What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-04-01 compared with 2023-04-14 · 693 added, 727 removed, 749 unchanged (65% of the section changed)

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have audited the accompanying consolidated balance sheets of My Size, Inc.

and subsidiaries (the Company) as of December 31, 2022 and

2021, the related consolidated statements of comprehensive loss, shareholders’ equity, and cash flows for each of the years in

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

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.

and subsidiaries (the Company) as of December 31, 2023

and 2022, the related consolidated statements of comprehensive loss, shareholders’ equity, and cash flows for each of the

years in the two-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the

Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year

period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

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in Note 1d to the consolidated financial statements, the Company has incurred significant losses and negative cash flows from operations

and has an accumulated deficit that raises substantial doubt about its ability to continue as a going concern.

and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern.

Management’s plans

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We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial

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

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.

audit matter communicated below is a matter arising from the current period audit of the consolidated financial

statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or

disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or

complex judgments.

The communication of a critical audit

matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or

disclosures to which it relates.

Goodwill impairment assessment

As discussed in Notes 2j and 7 to the consolidated financial statements, the Company examines on an annual basis

whether there is an impairment of goodwill, or between annual tests in certain circumstances.

The Company performed its annual quantitative

impairment test of goodwill at the reporting unit level using the income approach.

Based on this analysis, the Company determined that

the carrying value of its SaaS Solutions reporting unit exceeded its fair value and an impairment charge of $671 thousand was recorded.

We identified the evaluation of the goodwill impairment assessment for the SaaS Solutions reporting unit as a critical

audit matter.

A high degree of subjective auditor judgment was required to evaluate the assumptions used to estimate the fair value of

the Company’s SaaS Solutions reporting unit.

Specifically, the following assumptions had limited observable inputs (i) forecasted

reporting unit cost of sales and operating expenses (ii) revenue growth rates, and (iii) discount rate.

The fair value determined was

sensitive to changes in these key assumptions.

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

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

We evaluated the design

of certain internal controls related to the Company’s goodwill impairment evaluation process.

We performed sensitivity analyses

to assess the impact of reasonably possible changes to the forecasted cost of sales and operating expenses, revenue growth rates, and

discount rate assumptions on the Company’s determination of the reporting unit’s fair value.

We evaluated the Company’s

revenue growth rates by comparing the growth projections to industry reports.

We compared the Company’s historical forecasted revenue,

cost of sales, and operating expenses to historical actual results to assess the Company’s ability to accurately forecast cash flows.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s discount rate

by assessing the Company’s inputs to the discount rate as compared to publicly available data for comparable entities.

Somekh Chaikin

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Restricted cash

Sort term deposit

Account receivables

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Investment in marketable securities

Total non-current asset

Total non-current assets

Liabilities and shareholders’ equity

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Operating lease liability

Short-term loans

Bank overdraft and short-term loans

Trade payables

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Stock capital -

Common stock of $ 0.001

par value - Authorized:

and 100,000,000 shares as of

December 31,2022 and 2021;

Common stock of $ 0.001 par value - Authorized:

250,000,000 shares as of December 31,2023 and 2022;

Issued and outstanding:

and 959,297 as of December 31,2022 and

2021 , respectively (*)

3,621,792 and 1,464,117 as of December 31,2023 and 2022, respectively

Additional paid-in capital

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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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General and administrative

Impairment of goodwill

Total operating expenses

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Financial income (expense), net

Loss before taxes

Taxes on income

Equity loss of equity method investees

Loss before income taxes

Income tax benefit

Net loss for the year

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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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dollars in thousands (except share data)

comprehensive

other comprehensive

stockholders’

Balance as of January 1, 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)

Balance as of December 31, 2021

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

as of December 31, 2021

compensation related to options and restricted shares granted to employees and consultants

of shares in Business Combination (*) (**)

of shares post Business Combination ( * )

of reverse stock split (Note 10 (b)

comprehensive income (loss)

as of December 31, 2022

compensation related to options and restricted shares granted to employees and consultants

of shares, net of issuance cost of $ 959

of Exercise of warrants and prefunded warrants

comprehensive income (loss)

as of December 31, 2023

an amount of less than $1.

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Revaluation of investment in marketable securities

Restricted Shares issued to shareholder

Deferred tax benefits

Change in Investment in JV

Stock based compensation

Issuance of shares post Business Combination

Change in inventory

Change in deferred tax liabilities

Change in account receivable

Impairment of goodwill

Change in account receivables

Changes in operating lease liabilities

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Acquisition of a subsidiary, net of cash acquired

Proceeds from restricted deposits, net

investing in other receivable

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Repayment of loans

Proceeds from exercise of warrants

Net cash (used in) provided by financing activities

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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.

AND ITS SUBSIDIARIES

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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.

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 Naiz Fit 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.

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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.

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

Rotrade Ltd all of which are incorporated in Israel, 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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in the field of cardiology and urology.

September 1, 2005, the Company has traded on the Tel Aviv Stock Exchange (“TASE”).

2007 and 2012 the Company reported as a public company with the U.S.

Securities and Exchange Commission (the “SEC”).

2012, the Company suspended its reporting obligations under Section 13(a) and 15(d) of the Securities Exchange Act of 1934.

the Company resumed reporting as a public company.

January 9, 2014, at the Company’s general meeting of shareholders, its shareholders approved an engagement with one of the

Company’s investors (the “Seller”) for the purchase of rights in a Venture (the “Venture”), including

the rights to the method and the certain patent application that had been filed by the Seller (the “Assets”).

relates to the development of technologies and applications which will assist the consumer to take his or her body measurements accurately

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.

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

direct or indirect, connected to the Venture for a period of seven years starting from the end of the Venture’s development period.

part of the agreement, the Seller received an option to buy back the Assets for consideration which will reflect the market fair value

at that time, on the occurrence of the following events:

a) if a motion is filed to liquidate the Company;

b) if seven years after signing

the agreement, the Company’s total accumulated revenues, direct or indirect, from the Venture or the commercialization of the patent

will be lower than NIS 3.6 million.

such an event, Seller may repurchase the interest in the Venture at a market price to be determined by an independent third party valuation

consultant, who shall be chosen by agreement by the parties, and the audit committee shall conduct the negotiations on behalf of the

Company to determine the identity of the consultant.

May 26, 2021, the Company, My Size Israel and Shoshana Zigdon entered into an Amendment to Purchase Agreement (the “Amendment”)

which made certain amendments to a Purchase Agreement between the parties dated February 16, 2014 (the “Purchase Agreement”).

Pursuant to the Amendment, Ms.

Zigdon agreed to irrevocably waive the right to repurchase certain assets related to the collection of

data for measurement purposes that My Size Israel acquired from Ms.

Zigdon under the Purchase Agreement and upon which the Company’s

business is substantially dependent, and all past, present and future rights in any of the intellectual property rights sold, transferred

and assigned to My Size Israel under the Purchase Agreement and any modifications, amendments or improvements made thereto, including,

without limitation, any compensation, reward or any rights to royalties or to receive any payment or other consideration whatsoever in

connection with such intellectual property rights (the “Waiver”).

In consideration of the Waiver, the Company issued 100,000

shares of common stock to Ms.

Zigdon in a private placement.

September 1, 2005 to March 27, 2024, the Company’s common stock traded on the Tel Aviv Stock Exchange

in October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets.

Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel.

These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers.

Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas and other terrorist organizations in parallel to their continued rocket and terror attacks.

The Company cannot currently predict the intensity or duration of Israel’s war against Hamas, nor can predict how this war will ultimately affect the Company’s business and operations or Israel’s economy in general.

The war with Hamas has had an immaterial effect on

its operations and financial results so far.

This is attributable to its global footprint and the offices in Spain which has become a

hub for the Company’s sizing solutions business.

The majority of Orgad’s inventory utilizes fulfillment by Amazon rather than

fulfilling directly.

Inventory is now maintained and orders are shipped from regional Amazon warehouses, thereby reducing exposure to

inventory risk and contributing to operating efficiencies.

February 24, 2022, Russia invaded Ukraine.

The outbreak of hostilities between the two countries could result in more widespread conflict

and could have a severe adverse effect on the region.

Following Russia’s actions, various countries, issued broad-ranging economic

sanctions against Russia.

Such sanctions included, among other things, a prohibition on doing business with certain Russian companies,

officials and oligarchs;

a commitment by certain countries and the European Union to remove selected Russian banks from the Society for

Worldwide Interbank Financial Telecommunications (SWIFT) electronic banking network that connects banks globally;

and restrictive measures

to prevent the Russian Central Bank from undermining the impact of the sanctions.

The Company shut down its operation in Russia and expect to close down the subsidiary in the near future therefore

the impact from current situation is very limited.

AND ITS SUBSIDIARIES

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

NOTE 1 - GENERAL (Cont.)

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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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.

plans include the continued commercialization of the Company’s products and acquisition of technology, intellectual property

or businesses and securing sufficient financing through the sale of additional equity securities, debt or capital inflows from

strategic partnerships.

Additional funds may not be available when the Company needs them, on terms that are acceptable to it, or at

If the Company is unsuccessful in commercializing its products and securing sufficient financing, it may need to cease

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

1, July 2023 the Company merged its two SAAS segments into one segment, hence reducing the reportable segments from three to the

following two segments:

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

measurement solutions.

This realignment reflects the way resources are allocated and performance is assessed by the Chief Operating

Decision Maker.

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

in 2022, 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, My Size LLC and Naiz.

the Company’s financial reporting for December 31, 2023, comparative information for 2022 in the operating segment note was

restated to reflect the changes in reportable segments.

2 - SIGNIFICANT ACCOUNTING POLICIES

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

applied on a consistent basis, as follows:

of estimates :

Use of estimates :

preparation of financial statements in conformity with U.S.

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Actual results could differ from those estimates.

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.

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 units reporting:

impairment of non-financial assets

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

and equipment that are allocated to reporting units, in accordance with the accounting policy presented in Note 1 (h) below.

value calculations of reporting units require the use of estimates.

information on key assumptions used in calculation of the fair value, see NOTE 7 – Goodwill and other Intangible assets.

Functional currency :

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

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

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

of consolidation :

2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Principles of consolidation :

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

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transactions have been eliminated upon consolidation.

equivalents :

Cash equivalents :

equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or

less at the date acquired.

Restricted cash

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 :

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.

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.

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.

In 2023, the company recorded an inventory

mark-down of $ 39 .

Property and equipment :

and equipment are stated at cost, net of accumulated depreciation.

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Over the term of the lease or the useful life of the improvements, whichever is shorter

of long-lived assets :

Impairment of long-lived assets :

Company’s property and equipment are reviewed for impairment in accordance with ASC 360, “Property Plant and Equipment”,

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which the carrying amount of the assets exceeds the fair value of the assets.

Assets to be disposed of are reported at the lower of the

carrying amount or fair value less selling costs.

During the periods ended December 31, 2023 and 2022, no impairment losses have been

combinations :

Business 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.

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

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

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.)

TO CONSOLIDATED FINANCIAL STATEMENTS

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

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.

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.

350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill

impairment test.

If the qualitative assessment does not result in a more likely than not indication of impairment, no further

impairment testing is required.

If it does result in a more likely than not indication of impairment, the impairment test is

Goodwill is not deductible for income tax purposes.

Goodwill from the Orgad acquisition was allocated to the fashion and

equipment e-commerce platform segment and goodwill from Naiz acquisition was allocated to the Naiz segment based innovative

artificial intelligence driven measurement solutions.

Alternatively,

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of the goodwill impairment test.

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

Impairment charge of $ 671 as the carrying value of SaaS Solution reporting segment exceeded its expected fair value,

as determined using a discounted cash flow model which is primarily based on management’s future revenue and cost estimates.

impairment charge was recorded within Impairment of goodwill, within the Consolidated Statement of Operations, and within the Entertainment

segment for the year ended December 31, 2023.

Intangible assets :

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

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amortization method.

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

useful lives of the following assets.

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

Relationships

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

Severance pay :

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)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

and development costs :

2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Research and development costs :

and development costs are charged to the statement of operations, as incurred.

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wages, related expenses and subcontractors.

Software development costs also include costs to develop software to be used solely to meet internal needs and cloud-based

applications used to deliver our services.

The Company capitalize development costs related to these software applications once the preliminary

project stage is complete and it is probable that the project will be completed and the software will be used to perform the function

Costs capitalized for developing such software applications were not material for the periods presented and therefore were not

Income taxes :

Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities

for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Companies’

Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities

using enacted tax rates in effect in the years in which the differences are expected to reverse.

The Company assesses the likelihood

that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available

evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized.

The Company establishes

a valuation allowance, if necessary, to reduce deferred tax assets to the amount more likely than not to be realized.

As of December

31, 2022, and 2021, a full valuation allowance was established by the Company.

Deferred taxes are determined based on the difference between the financial statement carrying amount and the tax basis

of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based

upon the weight of available evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized.

The Company establishes a valuation allowance, if necessary, to reduce deferred tax assets to the amount more likely than not to be realized.

As of December 31, 2023, and 2022, a valuation allowance was established by the Company.

to reduce the deferred tax assets to

the amount supported by future reversals of existing taxable temporary differences.

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

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 :

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 examination, 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, 2023 and 2022 the Company has not recorded any unrecognized tax benefits.

Accounting for stock-based compensation :

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

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

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

value of financial instruments :

2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Fair value of financial instruments :

820, Fair Value Measurements and Disclosures, relating to fair value measurements, defines fair value and established a framework for

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effect of the sales restrictions and is therefore, ranked as Level 2 asset.

and diluted net loss per share :

Basic and diluted net loss per share :

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

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

Concentrations

of credit risk :

Concentrations of credit risk :

instruments that potentially subject the Company and its subsidiaries to concentrations of credit risk consist principally of cash and

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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

Such deposits in Israel may be in excess of insured limits

and are not insured in other jurisdictions.

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

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Recognition :

2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Revenue Recognition :

Company’s revenues are comprised of two main categories:

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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.

from licensing cloud-enabled software subscriptions include subscription fees from customers accessing the Company’s enterprise

cloud services.

Cloud Services allow customers to use the Company’s software without taking possession of the software.

is generally recognized ratably over the contract term.

Substantially all of the Company’s subscription service arrangements are

non-cancelable and do not contain refund-type provisions.

The Company also sells products directly to customers

mainly through its online Amazon stores.

Under the Company ’ s

standard contract terms, customers have a right of return within 30 until 90 days.

For contracts with rights of return, the Company recognizes

revenue based on the amount of the consideration which the Company expects to receive for products which are not expected to be returned

and recognizes a refund liability for the amount not expected to be received.

At the end of each reporting period, the Company updates

its estimates of expected product returns and adjusts the refund liabilities with a corresponding adjustment in revenues.

recorded an allowance for returns in the amounts of $ 260 thousand and $ 161 thousand as of December 31, 2023, and 2022, respectively.

allowance for returns is recorded as decrease in revenues against other payables.

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

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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).

Company recognizes 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.

The Company determined it is a principal, as it has determined that it controls the promised product

before it is transferred to the end customers, it is primarily responsible for fulfilling the promise to provide the goods, and it has

discretion in establishing prices.

Therefore, the revenues are recorded on a gross basis.

AND ITS SUBSIDIARIES

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

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Contingencies

and Commitments

2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Contingencies and Commitments

for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable

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are expensed as incurred.

Derivative instruments

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

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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.

Impact of recently issued accounting standards

In 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.

As an Emerging Growth Company,

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

In June 2022, the FASB issued ASC 2022-03 “Fair Value Measurement of Equity Securities Subject to Contractual

Sale Restrictions”.

The ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of

the unit of account of the equity security and, therefore, is not considered in measuring its fair value.

The ASU also clarifies that

an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction.

The ASU also introduces new disclosure

requirements for equity securities subject to contractual sale restrictions.

As an Emerging Growth Company, the ASU is effective for fiscal

years beginning after December 15, 2024, and interim periods within those fiscal years.

Early adoption is permitted for both interim and

annual financial statements that have not yet been issued or made available for issuance.

The Company is currently evaluating the effect

that ASU 2022-03 will have on its consolidated financial statements and related disclosures.

In December, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disclosure

of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies

other income tax-related disclosures.

The ASU will be effective for fiscal years beginning after December 15, 2024, and allows adoption

on a prospective basis, with a retrospective option.

The Company is in the process of assessing the impacts and method of adoption.

ASU will impact the Company’s income tax disclosures, but not Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, Segment

Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, This guidance expands public entities’ segment disclosures

primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and

included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items,

and interim disclosures of a reportable segment’s profit or loss and assets which updates reportable segment disclosure requirements

primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for fiscal years beginning after

December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments

should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating this

ASU to determine its impact on the Company’s segment disclosures.

In March 2024, the SEC adopted new rules relating to the disclosure of a range of climate-hange-related physical and

transition risks, data, and opportunities.

The adopted rule contains several new disclosure obligations, including, (i) disclosure on

how the board of directors and management oversee climate-related risks and certain climate-related governance items, (ii) disclosure

of information related to a registrant’s climate-related targets, goals, and/or transition plans, and (iii) disclosure on whether

and how climate-related events and transition activities impact line items above a threshold amount on a registrant’s consolidate

financial statements, including the impact of the financial estimates and the assumptions used.

This new rule will be effective in the

Company’s annual disclosures starting from the year ending December 31, 2027.

The Company is in the process of assessing the impact

on its consolidated financial statements and disclosures.

AND ITS SUBSIDIARIES

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

NOTE 3 - CASH AND CASH EQUIVALENTS

3 - CASH AND CASH EQUIVALENTS

Company’s cash and cash equivalents balance at December 31, 2023 and 2022 is denominated in the following currencies:

2 unchanged sentences

Cash and cash equivalents

NOTE 4 - OTHER RECEIVABLES AND PREPAID EXPENSES

4 - OTHER RECEIVABLES AND PREPAID EXPENSES

OF OTHER RECEIVABLES AND PREPAID EXPENSES

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Government authorities

NOTE 5 - PROPERTY AND EQUIPMENT, NET

(*) the loan was given

by the Company to a third party in March 2023 and bears annual interest of 9 % per annum.

The maturity date of the loan is December 31,2024.

5 - PROPERTY AND EQUIPMENT, NET

OF PROPERTY AND EQUIPMENT, NET

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Balance as at January 1, 2023

Business combination

Translation adjustments

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

NOTE 6 - LEASES

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

The lease term is for 36 months beginning on August 20, 2019 and

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

lease term is for 36

months beginning on August 20, 2019 and ending on August

20, 2022 , with an option

to extend for an additional 36 months .

The Company extended the lease period until August 20, 2025.

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

January 8, 2024 the Company provided a notice of six month termination to the lessor

that the lease will end on July 8,2024.

Monthly rent payments including utilities amounting to approximately USD 14

(NIS 49,500 )

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

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intangible assets

Schedule of Intangible assets

of Intangible assets

OF GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

As of January 1, 2022

Goodwill and intangible assets, Cost, beginning

Acquisitions through business combinations

1 unchanged sentence

As of December 31, 2022

Goodwill and intangible assets, Cost, beginning

Effect of changes in exchange rates

As of December 31, 2023

Goodwill and intangible assets, Cost, ending

As of January 1, 2022

Amortization for the year

Effect of changes in exchange rates

As of December 31, 2022

Goodwill and intangible assets, Amortization, beginning

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

Amortization for the year

Effect of changes in exchange rates

As of December 31, 2023

Goodwill and intangible assets, Amortization, ending

1 unchanged sentence

As of December 31, 2022

As of December 31, 2023

Goodwill and intangible assets, Carrying amount, ending

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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

Translation differences

Goodwill impairment

Balance as of December 31, 2023

Company operates its business through two reporting segments:

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

artificial intelligence driven measurement solutions See note 17 for additional segment information.

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

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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 the Fashion and equipment e-commerce platform reporting unit exceeded its estimated carrying amount by 16.8 %

charge of $ 671 as the carrying value of SaaS Solution reporting segment exceeded its expected fair value, as determined using a discounted

cash flow model which is primarily based on management’s future revenue and cost estimates.

This impairment charge was recorded

within Impairment of goodwill, within the Consolidated Statement of Operations, and within the SaaS based innovative artificial intelligence driven measurement solutions segment for the year ended

December 31, 2023.

based the following assumptions:

OF ESTIMATED FAIR VALUE

2 unchanged sentences

Terminal growth rate

Revenue growth rate

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

5 unchanged sentences

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

The Company holds 51 % and

Santista Têxtil holds 49 % of the JV.

The purpose of the JV is to serve the Brazilian market according to the business plan that

Both parties agree to make an initial investment in the JV of $ 198 that will be made per the holding percentage of each

As of the reporting date, the JV is in process of terminating its operations.

the years ended December 31, 2023 and 2022, the Company recognized equity loss from the JV in an amount of $ 71 and $ 0 respectively.

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:

1 unchanged sentence

Debts with credit institutions

NOTE 10 - RELATED PARTIES TRANSACTIONS

Loans in an amount of $ 80 is bearing interest between Prime to Prime + 1.5 % and is due between March 2025 to February

Loans in an amount of $ 327 is bearing interest between 0.13 %- 0.8 % and is due between December 2024 and June 2028.

10 - RELATED PARTY TRANSACTIONS

Balances with related parties:

1 unchanged sentence

SCHEDULE OF RELATED PARTY PAYABLES

Liability in respect of business combinations (**)

Other related parties (**)

Other related parties

Due to related parties

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.

amount includes the net salary payable.

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.

Related parties benefits:

4 unchanged sentences

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

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.

11 - FINANCIAL INSTRUMENTS

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

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Investment in marketable securities

financial assets (*)

December 31, 2022

Fair value hierarchy

Financial liabilities

December 31, 2021

Fair value hierarchy

Financial assets

Investment in marketable securities

Derivatives (*)

December 31, 2022

2 unchanged sentences

Warrants derivative

(*) the financial asset

includes in other receivables.

derivatives are included in other receivables.

AND ITS SUBSIDIARIES

1 unchanged sentence

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

NOTE 11 - FINANCIAL INSTRUMENTS (Cont.)

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

December 31, 2023, the recognized loss and fair value (based on quoted market prices with a discount due to security- restrictions on

iMine shares) of the marketable securities were $ 41 and $ 6 , respectively (at December 31, 2022 $ 59 and $ 47 , respectively).

NOTE 12 - TAXES ON INCOME

12 - TAXES ON INCOME

December 31, 2023, the Company had U.S.

1 unchanged sentence

taxable income:

will expire from 2030 until 2037 and the remain of $ 10,585 may be carryforward to offset against future income for an indefinite period

Utilization of the U.S.

2 unchanged sentences

Company has final tax assessments through 2015.

December 22, 2017, the Tax Reform Act was signed into law.

The legislation significantly changes U.S.

tax law by, among other things,

lowering the U.S.

corporate income tax rate from a maximum of 35 % to a flat 21 % rate, effective January 1, 2018.

As a result of the decrease

in the corporate income tax rate, the Company revalued the ending net deferred tax assets at December 31, 2017, but did not recognize

any incremental income tax expense in 2017 due to the revaluation of the valuation allowance.

hereunder are the tax rates relevant to the Company’s Israeli subsidiaries:

corporate income tax rate 21%.

hereunder are the income tax rates relevant to the Company’s Israeli subsidiaries:

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

of approximately $ 64

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

The Company’s Israeli subsidiaries have estimated

total available operating loss carryforwards of approximately $ 66,000

as of December 31, 202 3 .

Of these losses, a total

Of these carryforwards, a

total of $ 42,000

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.

Topspin’s operating loss carryforwards 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 operating loss

carryforwards are owned by My Size Israel 2014 Ltd and Orgad (subsidiary) may be carryforward to offset against future income for

an indefinite period of time.

Medical (Israel) Ltd.

1 unchanged sentence

has final tax assessments through 2016.

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

Naiz has estimated total available operating loss carryforwards of approximately

$ 1,335 as of December 31, 2023.

Naiz operating loss carryforward may be used to offset against future income for an indefinite period

and foreign components of loss, before income taxes consisted of:

OF COMPONENTS OF LOSS FROM CONTINUING OPERATIONS, BEFORE INCOME TAXES

before income taxes

AND ITS SUBSIDIARIES

1 unchanged sentence

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

NOTE 12 - TAXES ON INCOME (Cont.)

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

4 unchanged sentences

Operating loss carryforwards

Warrants and options

Marketable securities

Intangible assets

Research and development expenses

Stock based compensation expense

Investment in marketable securities

Capitalized research and development expenses

Other temporary differences

Deferred tax assets before valuation allowance

Total deferred tax assets

Valuation allowance

Net deferred tax assets after valuation allowance

Deferred tax liabilities:

Intangible assets

Net deferred tax liability

3 unchanged sentences

Additions in valuation allowance to the income statement

Additions in valuation allowance due to exchange rate differences

Additions in valuation allowance due to exchange rate foreign currency

translation differences

Net change in the valuation allowance

Balance at end of the year

4 unchanged sentences

Based on consideration of these factors, the Company recorded

a full valuation allowance at December 31, 2021 and 2020.

following presents the adjustment between the theoretical tax amount and the tax amount included in the financial statements:

a valuation allowance to reduce deferred tax assets to the amount supported by future reversals of existing taxable temporary differences

at December 31, 2023 and 2022.

The following presents the adjustment between the theoretical income tax benefit that would result from applying

federal statutory income tax rate to loss before income taxes amount and the reported income tax benefit included in the financial

OF COMPONENTS OF INCOME TAX EXPENSES BENEFITS

Loss before income taxes

Statutory tax rate

Computed “expected” tax income

Foreign tax rate differences and exchange rate differences

Statutory income tax rate

Computed “expected” income tax benefit

Foreign tax rate differences

Exchange rate differences

Nondeductible expenses

Impairment of goodwill

Change in valuation allowance

Taxes on income

Income tax benefit

The entire income tax benefit

is a deferred tax benefit.

AND ITS SUBSIDIARIES

1 unchanged sentence

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

NOTE 13 - SHAREHOLDERS’ EQUITY

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

right to receive dividends if declared.

January 8, 2021, the Company conducted a public offering of its securities pursuant to which it issued 62,768 shares of its common

stock for gross proceeds of $ 2,008 .

The net proceeds to the Company from the offering were approximately $ 1,700 , after deducting

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

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.

See note 1(b) above.

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 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

1 unchanged sentence

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

1 unchanged sentence

presented in these financial statements.

On 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.

In addition, the Company entered into a securities purchase agreement (the

“PIPE 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.

The pre-funded warrants are immediately exercisable at an exercise price

of $ 0.001 per share and will not expire until exercised in full.

The warrants are immediately exercisable upon issuance at an exercise

price of $ 2.805 per share, subject to adjustment as set forth therein.

The Series A warrants have a term of five and one-half years from

the date of issuance and the Series B warrants have a term of 28 months from the date of issuance.

The warrants may be exercised on a

cashless basis if there is no effective registration statement registering the shares underlying the warrants.

In connection with the PIPE Purchase Agreement, the Company entered into

a registration rights agreement (the “Registration Rights Agreement”).

Pursuant to the Registration Rights Agreement, the

Company is required to file a resale registration statement (the “Registration Statement”), with the SEC, to register for

resale the shares issuable upon exercise of the unregistered pre-funded warrants and the Series A and Series B warrants, within 20 days

of the signing date of the PIPE Purchase Agreement (the “Signing Date”), and to have such Registration Statement declared

effective within 60 days after the Signing Date in the event the Registration Statement is not reviewed by the SEC, or 90 days of the

Signing Date in the event the Registration Statement is reviewed by the SEC.

The Company will be obligated to pay certain liquidated damages

if it fails to maintain the effectiveness of the Registration Statement.

Aggregate gross proceeds to the Company in respect of the offerings was

approximately $ 3,000 , before deducting fees payable to the placement agent and other offering expenses payable by the Company.

proceeds were approximately $ 2,600 .

As of December 31, 2023, all the pre funded warrants were exercised.

On August 24, 2023, the Company entered into an inducement offer letter

agreement (the “Inducement Letter”) with a certain holder (the “Holder”) of certain of the Company’s existing

warrants to purchase up to (i) 1,963,994 shares of the Company’s common stock issued on January 12, 2023 at an exercise price of

$ 2.805 per share (the “January 2023 Warrants”), (ii) 6,864 shares of the Company’s common stock issued on January 17,

2020 at an exercise price of $ 94.00 per share (the “January 2020 Warrants”), and (ii) 47,153 shares of the Company’s

common stock issued on October 28, 2021 at an exercise price of $ 31.50 per share, having terms ranging from 28 months to five and one-half

years (the “October 2021 Warrants” and together with the January 2023 Warrants and the January 2020 Warrants, the “Existing

Pursuant to the Inducement Letter, the Holder agreed to exercise for cash

its Existing Warrants to purchase an aggregate of 2,018,012 shares of the Company’s common stock at a reduced exercise price of

$ 2.09 per share in consideration of the Company’s agreement to issue new common stock purchase warrants (the “New Warrants”),

to purchase up to an aggregate of 5,367,912 shares of the Company’s common stock (the “New Warrant Shares”), at an exercise

price of $ 2.09 per share.

The Company received aggregate gross proceeds of approximately $ 4.2 million from the exercise of the Existing

Warrants by the Holder, before deducting placement agent fees and other offering expenses payable by the Company.

The net proceeds are

approximately $ 3.6 million.

As of December 31, 2023, the Company issued to the holder 1,183,012 shares

and 835,000 in abeyance.

AND ITS SUBSIDIARIES

1 unchanged sentence

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

NOTE 13 - SHAREHOLDERS’ EQUITY (Cont.)

13 - SHAREHOLDERS’ EQUITY (Cont.)

summary of the warrant activity during the years ended December 31, 2023 and 2022 is presented below:

4 unchanged sentences

Expired or exercised

( 3,067,572 )

Outstanding, December 31, 2023

Exercisable, December 31, 2023

NOTE 14 - STOCK BASED COMPENSATION

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 – Cost of goods

Stock-based compensation expense - Research and development

2 unchanged sentences

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)

NOTE 14 - STOCK BASED COMPENSATION (Cont.)

14 - STOCK BASED COMPENSATION (Cont.)

issued to consultants

12 unchanged sentences

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.

In March 2023, the Company entered into a two-year agreement with a consultant (“Consultant15”) 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 Consultant15 options

to purchase up to 4,000 shares of the Company’s common stock upon execution of the agreement.

The options are exercisable at $ 3.00

per share and shall vest in 2 equal instalments every twelve months starting March 2023.

Unexercised options shall expire 3 years from

the effective date.

During 2023 and 2022, an

amount of $ 1

respectively, were recorded by the Company as stock-based equity awards with respect to Consultant 14 and consultant 15.

AND ITS SUBSIDIARIES

1 unchanged sentence

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

NOTE 14 - STOCK BASED COMPENSATION (Cont.)

14 - STOCK BASED COMPENSATION (Cont.)

Company’s outstanding options granted to consultants as of December 31, 2023 are as follows:

2 unchanged sentences

exercise price

February 2018

February 2023

August 2018-December 2018

August 2023 - December 2023

September-October 2020

1 unchanged sentence

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:

7 unchanged sentences

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

NOTE 14 - STOCK BASED COMPENSATION (Cont.)

14 - STOCK BASED COMPENSATION (Cont.)

Option Plan for employees

14 unchanged sentences

Risk-free interest

expected life

Contractual term

the years ended December 31, 2023 and 2022, 93,000 and 10,000 options, respectively, were granted.

13 unchanged sentences

exercise price of $ 0.21 per share.

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

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

On July 13, 2023, the

compensation committee of the board of directors of the Company reduced the exercise price of outstanding options of certain

officers and directors of the Company for the purchase of an aggregate of 23,575 shares of common stock (with exercise

prices of $ 26.00 per Share) to $ 1.09 per share, which was the closing price for the Company’s shares on July 13,

The exercise price reduction includes options held by, among others, the Company’s named executive officers with respect

to the following number of shares:

(i) Ronen Luzon, the Company’s Chief Executive Officer and director:

8,001 shares,

(ii) Or Kles, the Company’s Chief Financial Officer:

5,760 shares, and (iii) Billy Pardo, the Company’s Chief

Operating Officer and Chief Product Officer:

6,094 shares.

The incremental compensation cost

resulting from the repricing is approximately $ 10 .

addition, The Company granted five-year options to purchase up to 93,000 ordinary shares to employees of the Company at an exercise

price of $ 1.09 per share.

On February 14, 2024, the Compensation Committee of the Company granted restricted share awards under the Company’s

2017 Equity Incentive Plan to Ronen Luzon, Or Kles and Billy Pardo, pursuant to which they were issued 300,000 restricted shares, 150,000

restricted shares and 150,000 restricted shares, respectively.

The restricted shares shall vest in three equal installments on January 1, 2025, January

1,2026 and January 1, 2027, conditioned upon continuous employment with the Company, and subject to accelerated vesting upon a change

in control of the Company.

AND ITS SUBSIDIARIES

1 unchanged sentence

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

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, 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 .

14 - STOCK BASED COMPENSATION (Cont.)

total stock option compensation expense in the year ended December 31, 2023 amounted to $ 371 as follows:

Research and development expenses

amounted to $ 71 , sales and marketing expenses amounted to $ 130 and general and administrative expenses amounted to $ 168 .

total stock option compensation expense in the year ended December 31, 2022 amounted to $ 455 as follows:

Research and development expenses

amounted to $ 151 , sales and marketing expenses amounted to $ 126 and general and administrative expenses amounted to $ 178 .

of December 31, 2023, there was a total of $ 153 unrecognized compensation cost relating to non-vested share-based compensation arrangements.

2 unchanged sentences

OF SHARES OPTION ACTIVITY

Outstanding as of January 1

Outstanding as of year end

Vested as of year end

Outstanding at January 1

Outstanding at year end

Vested at year end

option activity during 2022 is as follows:

Outstanding as of January 1

Outstanding as of year end

Vested as of year end

Outstanding at January 1

Outstanding at year end

Vested at year end

AND ITS SUBSIDIARIES

1 unchanged sentence

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

NOTE 15 - CONTINGENCIES AND COMMITMENTS

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

in the Supreme Court of the State of New York, County of New York for breach of a Securities

Purchase Agreement (the “Agreement”) in which it is seeking damages in an amount

to be determined at trial, but in no event less than $ 616 .

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.

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

15 - CONTINGENCIES AND COMMITMENTS

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

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

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

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 $ 11,400 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

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 .

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

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 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.

has been completed and both parties have filed motions for summary judgment in connection with the claims and counterclaims.

30, 2021, the Court denied both the Company 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.

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.

filed its opposing brief on December 7, 2022.

Both sides were given an opportunity to file a reply brief.

The Company filed a 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.

May 2021, the Company received notice from Custodian Ventures, LLC (“Custodian”)

of its intention to nominate four candidates to stand for election to our Board of Directors

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,

(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.

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

Custodian, Activist Investing LLC, Milton C.

Ault III, Ault Alpha LP, Ault Alpha GP LLC, Ault Capital Management LLC, Ault &

Company Inc., David Aboudi, Patrick Loney and David Nathan, pursuant to Sections 13(d) and 14(a) of the Securities Exchange Act of

1934, and certain rules promulgated thereunder (the “SDNY Action”).

The complaint sought, among other things, declaratory

and injunctive relief related to defendants’ efforts to nominate a slate of directors for election at our next annual meeting.

The complaint alleged that the defendants formed an undisclosed “group” for purposes of Section 13(d) and has misrepresented

its true purpose in purchasing My Size, Inc.

stock in filings made with the SEC.

In addition, the complaint alleged that the defendants

engaged in an unlawful solicitation of investors in violation of the Exchange Act proxy rules in connection with their efforts to

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.

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

Pursuant to the Settlement Agreement,

the Company and the Lazar Parties agreed to compromise and settle the Delaware Action and SDNY Action.

In addition, pursuant to the

Settlement Agreement, the Company agreed to reimburse Custodian for out of pocket expenses and in consideration for the dismissal

and release of claims against the Company an aggregate amount equal to $ 275 , to be paid within three business days of the effective

date of the Settlement Agreement.

With respect to the Company’s 2021 annual meeting of stockholders, Custodian agreed to, among

other things, withdraw or rescind (i) its May 12, 2021 notice of stockholder nominations of four director candidates with respect

to the Company’s 2021 annual meeting of stockholders, (ii) the notice dated October 28, 2021 submitted by Custodian to the

Company notifying the Company of Custodian’s continued intent to bring its nomination of four director candidates before the

Company’s stockholders at the 2021 annual meeting, and (iii) any and all related materials and notices submitted to the Company

in connection therewith or related thereto and to not take any further action in connection with the solicitation of any proxies

in connection with the Company.

Custodian also agreed to cease any and all solicitation and other activities in connection with the

2021 annual meeting.

In addition, Custodian agreed to certain customary standstill provisions for a period of five years beginning

on the effective date of the Agreement (the “Standstill Period”).

The Settlement Agreement also provides that during

the Standstill Period, the Lazar Parties will vote all shares of common stock of the Company it beneficially owns in in accordance

with any proposal or recommendation made by the Company or the Board of Directors of the Company that is submitted to the stockholders

of the Company, unless to do so would violate applicable law and except with respect to certain extraordinary transactions.

The Settlement

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

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

and Dror Atzmon in the Magistrate’s Court in Tel Aviv for a monetary award in

an amount of NIS 1,436,679 (approximately $ 450 ) and a declaratory relief.

The plaintiffs

allege that the Company breached its contractual obligations to pay them for services allegedly

rendered to the Company by the plaintiffs under a certain consulting agreement dated July

2, 2014, in an amount of NIS 819,000 (approximately $ 256 ).

Additionally, the plaintiffs

allege that the Company should compensate them for losses allegedly incurred by them following

their investment in the Company’s shares issued under a certain private offering.

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

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

(approximately $ 415 ).

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

The first preliminary court hearing of the case is scheduled for January 23, 2022.

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

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

claim without prejudice.

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

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 the Company

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

On March 13, 2023, the Supreme

Court referred the case to its Alternative Dispute Program and ordered the cases to mediate.

The mediation was held on July 26, 2023 and

various settlement options were explored but the mediation did not lead to settlement.

On December 21, 2023, a conference with the Court

was held and the parties were given dates for various pre-trial filings.

The next pre-trial conference is scheduled to be held on May 31, 2024, at

which point the Court will schedule the matter for trial on the ultimate claims.

The Company intends to vigorously defend any claims made

by North Empire.

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

AND ITS SUBSIDIARIES

1 unchanged sentence

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

NOTE 16 - BUSINESS COMBINATION

16 - BUSINESS COMBINATIONS

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

6 unchanged sentences

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

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.

2 unchanged sentences

OF FAIR VALUE OF THE ACQUISITION

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

Issuance of shares of common stock ( 55,801

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.

Quoted price as of the acquisition date

In 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.

Subsequent to the balance sheet date, the amount of $ 700 was fully paid to the

former owners of Orgad net of a settlement amount of $ 275 .

Furthermore, 55,801

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 %

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

earn-out payments of 10 %

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

All of these payments are subject to the former owners

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

business combination.

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:

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 years ended December 31, 2023 and 2022 an amount of $ 202 ,

$ 82 and $ 319

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:

Expenses – Cost of goods

Expenses - Sales and marketing

Expenses - General and administrative

Stock-based compensation

Identifiable 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

2 unchanged sentences

Long-term financial investment

Customer Relationships

Short Term accruals and deferrals

Short-term provision

Long term debt

Long-term financial investment

Selling platform

3 unchanged sentences

Long-term debt

Deferred Taxes

Deferred tax liabilities

Total net assets acquired

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands

(except share data and per share data)

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).

Company incurred transaction costs of approximately none and $ 40

and during twelve-month period ended December 31, 2023 and 2022 respectively, which were included in general and administrative

expenses in the consolidated statements of income (loss).

of N aiz Bespoke Technologies, S.L.

3 unchanged sentences

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

Unaudited pro-forma

pro-forma information

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

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 $ 4,738 and $ 379 respectively and the net loss after tax would have been $ 8,695 and $ 10,717

respectively.

Consideration transferred

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

2 unchanged sentences

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.

Quoted 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:

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

Naiz’s 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;

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 ;

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

NOTES 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 year ended December 31, 2023 and 2022 an amount

of ($ 130 ) and $ 283

was recorded in respect of the additional cash consideration respectively.

has reached the Revenues target of (1) period January 1, 2022-December 31,2022 and therefore an amount of $ 125 was paid during the year

has not reached the targets of the (2) and (3) periods and therefore the contingent liability was reduced accordingly.

Identifiable assets

acquired and liabilities assumed

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

12 unchanged sentences

Long term debt

Deferred Taxes

Deferred tax liabilities

Total net assets acquired

2 unchanged sentences

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)

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.

1, July 2023 the Company merged its two SAAS segments into one segment, hence reducing the reportable segments from three to the following

two segments:

(i) fashion and equipment e-commerce platform, and (ii) SaaS based innovative artificial intelligence driven measurement

This realignment reflects the way resources are allocated and performance is assessed by the Chief Operating Decision Maker.

The fashion and equipment e-commerce platform which represents Orgad’s activity that was acquired by the Company in 2022, 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, My Size LLC and Naiz.

the Company’s financial reporting for December 31, 2023, comparative information for 2022 was restated to reflect the changes in

reportable segments.

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

4 unchanged sentences

Operating (loss) income

Financial income (expense), net

Net loss before tax

and equipment e-commerce platform

Significant non-cash items:

Amortization (*)

Impairment of goodwill (*)

(*) see note 7.

Fashion and equipment e-commerce platform

As of December 31, 2023:

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

Fashion and equipment e-commerce platform

As of the year ended December 31, 2022

Revenues from external customers

Operating (loss) income

Significant non-cash items:

Amortization (*)

(*) see note 7.

Fashion and equipment e-commerce platform

As of December 31, 2022:

The Company elected to present geographic information

in respect with revenues generated from external customers based on the selling location:

assets, which includes investment in JV, property, plant and equipment and right

of use assets, by geographic region are as follows :

SCHEDULE OF CONSOLIDATED ASSETS

For the year ended December 31, 2023 86.45 % of the Company’s total revenues were generated

in the United states, no other foreign destination comprised 10.0% or more of the Company’s total revenues.

18 - SALES AND MARKETING

OF SALES AND MARKETING

Consultants and subcontractors

Share based payments post Orgad acquisition (*)

Cash and equity liability expenses related to Orgad acquisition (*) *

Share based payments for consultants and employees

1 unchanged sentence

(*) See note 16.

NOTE 19 - GENERAL AND ADMINISTRATIVE EXPENSES

19 - GENERAL AND ADMINISTRATIVE EXPENSES

OF GENERAL AND ADMINISTRATIVE EXPENSES

4 unchanged sentences

Cash liability expenses related to Naiz acquisition (*)

Settlement fees (*)

General and administrative

(*) See note 16.

AND ITS SUBSIDIARIES

1 unchanged sentence

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

NOTE 20 - FINANCIAL INCOME (EXPENSE), NET

20 - FINANCIAL INCOME (EXPENSE), NET

OF FINANCIAL INCOME (EXPENSES), NET

Financial income

Revaluation investment in marketable securities

Financial expense

Exchange rate differences

Total Financial income

Exchange rate differences

Revaluation of loan granted

Revaluation investment in marketable securities

NOTE 21 - EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

Total Financial expense

21 – SIGNIFICANT EVENTS DURING THE REPORTING PERIOD

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 is not aware of any casualties or injuries associated

with the fire.

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.

The value of the inventory that was in the warehouse

was approximately $ 640 .

The Company believes that this incident did not affect the future sales results of Orgad for the year of

The inventory was not insured and the Company and lessor signed an agreement to settle the issue in which the Company paid

to the lessor an amount of $ 50 to cover its loss.

The Company recognized the payment to the lessor as a general and administrative

the reporting period, claims by the owners a neighboring warehouse were made of damage caused by the fire.

As of the date these financial

statements were authorized for issuance, no lawsuit was filed against the Company, and the amount of potential loss, if any, cannot

be reasonably estimated.

During May 2023, the Company

initiated a transfer of the support, development and customer success operations to its Spanish entity, Naiz Fit, that is intended

to improve efficiency and lower costs between the Company’s operations in Israel and Naiz Fit.

As part of this, the Company

reduced headcount by 13 persons in Israel, including the termination of its Chief Commercial Officer, Ezequiel Javier Brandwain.

This restructuring did not have a material impact on the Company’s results.

The Company expects it to lower future operating

costs without significant impact on revenues.

On November 3, 2023, the

Company was notified, by the Nasdaq Listing Qualifications that the Company is not in compliance with the minimum bid price requirements

set forth in Nasdaq Listing Rule 5550(a)(2), or the Rule, for continued listing on The Nasdaq Capital Market.

The Notification Letter

provides that the Company has 180 calendar days, or until May 1, 2024, to regain compliance with the Rule.

To regain compliance,

the bid price of our common stock must have a closing bid price of at least $ 1.00 per share for a minimum of 10 consecutive business

In the event we do not regain compliance by July 5, 2022, the Company may then be eligible for additional 180 days if the Company

meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq

Capital Market, with the exception of the bid price requirement, and will need to provide written notice of the Company’s intention

to cure the deficiency during the second compliance period.

If the Company does not qualify for the second compliance period or fails

to regain compliance during the second compliance period, then Nasdaq will notify the Company of its determination to delist the

Company common stock, at which point the Company will have an opportunity to appeal the delisting determination to a Hearings Panel.

22 - EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

February 14, 2024, the Compensation Committee of the Company granted restricted stock awards under the Company’s 2017 Equity

Incentive Plan to Ronen Luzon, Or Kles and Billy Pardo, pursuant to which they were issued 300,000

restricted shares, 150,000

restricted shares and 150,000

restricted shares, respectively.

The restricted shares shall vest in three equal installments on January 1, 2025, January 1, 2026

and January 1, 2027, conditioned upon continuous employment with the Company, and subject to accelerated vesting upon a change in

control of the Company.

On the same day, the Company granted a total of 80,000 RSU (restricted stock units) to its Directors that will vest

on January 1,2025 and five -years options to purchase up to 55,000 ordinary shares to other employees of the Company at an exercise price

of $ 0.479 per share.

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

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE

2 unchanged sentences

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