amounting

to approximately USD 14 (NIS 45,000 ) per month .

The Company extended the lease period until August 20,

Monthly rent payments including utilities amounting to approximately USD 14 (NIS 49,500 ) per month.

addition, The Company entered into a three-year cancelable operating lease agreement for cars.

future minimum remaining rental payments due under these leases are as follows:

SCHEDULE OF FUTURE MINIMUM REMAINING RENTAL PAYMENTS

leases generally have terms which range from 1 year to 6 years, and often include one or more options to renew.

These renewal terms can

extend the lease term from 1 year to 6 years, and are included in the lease term when it is reasonably certain that the Company will

exercise the option .

These operating leases are included

in “Right of use asset” on the Company’s December 31, 2021 consolidated balance sheets, and represent the Company’s

right to use the underlying asset for the lease term.

The Company’s obligations to make lease payments are included in the current

liabilities as “Operating lease liability” and in the non-current liabilities as “Operating lease liability - long

term” on the Company’s December 31, 2021 consolidated balance sheets.

As of December 31, 2021, right-of-use of asset

lease liabilities were $ 138

operating leases are included in “Right of use asset” on the Company’s December 31, 2022 consolidated balance

sheets, and represent the Company’s right to use the underlying asset for the lease term.

The Company’s obligations to

make lease payments are included in the current liabilities as “Operating lease liability” and in the non-current

liabilities as “Operating lease liability - long term” on the Company’s December 31, 2022 consolidated balance

As of December 31, 2022, right-of-use of asset was $ 583 .

operating lease liabilities were $ 159

and non current Operating lease liabilities were $ 308 .

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

PARTY TRANSACTIONS

7 – Goodwill and other Intangible assets

intangible assets

Schedule of Intangible assets

OF GOODWILL AND INTANGIBLE ASSETS

Selling Platform

Customer Relationships

As of January 1, 2022

Goodwill and intangible assets, Cost, beginning

Acquisitions through business combinations

Effect of changes in exchange rates

As of December 31, 2022

Goodwill and intangible assets, Cost, ending

As of January 1, 2022

Goodwill and intangible assets, Amortization, beginning

Amortization for the year including effect of changes in exchange rates as of December 31, 2022

Goodwill and intangible assets, Amortization, ending

Carrying amount

As of December 31, 2022

Goodwill and intangible assets, Carrying amount, ending

expenses recorded for identified intangible assets in the Consolidated Statements of Operations for each period and were as follows:

OF AMORTIZATION EXPENSES INTANGIBLE ASSETS

Selling platform

Costs of revenues

Sales and marketing

Costs of revenues

Customer relationships

Sales and marketing

Total amortization expenses

amortization expenses are expected to be as follows:

OF FUTURE AMORTIZATION EXPENSES

Future amortization expenses

changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021 were as follows:

Fashion and equipment e-commerce platform

Balance as of December 31, 2021

Changes during the period:

Goodwill acquired

Goodwill impairment

Translation differences

Balance as of December 31, 2022

Company operates its business through three reporting segments:

(i) fashion and equipment e-commerce platform, and (ii) SaaS based

innovative artificial intelligence driven measurement solutions and (iii) Naiz.

See note 17 for additional segments

Company determines the fair value of its reporting units using the income approach.

According to the income, the Company uses discounted

cash flows to estimate the fair value.

Cash flow projections are based on the Company’s estimates of revenue growth rates and operating

margins, taking into consideration the industry’s and market’s conditions.

The discount rate used is based on the weighted

average cost of capital (“WACC”), adjusted for the relevant risk associated with business-specific characteristics.

Company performed a quantitative assessment as of December, 31 2022 for the reporting units’ fair value.

The estimated fair value

of the Fashion and equipment e-commerce platform and Naiz reporting units exceeded its estimated carrying amount by 95.9 % and 27.7 % respectively.

This, based the following assumptions:

OF ESTIMATED FAIR VALUE

Fashion and equipment e-commerce platform

Discount rate

Terminal growth rate

business conditions or expectations were to change materially, it may be necessary to record impairment charges to the Company’s

reporting units in the future.

AND ITS SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

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

8 - Investment in JV

August 2022, the Company established a joint venture (“JV”) in Brazil with Santista Têxtil.

The Company holds 51 %

and Santista Têxtil holds 49 %

The 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 $ 198

that will be made per the holding percentage

of each party.

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

NOTE 9 - Financial Liabilities

book value of each of the financial liability categories is an acceptable approximation of fair value.

debt is comprised of four loans that were granted to My Size Israel – in an outstanding amount of approximately $ 131 ,

bearing interest ranging from prime rate to prime+ 2.8 % rate,

and four loans that were granted to the Spanish subsidiary– in an outstanding

amount of approximately $ 400 ,

bearing interest ranging from 1 % to 3 % .

financial liability maturities during the five years following the end of the financial year are shown below:

SCHEDULE OF FINANCIAL LIABILITY MATURITIES

Debts with credit institutions

NOTE 10 - RELATED PARTIES TRANSACTIONS

Balances with related parties:

following related party payables are included in trade payables and accounts payable.

following related party payables are included in liability to related parties.

SCHEDULE OF RELATED PARTY PAYABLES

Liability in respect of business combinations (**)

Other related parties (***)

Due to related parties

amount includes the net salary payable.

amount includes the net salaries payables.

(**) The amount includes

the provision created to former owners of Orgad that are entitled to additional cash and equity consideration and former owners of Naiz

that entitled to additional cash consideration, see note 16- business combination.

(***) The amount includes an amount receivable from Orgad previous shareholders who currently work in the company.

Related parties benefits:

2 unchanged sentences

Share based payments

Cash liability and equity liability expenses related to acquisitions (**)

Related parties benefits

(**) The amount includes the expenses for a provision created to former owners of Orgad that are

entitled to additional cash and equity consideration and former owners of Naiz that entitled to additional cash consideration, see note

16- business combination.

NOTE 11 - FINANCIAL INSTRUMENTS

following tables presents the Company’s significant assets and liabilities that are measured at fair value on recurring basis and

1 unchanged sentence

SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS

value hierarchy

December 31, 2022

Fair value hierarchy

Financial assets

Investment in marketable securities

value hierarchy

financial assets (*)

December 31, 2022

Fair value hierarchy

Financial liabilities

Warrants and derivative

value hierarchy

December 31, 2021

Fair value hierarchy

Financial assets

Investment in marketable securities

value hierarchy

December 31, 2021

Fair value hierarchy

Financial liabilities

Warrants derivative

(*) the financial asset

includes in other receivables.

AND ITS SUBSIDIARIES

1 unchanged sentence

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

INSTRUMENTS (Cont.)

NOTE 11 - FINANCIAL INSTRUMENTS (Cont.)

carrying amounts of cash and cash equivalents, restricted cash, short term restricted deposit, accounts receivable, other receivables

and prepaid expenses, trade payable and accounts payable approximate their fair value due to the short-term maturities of such instruments.

December 31, 2021, the recognized gain and fair value (based on quoted market prices with a discount due to security- restrictions

on iMine shares) of the marketable securities were $ 49

respectively (at December 31, 2020 33

respectively).

December 31, 2022, the recognized gain and fair value (based on quoted market prices with a discount due to security- restrictions on

iMine shares) of the marketable securities were $ 59 and $ 47 , respectively (at December 31, 2021 $ 49 and $ 108 , respectively).

NOTE 12 - TAXES ON INCOME

December 31, 2022, the Company had U.S.

federal net operating loss carryforwards of approximately $ 26,000

available to reduce future taxable income.

federal net operating loss carryforwards of approximately $ 26 available to reduce future

taxable income.

Utilization of the U.S.

net operating losses may be subject to substantial limitations due to the change of ownership provisions

of the Internal Revenue Code of 1986.

net operating losses may be subject to substantial limitations due to the change of ownership

provisions of the Internal Revenue Code of 1986.

Company has final tax assessments through 2014.

9 unchanged sentences

SCHEDULE OF TAX RATES RELEVANT TO THE COMPANY'S ISRAELI SUBSIDIARY

hereunder are the tax rates relevant to the Company’s Spanish subsidiary:

Company’s Israeli subsidiaries have estimated total available carryforward operating tax losses for Israeli income tax purposes

1 unchanged sentence

as of December 31, 2022.

losses, a total of $ 47,500

are owned by Topspin Medical (Israel)

Topspin tax losses may be offset only by future income with respect to the same operational activity by which it was incurred

for an indefinite period of time.

The other losses are owned by My Size Israel 2014 Ltd and may be carryforward to offset against

future income for an indefinite period of time.

Of these losses, a total

are owned by Topspin Medical (Israel) Ltd.

tax losses may be offset only by future income with respect to the same operational activity by which it was incurred for an indefinite

period of time.

The other losses are owned by My Size Israel and may be carryforward to offset against future income for an

indefinite period of time.

Medical (Israel) Ltd.

2 unchanged sentences

and foreign components of loss from continuing operations, before income taxes consisted of:

SCHEDULE OF COMPONENTS OF LOSS FROM CONTINUING OPERATIONS, BEFORE INCOME TAXES

OF COMPONENTS OF LOSS FROM CONTINUING OPERATIONS, BEFORE INCOME TAXES

AND ITS SUBSIDIARIES

1 unchanged sentence

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

ON INCOME (Cont.)

NOTE 12 - TAXES ON INCOME (Cont.)

taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting

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Marketable securities

Intangible assets

Research and development expenses

Other temporary differences

1 unchanged sentence

Valuation allowance

Net deferred tax asset

Net deferred tax liability

following table presents a reconciliation of the beginning and ending valuation allowance:

1 unchanged sentence

Balance at beginning of the year

Additions in valuation allowance to the income

in valuation allowance due to exchange rate differences

Balance at end of the

Additions in valuation allowance to the income statement

Additions in valuation allowance due to exchange rate differences

Balance at end of the year

assessing the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of

9 unchanged sentences

Computed “expected” tax income

Foreign tax rate differences and exchange rate

Foreign tax rate differences and exchange rate differences

Nondeductible expenses

Change in valuation

Change in valuation allowance

Taxes on income

2 unchanged sentences

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

SHAREHOLDERS’

NOTE 13 - SHAREHOLDERS’ EQUITY

stock confers upon their holders the right to receive notice to participate and vote in general meetings of the Company, and the

4 unchanged sentences

placement agent’s fees and other estimated offering expenses payable by the Company.

2021, a holders of warrants exercised warrants to purchase 3,377,710 ordinary shares of the

Company in exchange for $ 3,709 .

March 25, 2021, the Company conducted a public offering of its shares of common stock pursuant to which it issued 2,618,532 shares

of its common stock for gross proceeds of $ 3,300 .

The net proceeds to the Company from the offering were approximately $ 2,872 , after

deducting placement agent’s fees and other estimated offering expenses payable by the Company.

On May 7, 2021, the Company issued an additional 392,780 shares of

the Company’s common stock in connection with the full exercise of the underwriter’s overallotment option granted in the

Company’s March 2021 public offering.

These additional shares were sold to the underwriter at a public offering price of $ 1.26

per share, resulting in additional net proceeds to the Company, net of the underwriting discount, of approximately $ 463 .

2021, a holders of warrants exercised warrants to purchase 135,109 ordinary shares of the Company in exchange for $ 3,709 .

March 25, 2021, the Company conducted a public offering of its shares of common stock pursuant

to which it issued 104,741 shares of its common stock for gross proceeds of $ 3,300 .

proceeds to the Company from the offering were approximately $ 2,872 , after deducting placement

agent’s fees and other estimated offering expenses payable by the Company.

May 7, 2021, the Company issued an additional 15,711 shares of the Company’s common stock in connection with the full exercise

of the underwriter’s overallotment option granted in the Company’s March 2021 public offering.

These additional shares

were sold to the underwriter at a public offering price of $ 31.5 per share, resulting in additional net proceeds to the Company,

net of the underwriting discount, of approximately $ 463 .

May 26, 2021, the Company issued 100,000 shares of common stock to Ms.

Zigdon in consideration

of the Waiver.

Zigdon in consideration of the Waiver.

See note 1(b) above.

October 28, 2021, the Company sold in a registered direct offering 2,514,800 shares of its common stock and, in a concurrent private

placement, an aggregate of 1,886,100 unregistered warrants to purchase shares of common stock, at an offering price of $ 1.352 per

share and associated warrant.

In addition, on the same day, the Company sold in a private placement 3,772,208 unregistered shares

of common stock and unregistered warrants to purchase up to an aggregate of 2,829,156 shares of common stock at the same purchase

price as in the registered direct offering.

The warrants are immediately exercisable and will expire five years from issuance at

an exercise price of $ 1.26 per share, subject to adjustment as set forth therein.

October 28, 2021, the Company sold in a registered direct offering 100,592 shares of its common stock and, in a concurrent private placement,

an aggregate of 75,444 unregistered warrants to purchase shares of common stock, at an offering price of $ 33.8 per share and associated

In addition, on the same day, the Company sold in a private placement 150,888 unregistered shares of common stock and unregistered

warrants to purchase up to an aggregate of 113,166 shares of common stock at the same purchase price as in the registered direct offering.

The warrants are immediately exercisable and will expire five years from issuance at an exercise price of $ 31.5 per share, subject to

adjustment as set forth therein.

The gross proceeds from the offerings were $ 8,500 .

The net proceeds to the Company from the offerings were approximately $ 7,560 , after deducting placement agent’s fees and other

estimated offering expenses payable by the Company.

In connection with the offerings, the Company issued to the placement agent warrants

to purchase 440,091 shares on substantially the same terms as the purchasers in the offerings at an exercise price of $ 1.69 per share

and a term expiring on October 26, 2026 .

The net proceeds to the Company from the offerings

were approximately $ 7,560 , after deducting placement agent’s fees and other estimated offering expenses payable by the Company.

In connection with the offerings, the Company issued to the placement agent warrants to purchase 17,603 shares on substantially the same

terms as the purchasers in the offerings at an exercise price of $ 42.25 per share and a term expiring on October 26, 2026 .

December 7, 2022, the Company’s board of directors approved a 1-for-25 reverse stock split of the Company’s issued and

outstanding shares of common stock .

The reverse stock split became effective on December 8, 2022.

In order not to have fractional shares as a result of the reverse stock

split, the Company issued an additional 12,091 shares of common stock.

As a result, all shares of common

stock, options for shares of common stock, exercise price and net loss per share amounts were adjusted retroactively for all periods

presented in these financial statements.

AND ITS SUBSIDIARIES

1 unchanged sentence

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

SHAREHOLDERS’

EQUITY (Cont.)

NOTE 13 - SHAREHOLDERS’ EQUITY (Cont.)

summary of the warrant activity during the years ended December 31, 2022 and 2021 is presented below:

4 unchanged sentences

Expired or exercised

( 3,377,710 )

Outstanding, December 31, 2022

Exercisable, December 31, 2022

BASED COMPENSATION

NOTE 14 - STOCK BASED COMPENSATION

stock-based expense recognized in the financial statements for services received is related to Research and Development, Sales and Marketing

1 unchanged sentence

OF STOCK BASED COMPENSATION EXPENSES

Stock-based compensation expense

- Research and development

Stock-based compensation expense - Sales and

Stock-based compensation

expense - General and administrative

Stock-based compensation expense - Research and development

Stock-based compensation expense - Sales and marketing

Stock-based compensation expense - General and administrative

Stock-based compensation

stock-based expense recognized in the financial statements for services received post Acquisition of Orgad (see note 16) is related

to Cost Of Goods, Sales and Marketing and General and Administrative expenses as shown in the following table:

OF STOCK BASED COMPENSATION EXPENSES

Stock-based compensation expense – Cost of goods

Stock-based compensation expense - Sales and marketing

Stock-based compensation expense - General and administrative

Stock-based compensation expense

AND ITS SUBSIDIARIES

1 unchanged sentence

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

BASED COMPENSATION (Cont.)

NOTE 14 - STOCK BASED COMPENSATION (Cont.)

issued to consultants

July 2019, the Company entered into a three-year agreement with a consultant (“Consultant14”)

to provide services to the Company including assisting the Company to promote, market and

sell the Company’s technology to potential customers.

Pursuant to such agreement and

in partial consideration for such consulting services, the Company agreed to issue to Consultant14

options to purchase up to 2,667

of the Company’s common stock upon execution of the agreement.

The options are exercisable

share and shall vest in 3 equal instalments every twelve months starting July 2019.

Unexercised options shall expire 4

from the effective date.

addition, the Company agreed to issue to Consultant14 options to purchase up to 22,233

shares of the Company’s common stock

upon execution of the agreement.

The options are exercisable at $ 1.08

per share and shall vest in 4 equal instalments

every six months starting September 2020.

Unexercised options shall expire 5

years from the effective date.

2021 and 2020, an amount of $ 14 and $ 8 respectively, were recorded by the Company as stock-based equity awards with respect to Consultant14.

April 2020, the Company entered into a twelve month agreement with a consultant (“Consultant16”) to provide services

to the Company including assisting the Company to promote, market and sell the Company’s technology to potential customers.

Pursuant to said agreement and in partial consideration for such consulting services, the Company agreed to issue to Consultant16

options to purchase up to 6,000

shares of the Company’s common stock

upon execution of the agreement.

The options are exercisable at $ 2.00

per share and shall vest in 4 equal instalments

every three months starting May 2020.

Unexercised options shall expire 18

month from the effective date.

2021 and 2020, an amount of $ 1 and $ 1 respectively, were recorded by the Company as stock-based equity awards with respect to Consultant16.

October 2020, the Company entered into a twelve month agreement with a consultant (“Consultant17”) to provide services

to the Company including assisting the Company to promote, market and sell the Company’s technology to potential customers.

Pursuant to said agreement and in partial consideration for such consulting services, the Company agreed to issue to Consultant17

options to purchase up to 15,000

shares of the Company’s common stock

upon execution of the agreement.

July 2019, the Company entered into a three-year agreement with a consultant (“Consultant14”) to provide services to

the Company including assisting the Company to promote, market and sell the Company’s technology to potential customers.

to such agreement and in partial consideration for such consulting services, the Company agreed to issue to Consultant14 options

to purchase up to 107 shares of the Company’s common stock upon execution of the agreement.

The options are exercisable at

per share and shall vest in 3 equal instalments

every twelve months starting October 2021.

$ 375.00 per share and shall vest in 3 equal instalments every twelve months starting July 2019.

Unexercised options shall expire

4 years from the effective date.

addition, the Company agreed to issue to Consultant14 options to purchase up to 890 shares of the Company’s common stock upon

execution of the agreement.

The options are exercisable at $ 27.00 per share and shall vest in 4 equal instalments every six months

starting September 2020.

Unexercised options shall expire 5 years from the effective date.

2022 and 2021, an amount of $ 7 and $ 14 respectively, were recorded by the Company as stock-based equity awards with respect to Consultant14.

May 2021, the Company entered into a consulting agreement with a consultant (“Consultant18”) pursuant to which the Company

agreed upon the three-month anniversary of the agreement to issue to consultant18 a (i) a warrant to purchase up to 50,000 shares

of the Company’s common stock exercisable at $ 1.50 per share and expiring on December 31, 2022 , and (ii) a warrant to purchase

up to 50,000 shares of the Company’s common stock exercisable at $ 2.00 per share and expiring on December 31, 2022 .

2021, an amount of $ 64 , was recorded by the Company as stock-based equity awards with respect to Consultant18.

June 2021, the Company entered into a consulting agreement with a consultant (“Consultant19”) pursuant to which the Company

agreed to issue to the consultant a warrant to purchase up to 50,000 shares of the Company’s common stock exercisable at $ 1.50

per share and expiring on December 31, 2022 .

2021, an amount of $ 34 , was recorded by the Company as stock-based equity awards with respect to Consultant19.

AND ITS SUBSIDIARIES

1 unchanged sentence

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

BASED COMPENSATION (Cont.)

NOTE 14 - STOCK BASED COMPENSATION (Cont.)

Company’s outstanding options granted to consultants as of December 31, 2022 are as follows:

SCHEDULE OF OPTIONS

GRANTED TO CONSULTANTS

OF OPTIONS GRANTED TO CONSULTANTS

Issuance date

exercise price

February 2018

May 2021- February 2023

February 2023

August 2018-December 2018

August 2023 - December 2023

April 2021- July 2023

September-October 2020

October 2024- September 2025

May-June 2021

December 31 2022

Company uses the Black Scholes model to measure the fair value of the stock options with the assistance of a third party valuation.

No stock options were granted

during 2022 to consultants.

fair value of the Company’s stock options granted to non-employees was calculated using the following weighted average assumptions:

OF STOCK OPTIONS ASSUMPTIONS

101.65 %- 106.74

term of up to (years)

OF FAIR VALUE ASSUMPTIONS OF STOCK OPTIONS

Dividend yield

Expected volatility

Risk-free interest

Contractual term of up to (years)

AND ITS SUBSIDIARIES

1 unchanged sentence

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

BASED COMPENSATION (Cont.)

NOTE 14 - STOCK BASED COMPENSATION (Cont.)

Option Plan for employees

2 unchanged sentences

The total number of options which may be granted to directors, officers, employees

under this plan, is limited to 5,770,000

Stock options can be granted with

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

under this plan, is limited to 289,000 options.

Stock options can be granted with an exercise price equal to or less than the stock’s

fair market value at the date of grant.

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

3 unchanged sentences

in effect at the time of grant.

OF STOCK OPTIONS ASSUMPTIONS

OF FAIR VALUE ASSUMPTIONS OF STOCK OPTIONS

Dividend yield

3 unchanged sentences

the years ended December 31, 2022 and 2021, 10,000 and 3,900 options, respectively, were granted.

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 years ended December 31, 2021 and 2020 was $ 1 and $ 50 respectively.

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

As a result and pursuant to approval

of the Company’s compensation committee that was contingent on the foregoing shareholder approval, the following occurred on August

(i) the number of shares available for issuance under the Company’s 2017 Consultant Incentive Plan was reduced from 466,667

(ii) the Company granted to the Company’s

Chief Executive Officer (A) five-year options to purchase up to 160,000

ordinary shares at an exercise price of $ 1.04

quarter of such options vested on November 26, 2020, one quarter vest on May 26, 2021, one quarter vest on November 26, 2021 and one

quarter vest on May 26, 2022 , and (B) 80,000

performance-based restricted stock units, each

representing the right to receive one share of common stock, which vest (x) upon the Company generating revenue of at least $50,000 in

the Russian Federation during the year ended 2020, or (y) upon the Company generating revenue of at least $500,000 in the Russian Federation

during the year ending 2021 ;

(iii) the Company

granted five-year options to purchase up to 130,000

ordinary shares to the Company’s Chief

Financial Officer at an exercise price of $ 1.04

quarter of such options vested on November 26, 2020, one quarter vest on May 26, 2021, one quarter vest on November 26, 2021 and one

quarter vest on May 26, 2022 ;

(iv) the Company

granted five-year options to purchase up to 130,000

ordinary shares to the Company’s Chief

Operating Officer and Chief Product Officer at an exercise price of $ 1.04

quarter of such options vested on November 26, 2020, one quarter vest on May 26, 2021, one quarter vest on November 26, 2021 and one

quarter vest on May 26, 2022 ;

(v) the Company

granted five-year options to purchase up to 325,893

ordinary shares to other employees of the Company

at an exercise price of $ 1.04

quarter of such options vested on November 26, 2020, one quarter vest on May 26, 2021, one quarter vest on November 26, 2021 and one

quarter vest on May 26, 2022 ;

and (vi) the Company

granted five-year options to purchase up to 30,000

ordinary shares to each of the Company’s

non-employee Board members at an exercise price of $ 1.04

options vested on November 26, 2020 .

On December 30, 2021, our stockholders

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.

December 7, 2022, the Company’s stockholders approved an increase in the shares available for issuance under the 2017 Equity Incentive

Plan from 230,800 shares to 289,000 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 100,000 restricted shares, 24,000 restricted shares, 24,000 restricted shares, 16,000 restricted shares

and 12,000 restricted shares, respectively.

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

(the “Agreement”).

The 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 Company.

the same day, the Company granted five-years options to purchase up to 10,000 ordinary shares to other employees of the Company at an

exercise price of $ 0.21 per share.

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

AND ITS SUBSIDIARIES

1 unchanged sentence

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

BASED COMPENSATION (Cont.)

total stock option compensation expense in the year ended December 31, 2021 amounted to $ 252

Research and development expenses

amounted to $ 94 ,

NOTE 14 - STOCK BASED COMPENSATION (Cont.)

total stock option compensation expens e in the year ended December 31, 2022 amounted to $ 448

Research and development expenses amounted

sales and marketing expenses amounted to $ 119

and general and administrative expenses amounted

total stock option compensation expense in the year ended December 31, 2020 amounted to $ 560 as follows:

research and development expenses

amounted to $ 190 , sales and marketing expenses amounted to $ 117 and general and administrative expenses amounted to $ 253 .

total stock option compensation expense in

the year ended December 31, 2021 amounted to $ 252

Research and development expenses amounted to $ 94 ,

sales and marketing expenses amounted to $ 97

and general and administrative expenses amounted to $ 61 .

of December 31, 2022, there was a total of $ 530 unrecognized compensation cost relating to non-vested share-based compensation arrangements.

2 unchanged sentences

OF SHARES OPTION ACTIVITY

Outstanding at January 1

Outstanding at year

Vested at year end

Outstanding as of January 1

Outstanding as of year end

Vested as of year end

option activity during 2021 is as follows:

Outstanding at January 1

Outstanding at year

Vested at year end

Outstanding as of January 1

Outstanding as of year end

Vested as of year end

AND ITS SUBSIDIARIES

1 unchanged sentence

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

CONTINGENCIES

AND COMMITMENTS

NOTE 15 - CONTINGENCIES AND COMMITMENTS

August 7, 2018, the Company commenced an action against North Empire LLC (“North Empire”)

2 unchanged sentences

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

arising from an alleged breach of the Agreement.

On September 6, 2018 North Empire filed

a Notice of Discontinuance of the action it had filed on August 2, 2018.

On September 27,

2018, North Empire filed an answer and asserted counterclaims in the action commenced by

the Company against them, alleging that the Company failed to deliver stock certificates

to North Empire causing damage to North Empire in the amount of $ 10,958,589 .

North Empire also filed a third-party complaint against the Company’s CEO and now former

Chairman of the Board asserting similar claims against them in their individual capacities.

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.

September 6, 2018 North Empire filed a Notice of Discontinuance of the action it had filed

on August 2, 2018.

On September 27, 2018, North Empire filed an answer and asserted counterclaims

in the action commenced by the Company against them, alleging that the Company failed to

deliver stock certificates to North Empire causing damage to North Empire in the amount of

$ 10,958,589 .

North Empire also filed a third-party complaint against the Company’s

CEO and now former Chairman of the Board asserting similar claims against them in their individual

On October 17, 2018, the Company filed a reply to North Empire’s counterclaims.

November 15, 2018, the Company’s CEO and now former Chairman of the Board filed a motion

to dismiss North Empire’s third-party complaint.

On January 6, 2020, the Court granted

the motion and dismissed the third-party complaint.

Discovery has been completed and both

parties have filed motions for summary judgment in connection with the claims and counterclaims.

On December 30, 2021, the Court denied both My Size and North Empire’s motions for

summary judgment, arguing there were factual issues to be determined at trial.

26, 2022, the Company filed a notice of appeal of the summary judgment decision.

must be fully perfected and filed by July 26, 2022.

On February 3, 2022, the Company filed

a motion to reargue the Court’s decision denying the Company’s motion for summary

North Empire will file its opposition papers on or before March 31, 2022, and the

Company will file reply papers on April 29, 2022.

The return date on the motion to reargue

is scheduled for May 2, 2022.

On November 15, 2018, the Company’s CEO and now former Chairman of the Board filed

a motion to dismiss North Empire’s third-party complaint.

On January 6, 2020, the Court

granted the motion and dismissed the third-party complaint.

Discovery has been completed

and both parties have filed motions for summary judgment in connection with the claims and

counterclaims.

On December 30, 2021, the Court denied both My Size and North Empire’s

motions for summary judgment, arguing there were factual issues to be determined at trial.

On January 26, 2022, the Company filed a notice of appeal of the summary judgment decision.

The appeal must be fully perfected and filed by July 26, 2022.

On February 3, 2022, the Company

filed a motion to reargue the Court’s decision denying the Company’s motion for

summary judgment.

North Empire will file its opposition papers on or before March 31, 2022,

and the Company will file reply papers on April 29, 2022.

On or about September 12, 2022,

the Court issued its Decision and Order denying the Company’s motion to reargue.

Empire filed its opposing brief on December 7, 2022.

Both sides were given an opportunity

to file a reply brief.

The Company filed our reply brief on January 4, 2023 and North Empire

filed its reply brief on January 13, 2023.

The Appellate Court has scheduled oral argument

for the appeal for February 7, 2023.

Oral argument was held before the Appellate Court on

February 7, 2023.

On or about February 28, 2023, the Appellate Court filed its Decision and

Order, which affirmed the lower court’s decisions regarding both My Size and North

Empire’s motions for summary judgment and sent the case back to the Supreme Court.

or about March 13, 2023, the Supreme Court referred the case to its Alternative Dispute Program and ordered the cases to mediate.

A date for the mediation has not yet been set.

The Company intends to vigorously defend any claims made by North Empire.

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

2 unchanged sentences

at the Company’s 2021 annual meeting of stockholders.

Custodian subsequently made

a book and records request and has made public statements calling for changes to our management.

September 22, 2021, Custodian commenced an action in the Court of Chancery of the State of Delaware captioned, Custodian Ventures, LLC

Custodian subsequently made a

book and records request and has made public statements calling for changes to our management.

September 22, 2021, Custodian commenced an action in the Court of Chancery of the State of Delaware captioned, Custodian Ventures,

(the “Delaware Action”).

In the Delaware Action, Custodian sought an order from the Court of Chancery pursuant

to Section 211 of the General Corporation Law of the State of Delaware compelling us to hold an annual meeting.

In the Delaware Action, Custodian sought an order from the Court of Chancery

pursuant to Section 211 of the General Corporation Law of the State of Delaware compelling us to hold an annual meeting.

October 19, 2021, the Company commenced an action in the United States District Court for the Southern District of New York against

11 unchanged sentences

elect a slate of directors to the Company’s Board of Directors.

On October 20, 2021, the Court signed an order granting

a hearing on an anticipated motion for a preliminary injunction and expedited scheduling and discovery in aid thereof, and scheduled

that hearing for December 2, 2021.

On October 20, 2021, the Court signed an order granting a hearing

on an anticipated motion for a preliminary injunction and expedited scheduling and discovery in aid thereof, and scheduled that hearing

for December 2, 2021.

November 4, 2021, the Company entered into the Settlement Agreement with the Lazar Parties.

22 unchanged sentences

Agreement also contains non-disparagement and confidentiality provisions, subject to certain exceptions.

On December 9, 2021, the Company subsequently

entered into a Settlement Agreement (the “Ault Settlement Agreement”), with Milton C.

Ault III, Ault Alpha LP, Ault Alpha

GP LLC, Ault Capital Management LLC, Ault & Company Inc., collectively the Ault Parties, which we agreed to withdraw the SDNY Action

against the Ault Parties and the Ault Parties agreed to withdraw the counterclaim that they asserted in that action against the Company.

In addition, pursuant to the Settlement Agreement, the Company paid $ 70 to the Ault Parties in consideration for the releases and

other good and valuable consideration as set forth in the Ault Settlement Agreement.

December 9, 2021, the Company subsequently entered into a Settlement Agreement (the “Ault Settlement Agreement”), with

Ault III, Ault Alpha LP, Ault Alpha GP LLC, Ault Capital Management LLC, Ault & Company Inc., collectively the Ault

Parties, which we agreed to withdraw the SDNY Action against the Ault Parties and the Ault Parties agreed to withdraw the counterclaim

that they asserted in that action against the Company.

In addition, pursuant to the Settlement Agreement, the Company paid $ 70 to

the Ault Parties in consideration for the releases and other good and valuable consideration as set forth in the Ault Settlement

July 5, 2021, the Company was served with a legal complaint filed by Fidelity Venture Capital

20 unchanged sentences

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

AND MARKETING

NOTE 16 - BUSINESS COMBINATION

February 7, 2022, the Company acquired 100 % of the shares and voting interests in Orgad an omnichannel e-commerce platform.

The acquisition

was designed to create an additional revenue stream for the Company by becoming a direct e-commerce seller while leveraging the synergies

between MySizeID and Orgad’s e-commerce platform.

pro-forma information

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 December 31,

2022 were $ 4,132 .

If the acquisition had occurred on January 1, 2021, management estimates that the consolidated pro forma revenues for the year ended

December 31 2022 and 2021 would have been $ 4,662

and $ 2,850 respectively, and the net loss after tax would have been $ 8,519

and $ 10,149 respectively.

Consideration

following table summarizes the acquisition date fair value of each major class of consideration:

OF FAIR VALUE OF THE ACQUISITION

Issuance of shares of common stock ( 69,752 shares) (**)

Total consideration transferred

cash payment is subject to working capital adjustments.

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

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, 69,752

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 year ended December 31, 2022 an amount of $ 456

was recorded in respect of the cash instalments

and in respect of stocks issuance, respectively in Cost Of Goods, Sales and Marketing and General and Administrative expenses as shown

in the following table:

OF STOCK BASED COMPENSATION EXPENSES

Stock-based compensation expense – Cost of goods

Stock-based compensation expense - Sales and marketing

Stock-based compensation expense - General and administrative

Stock-based compensation expense

assets acquired and liabilities assumed

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

and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation

techniques based on estimates and assumptions made by management at the time of the acquisition.

Such estimates are subject to change

during the measurement period which is not expected to exceed one year.

The purchase price allocation was not finalized duo to examination

of the net working capital of Orgad at the acquisition date.

Any adjustments to the preliminary purchase price allocation identified

during the measurement period will be recognized in the period in which the adjustments are determined.

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

Cash and Cash Equivalent

Trade receivables

Long-term financial investment

Customer Relationships

Short Term accruals and deferrals

Short-term provision

Long term debt

Long-term financial investment

Selling platform

Short-term accruals and deferrals

Trade payables

Long term provision

Long-term debt

Deferred Taxes

Total net assets acquired

AND ITS SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands

(except share data and per share data)

16 - BUSINESS COMBINATION (Cont.)

Acquisition-related

Company incurred transaction costs of approximately $ 40

and none during twelve-month period ended December

31, 2022 which were included in general and administrative expenses in the consolidated statements of income (loss).

of N aiz Bespoke Technologies, S.L.

October 11, 2022, the Company acquired 100 % of the shares and voting interests in Naiz a provider of SaaS technology solutions that solve

size and fit issues for fashion ecommerce companies.

The acquisition was designed to allow Naiz’s customers benefit from MySize’s

deep understanding of the fashion ecommerce retail landscape, while creating an additional revenue stream for the Company.

Unaudited pro-forma

results of operations of Naiz have been included in the consolidated financial statements since the acquisition date of October 11, 2022.

Naiz revenues included in the Company’s consolidated statement of operations from October 11, 2022 through December 31, 2022 were

If the acquisition had occurred on January 1, 2021, management estimates that the consolidated pro forma revenues for the year ended

December 31 2022 and 2021 would have been $4,7 38

and $379 respectively and the net loss after tax would have been $8,695 and $10,717 respectively.

Consideration

following table summarizes the acquisition date fair value of each major class of consideration:

OF FAIR VALUE OF THE ACQUISITION

Issuance of shares of common stock ( 240,000 shares) (*)

Total consideration transferred

price as of the acquisition date

addition, the Company agreed to pay to the former owners of Naiz, additional cash consideration (up to $ 1,550 ) in four instalments

subject to the following conditions:

employment or involvement of the Key Persons of Naiz (as defined in the agreement) by or with Naiz, except if terminated as a result

of a Good Reason;

Revenues reaching or exceeding the respective Target Revenues defined in the agreement.

The revenues will be calculated in four periods:

(1) January 1, 2022 – December 31, 2022;

(2) January 1, 2023 – June 30, 2023;

(3) July 1, 2023 – December 31, 2023;

(4) January 1, 2024 – December 31, 2024.

owners of Naiz are entitled to additional cash consideration following December 31, 2025 (up to $1,650) in an event when the actual

value of the equity consideration is less than $1,650, subject to completion of a Target Revenue for the period of January 1, 2025

– December 31, 2025 and continuing employment or involvement of the Key Persons of Naiz (as defined in the agreement) by or with

Naiz, except if terminated as a result of a Good Reason ;

AND ITS SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

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

16 - BUSINESS COMBINATION (Cont.)

the year ended December 31, 2022 an amount of $ 283 was recorded in respect of the additional cash consideration.

assets acquired and liabilities assumed

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

assumed based on the estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates

and assumptions made by management at the time of the acquisition.

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

OF FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES

Cash and cash equivalent

Trade receivables and other receivables

Long-term financial investment

Customer Relationships

Short Term accruals and deferrals

Trade payables

Short-term provision

Short term debt

Long term debt

Deferred Taxes

Total net assets acquired

Acquisition-related

2022, the Company incurred transaction costs of approximately $ 75 which were included in general and administrative expenses in the consolidated

statements of income (loss).

MY SIZE, INC.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands (except share

data and per share data)

17 – Operating Segments

the year ended December 31, 2021, the Company had one reportable segment.

As a result of the business combinations in the reporting

period (see note 13), the Company has three reportable segments:

(i) fashion and equipment e-commerce platform, and (ii) SaaS based innovative

artificial intelligence driven measurement solutions and (iii) Naiz SaaS based innovative artificial intelligence driven measurement

solutions and.

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

mainly operates on Amazon.

Orgad has one customer that is responsible for 37.9% of the Company consolidated revenues.

The SaaS based

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

Israel and My Size LLC.

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

OF REPORTABLE OPERATING SEGMENTS

Fashion and equipment e-commerce platform

As of the year ended December 31, 2022

Revenues from external customers

Operating (loss) income

Financial income (expense), net

Net loss before tax

and equipment e-commerce platform

As of December 31, 2022:

Amortization of intangible assets

The Company elected to present

geographic information in respect with revenues generated from external customers based on the location of the selling entity:

All the revenues of the fashion and equipment e-commerce

platform segment are generated by Orgad, located in Israel.

All the revenues of the Naiz segment are generated by Naiz, located in Spain.

The revenues of the Saas Solutions segment are generated by My Size Ltd.

located in Israel (approximately 75 % of the segment revenues)

and by My Size Inc.

located in the U.S.

(approximately 25 % of the segment revenues).

NOTE 18 - SALES AND MARKETING

OF SALES AND MARKETING

Consultants and subcontractors

Share based payments post Orgad acquisition (*)

Share based payments for consultants and employees

and marketing expenses

AND ADMINISTRATIVE EXPENSES

Sales and marketing expenses

(*) See note 16.

NOTE 19 - GENERAL AND ADMINISTRATIVE EXPENSES

OF GENERAL AND ADMINISTRATIVE EXPENSES

Professional services

Share based payments for consultants, directors

and employees

Share based payments for consultants, directors and employees

Rent, office expenses and communication

cash liability and equity liability expenses related to Orgad acquisition

cash liability expenses related to Naiz acquisition

Settlement fees (*)

General and administrative

See note 12(b)

AND ITS SUBSIDIARIES

1 unchanged sentence

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

INCOME (EXPENSE), NET

NOTE 20 - FINANCIAL INCOME (EXPENSE), NET

OF FINANCIAL INCOME (EXPENSES), NET

Financial income

Revaluation of derivative

Revaluation investment in marketable securities

1 unchanged sentence

Exchange rate differences

SUBSEQUENT TO THE BALANCE SHEET DATE

February 7, 2022, the Company entered into Share Purchase Agreement (the “Agreement”),

with Amar Guy Shalom and Elad Bretfeld (the “Sellers”), pursuant to which the

Sellers agreed to sell to the Company all of the issued and outstanding equity of Orgad International

Marketing Ltd., a company incorporated under the laws of the State of Israel (“Orgad”).

The Sellers are the sole title and beneficial owners of 100 % of the shares of Orgad.

In consideration

of the shares of Orgad, the Sellers are entitled to receive (i) up to $ 1,000,000 in cash

(the “Cash Consideration”), (ii) an aggregate of 2,790,049 shares (the “Equity

Consideration”) of the Company’s common stock, and (iii) earn-out payments of

10 % of the operating profit of Orgad for the years 2022 and 2023.

The transaction closed

on the same day.

The Cash Consideration is payable to the Sellers in three installments, according to the following payment schedule:

(i) $ 300,000

at closing, (ii) $ 350,000 payable on the two-year anniversary of the closing, and (iii) $ 350,000 payable on the three-year anniversary

of the closing;

provided that in the case of the second and third installments certain revenue targets are met and subject further

to certain downward post-closing adjustment.

Equity Consideration is payable to the Sellers according to the following payment schedule:

(i) 50% at closing, and (ii) the remaining

50% will be issued in eight equal quarterly installments until the lapse of two years from closing, subject to certain downward post-closing

payment of the second and third cash installments, the equity installments and the earn out are further subject in each case to the

Sellers being actively engaged with Orgad at the

date such payment is due (except if Seller resigns due to reasons relating to material reduction of salary or adverse change in his

position with Orgad or its affiliates).

Agreement contains customary representations, warranties and indemnification provisions.

In addition, the Sellers will be subject

to non-competition and non-solicitation provisions pursuant to which they agree not to engage in competitive activities with respect

to the Company’s business .

In connection with the Agreement, each of the Sellers entered into employment agreements with Orgad and six-month lock-up agreements

with the Company.

The required information for purchase price allocation in accordance with the FASB ASC Topic 805 is not presented because the initial accounting

for the business combination is incomplete as of the date of these financial statements due to the short period since acquisition

and since the acquiree accounting records were not finalized.

CHANGES IN AND DISAGREEMENTS

WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE

Revaluation of loan granted

Revaluation investment in marketable securities

NOTE 21 - EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

January 2, 2023, Orgad experienced a fire at its warehouse in Israel.

The Company is not aware of any casualties or injuries associated with

The Company shifted Orgad’s operation to its headquarters.

The value of the inventory that was in the

warehouse was approximately $ 450 .

The Company believes that this incident did not affect the future sales

results of Orgad for the year 2023.

The inventory was not insured and it is too early to determine the potential impact of this incident

on the other parties that were involved in the incident (lessor and others that leased properties near the warehouse).

January 10, 2023, the Company entered into a securities purchase agreement pursuant to which the Company sold an aggregate of 162,000

of the Company’s shares of common stock and pre-funded warrants to purchase up to 278,899

shares of common stock and, in a concurrent private placement, unregistered warrants to purchase up to

883,798 shares of common stock, consisting of Series A warrants to purchase up to 441,899

shares of common stock and Series B warrants to purchase up to 441,899

shares of common stock, at an offering price of $ 3.055

per share of common stock 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.

addition, the Company entered into a securities purchase agreement pursuant to which the Company agreed to sell and issue in a private

placement 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, 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.

As of March 31,2023 all the pre funded warrants were exercised by the investor.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE

were no disagreements with accountants on accounting and financial disclosure of a type described in Item 304 (a)(1)(iv) or any reportable

1 unchanged sentence

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-K

Item 8. Financial Statements and Supplementary Data