What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-04-01 compared with 2023-04-14 · 114 added, 142 removed, 193 unchanged (57% of the section changed)

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those expressed in, or implied by, these forward-looking statements.

is an omnichannel e-commerce platform and provider of AI-driven apparel sizing and digital experience solutions that drive revenue growth

and reduce costs for our business clients for online shopping and physical stores.

flagship innovative tech products, MySizeID, enables shoppers to generate highly accurate measurements of their body to find the accurate

fitting apparel by using our application on their mobile device or through MySizeID Widget:

a simple questionnaire which was uses a database

collected over the years.

synchronizes the user’s measurement data to a sizing chart integrated through a retailer’s (or a white labeled) mobile application,

and only presents items available for purchase that match their measurements to ensure a correct fit.

is positioning itself as a consolidator of sizing solutions and new digital experience due to new developments for the fashion industry

Our other product offerings include First Look Smart Mirror for physical stores and Smart Catalog to empowering brand design teams,

are an omnichannel e-commerce platform and provider of AI-driven SaaS measurement solutions, including MySizeID and our recently acquired

subsidiaries, Naiz Fit, which provides SaaS technology solutions that solve size and fit issues and AI solutions for smarter design through

data driven decisions for fashion ecommerce companies, and Orgad, an online retailer operating in the global markets.

To date, we have

generated almost all our revenue as a third-party seller on Amazon.

Our advanced software and solutions assists us in supply chain, identifying

products that can drive growth and provides a user-friendly experience and best customer service.

are currently focused on driving the commercialization of the Naiz Fit technology which enables shoppers to generate highly accurate

measurements of their body to find the accurate fitting apparel by using our Naiz Fit Widget, a simple questionnaire which uses a database

collected over the years and allows buyers to know what size to pick when buying online, reducing returns and increasing conversion rates

Fit syncs the user’s measurement data to a sizing model generated with our proprietary Garment Modelling technology for each item

sold on the ecommerce, and only presents items for purchase that match their measurements to ensure a correct fit.

are positioning ourselves as a consolidator of sizing solutions and new digital experience due to new developments for the fashion industry

Our other product offerings include First Look Smart Mirror for physical stores and Smart Catalog to empower brand design teams,

which are designed to increase end consumer satisfaction, contributing to a sustainable world and reduce operation costs.

We also recently

launched True Feedback, a Go-To-market solution that extracts data from our Naiz Community mystery shoppers to fine-tune the customer

experience offered to fashion buyers, both online and offline.

February 7, 2022, My Size Israel 2014 Ltd, or My Size Israel, entered into a Share Purchase Agreement, or the Orgad Agreement, with Amar

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

In consideration of the shares of Orgad, the Orgad

Sellers are entitled to receive (i) up to $1,000,000 in cash, or the Orgad Cash Consideration, (ii) an aggregate of 111,682 shares, or

the Orgad Equity Consideration, of our common stock, and (iii) earn-out payments of 10% of the operating profit of Orgad for the years

2022 and 2023.

In consideration of the shares of Orgad, the

Orgad Sellers are entitled to receive (i) up to $1,000,000 in cash, or the Orgad Cash Consideration, (ii) an aggregate of 111,682

shares, or the Orgad Equity Consideration, of our 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.

In February 2024, we paid the remaining $700,000 of the

Orgad Cash Consideration to the Orgad Sellers, net of a settlement amount of $275,000.

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

(i) $300,000,

which we paid upon closing, (ii) $350,000 payable on the two-year anniversary of the closing, and (iii) $350,000 payable on the three-year

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further to certain downward post-closing adjustment.

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

(i) 55,801 shares were issued at closing,

and (ii) 55,801 shares will be issued in eight equal quarterly installments until the lapse of two years from closing, subject to certain

downward post-closing adjustment.

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

(i) 55,801 shares were issued

at closing, and (ii) 55,801 shares will be issued in eight equal quarterly installments until the lapse of two years from closing, subject

to certain downward post-closing adjustment.

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

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protection of debtors.

addition to our Israel operations, we had operations in Russia through our wholly owned subsidiary, My Size LLC.

Specifically, we

undertake some of our sales and marketing using personnel located in Russia.

To date, mainly due to the invasion of Ukraine by

Russia and the ongoing sanctions we stopped most of our efforts in Russia and will probably close the subsidiary in the

In addition to our Israel operations, we historically had operations in Russia through our wholly owned subsidiary,

To date, mainly due to the invasion of Ukraine by Russia and the ongoing sanctions we ceased most of our efforts in Russia

and expect to dissolve the subsidiary in the near future.

of Operations

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General and administrative

Impairment of goodwill

Operating loss

Financial income (expenses), net

Equity accounted losses

Income tax benefit

Ended December 31, 2023 Compared to Year Ended December 31, 2022

inception through December 31, 2018, we did not generate any revenue from

operations and we continue to expect to incur additional losses to perform further research and development activities.

We started to

generate revenues only in 2019.

Our revenues for the year ended December 31, 2022 amounted to $4,459,000 compared to $131,000 for year

ended December 31, 2021.

The increase from the corresponding period primarily attributable to $4,132,000 in revenue generated from Orgad

from February 7, 2022, the date of closing of the Orgad acquisition, or the Acquisition Date and revenue generated from the Naiz Acquisition

from October 11, 2022, the date of closing of the Naiz acquisition.

In addition, the increase from the corresponding period results from an

increase in revenues generated by My Size.

cost of revenues expenses for the year ended December 31, 2022 amounted to $3,825,000, compared to none for the year ended December 31,

The cost of revenues includes cash and equity liabilities expenses in the amount of $194,000.

The increase in comparison with the corresponding

period was due to the cost of goods of the revenues generated from Orgad’s operations.

Our revenues for the year

ended December 31, 2023 amounted to $6,996,000 compared to $4,459,000 for year ended December 31, 2022.

The increase from the

corresponding period is primarily attributable to an increase in Orgad sales and revenue generated from Naiz Fit that was

acquired in October 2022 and therefore were consolidated for three months as opposed to twelve months in 2023 .

cost of revenues expenses for the year ended December 31, 2023 amounted to $4,265,000 compared to $3,825,000 for the year ended

December 31, 2022.

The cost of revenues includes cash and equity liabilities expenses in the amount of $21,000 and an inventory

mark-down of $643,000 due to the fire that occurred in Orgad’s warehouse during January 2023 .

The increase in

comparison with the corresponding period was due to the inventory mark down and increase in sales.

and Development Expenses

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compared to $1,701,000 for the year ended December 31, 2022.

The decrease from the corresponding period primarily resulted from

share based payment in amount of $2,618,000 attributed to the share issuance to Shoshana Zigdon under the Amendment to Purchase Agreement

dated May 26, 2021.

The decrease from the corresponding period primarily resulted from a decrease in salaries expenses due to reduced headcount and a decrease in subcontractor expenses.

and Marketing Expenses

sales and marketing expenses for the year ended December 31, 2022 amounted

to $3,143,000 an increase of $807,000, or 34.55%, compared to $2,336,000 for the year ended December 31, 2021.

The increase primarily

resulted from an increase in employees expenses mainly due to Orgad and Naiz acquisitions, increase in Amazon fees, increase in cash

and equity liabilities expenses attributed to the Orgad acquisition and an increase in share based payments offset by a decrease in payments

to consultants.

sales and marketing expenses for the year ended December 31, 2023 amounted to $3,856,000 an increase of $713,000, or 22.7%, compared

to $3,143,000 for the year ended December 31, 2022.

The increase primarily resulted from an increase in Amazon fees due to the increase in sales offset by a decrease in salary expenses due to reduced headcount,

consultant expenses, travel and marketing expenses.

and Administrative Expenses

general and administrative expenses for the year ended December 31, 2022

amounted to $3,900,000, a decrease of $224,000, or 5.43%, compared to $4,124,000 for the year ended December 31, 2021.

The decrease compared

to the corresponding period was mainly due to a decrease in professional expenses, mainly attributed to shareholder activism including

settlement expenses with the Lazar Parties offset by an increase in shared-based payments and an increase in employees expenses mainly

due to the Orgad and Naiz acquisitions.

general and administrative expenses for the year ended December 31, 2023 amounted to $3,971,000, an increase of $71,000, or 1.8%,

compared to $3,900,000 for the year ended December 31, 2022.

The increase compared to the corresponding period was mainly due to an

increase in professional expenses which includes increase in audit and legal expenses and investor relations, offset by a decrease in cash and equity liabilities expenses attributed to Orgad and Naiz Fit

acquisitions.

goodwill impairment charge of $671,000 recorded in Impairment of goodwill for year ended December 31, 2023.

No impairment was recorded

for the year ended December 31, 2022.

a result of the foregoing, for the year ended December 31, 2023, our operating loss was $6,741,000, a decrease of $1,369,000 or

16.9%, compared to our operating loss for the year ended December 31, 2022 of $8,110,000.

financial (expense) income, net for the year ended December 31, 2022 amounted to $236,000 compared to financial income, $57,000 for

the year ended December 31, 2021.

In 2022, we had financial expenses exchange rate differences offset by an income from fair value revaluation

of investment in marketable securities whereas in 2021 we had financial income from the fair value revaluation of warrants offset by

expenses from exchange rate differences and expenses from fair value revaluation of investment in marketable securities.

a result of the foregoing, our net loss

for the year ended December 31, 2022 was $8,310,000 compared to net loss of $10,520,000 for the year ended December 31, 2021.

in net loss was mainly due increase in sales and marketing expenses and financial expenses as opposed to financial income in the corresponding

period offset by a decrease in research and development expenses in amount of $2,618,000 attributed to the share issuance to Shoshana

Zigdon under the Amendment to Purchase Agreement dated May 26, 2021.

financial income, net for the year ended December 31, 2023 amounted to $99,000 compared to financial expenses of, $236,000 for the year ended

December 31, 2022.

In 2023, we had financial expenses exchange rate differences offset by an income from fair value revaluation of investment

in marketable securities whereas in 2022 we had financial income from the fair value revaluation of warrants offset by expenses from

exchange rate differences and expenses from fair value revaluation of investment in marketable securities.

a result of the foregoing, our net loss for the year ended December 31, 2023 was $6,380,000 compared to net loss of $8,310,000 for the

year ended December 31, 2022.

The decrease in net loss was mainly due to the reasons mentioned above.

and Capital Resources

our inception, we have funded our operations primarily through public and private offerings of debt and equity in Israel and in the U.S.

of December 31, 2022, we had cash, cash equivalents and restricted cash

of $2,363,000 compared to $10,943,000 cash, cash equivalents, restricted cash as of December 31, 2021.

During January 2023, we completed

a registered direct and concurrent private placement offering resulting in gross proceeds of approximately $3 million.

This decrease primarily

resulted from our operating activities, the acquisition of Orgad and Naiz Fit, and resources that were deployed to grow of both businesses.

cash used in operating activities was $7,290,000 for the year ended December

31, 2022 compared to $7,297,000 for the year ended December 31, 2021.

The decrease in cash used in operating activity is derived mainly

from an increase in share based payments and increase in account receivables mainly from the Orgad and Naiz fit acquisitions offset by

a decrease in the net loss.

cash used in investing activities for the year ended December 31, 2022

was $993,000 as opposed to net cash provided by investing activities of $161,000 for the year ended December 31, 2021.

The net cash used

in investing activities for the year ended December 31, 2022 was mainly from the acquisition of Orgad and Naiz as opposed to proceeds

from short-term deposits and restricted deposits during the year ended December 31, 2021.

had a negative cash flow from financing activities of $67,000 for the year ended December 31, 2022 compared to positive cash flow

of $16,292,000 for the year ended December 31, 2021.

The negative cash flow from financing activities for the year ended December

31, 2022 was mainly due to repayment of loans and interest and payments for leases as opposed to proceeds from issuance of shares and from exercise

of warrants for the year ended December 31, 2021.

expect that we will continue to generate losses and negative cash flows

from operations for the foreseeable future.

Based on the projected cash flows and cash balances as of December 31, 2022, together with

the proceeds from the January 2023 financing, we believe our existing cash will not be sufficient to fund operations for a period of more

than 12 months.

of December 31, 2023, we had cash, cash equivalents and restricted cash of $2,264,000 compared to $2,363,000 cash, cash equivalents,

restricted cash as of December 31, 2022.

In January 2023, we completed a registered direct and concurrent private placement offering

resulting in gross proceeds of approximately $3 million.

In August 2023, we completed a warrant repricing transaction resulting in

gross proceeds of approximately $4.2 million.

This decrease primarily resulted from operating activities, the acquisition of Orgad

and Naiz Fit, and resources that were deployed to grow of both businesses.

cash used in operating activities was $6,106,000 for the year ended December 31, 2023 compared to $7,290,000 for the year ended

December 31, 2022.

The decrease in cash used in operating activity is derived mainly from the decrease in the net loss offset by the

change in inventory and change in account receivable.

Net cash flow from investing activities was $7,000 for the year ended December 31, 2023 compared to net cash provided

by investing activities of $993,000 for the year ended December 31, 2022.

The net cash used in investing activities for the year ended

December 31, 2022 was mainly from Acquisition of a subsidiary and establishing the JVa joint venture in Brazil, which has subsequently

been terminated.

cash provided by financing activities was $6,134,000 for the year ended December 31, 2023 as opposed to negative cash flow of

$67,000 for the year ended December 31, 2022.

The cash flow provided by financing activities for the year ended December 31, 2023

was mainly due to the public and private offerings that occurred in January and August 2023.

expect that we will continue to generate losses and negative cash flows from operations for the foreseeable future.

Based on the projected

cash flows and cash balances as of December 31, 2023, we believe our existing cash will not be sufficient to fund operations for a period

of more than 12 months.

As a result, there is substantial doubt about our ability to continue as a going concern.

We will need to raise additional

capital, which may not be available on reasonable terms or at all.

We will need to raise

additional capital, which may not be available on reasonable terms or at all.

Additional capital would be used to accomplish the following:

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compliance with applicable laws.

conditions in the capital markets are such that traditional sources of

capital may not be available to us when needed or may be available only on unfavorable terms.

Our ability to raise additional capital,

if needed, will depend on conditions in the capital markets, economic conditions, the Russian invasion of Ukraine, the impact of any resurgence

of the COVID-19 pandemic and a number of other factors, many of which are outside our control, and on our financial performance.

we cannot assure you that we will be able to successfully raise additional capital at all or on terms that are acceptable to us.

cannot raise additional capital when needed, it may have a material adverse effect on our business, results of operations and financial

conditions in the capital markets are such that traditional sources of capital may not be available to us when needed or may be available

only on unfavorable terms.

Our ability to raise additional capital, if needed, will depend on conditions in the capital markets, economic

conditions, the Russian invasion of Ukraine, the current war between Israel and Hamas, the impact of the recent resurgence of the COVID-19

pandemic and a number of other factors, many of which are outside our control, and on our financial performance.

Accordingly, we cannot

assure you that we will be able to successfully raise additional capital at all or on terms that are acceptable to us.

If we cannot raise

additional capital when needed, it may have a material adverse effect on our business, results of operations and financial condition.

the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities

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Data” of this Annual Report on Form 10-K.

from contracts with customers

Our revenues are comprised of two main categories:

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

subscriptions, associated software maintenance and support.

We recognize 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,

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

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

it is probable that we will collect the consideration to which we 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.

We maintain a returns policy that allows our 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

We follow the guidance provided in ASC 606 for determining whether we are a principal or an agent in arrangements with customers,

by assessing whether the nature of our 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.

We determine it is the principle when it has control over the 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).

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

of transactions where the delivery and consumption of the benefit of the services occur evenly over time, beginning on the date the services

associated with the committed transactions are first made available to the customer and continuing through the end of the contractual

service term.

Over usage fees and fees based on the actual number of transactions are billed in accordance with contract terms as these

fees are incurred and are included in the transaction price of an arrangement as variable consideration.

Fees based on a number of transactions

or impressions per month, are allocated to the period in which the transactions occur.

Revenue for subscriptions sold as a fee per period

is recognized ratably over the contractual term as the customer simultaneously receives and consumes the benefit of the underlying service.

Goodwill impairment

We determine the fair value of our reporting units using the income approach.

According to the income, we use discounted

cash flows to estimate the fair value.

Cash flow projections require us to make significant 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.

Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the

future include but are not limited to the discount rate, the terminal growth rate and the revenue growth rate.

Based on our analysis, we determined that the carrying value of our SaaS Solutions reporting unit exceeded its fair

value and an impairment charge of $671 thousand was recorded.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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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 7. Management’s Discussion and Analysis