My Size, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MY SIZE, INC. AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2024 U.S. DOLLARS IN THOUSANDS INDEX Page Report of Independent Registered Public Accounting Firm (PCAOB ID: ID 1057 ) F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Comprehensive Loss F-4 Consolidated Statements of Shareholders’ Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 - F-31 F- 1 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors My Size, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of My Size, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed 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 raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1d. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical 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 2i 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 $631 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. /s/ Somekh Chaikin Somekh Chaikin Member Firm of KPMG International We have served as the Company’s auditor since 2017. Tel Aviv, Israel March 27, 2025 F- 2 MY SIZE, INC. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share data) Note 2024 2023 December 31, Note 2024 2023 Assets Current assets Cash and cash equivalents 3 4,880 2,187 Restricted cash - 77 Sort term deposit - 22 Inventory 2,796 2,879 Account receivables 278 615 Other receivables and prepaid expenses 4 1,118 847 Total current assets 9,072 6,627 Long term deposits 7 7 Property and equipment, net 5 67 121 Operating right-of-use asset 6 23 351 Intangible assets 7 750 1,097 Goodwill 7 133 758 Investment in JV 8 - 24 Investment in marketable securities 11 7 6 Total non-current assets 987 2,364 Total assets 10,059 8,991 Liabilities and shareholders’ equity Current liabilities Operating lease liability 6 15 158 Bank overdraft and short-term loans 9 107 158 Trade payables 2,084 2,154 Liabilities to Related parties 10 151 605 Other payables 639 803 Total current liabilities 2,996 3,878 Long-term loans 9 146 249 Operating lease liability 6 8 129 Total non-current liabilities 154 378 CONTINGENCIES AND COMMITMENTS 15 - - Total Liabilities 3,150 4,256 Shareholders’ equity 13 Stock capital - Common stock of $ 0.001 par value - Authorized: 250,000,000 shares as of December 31,2024 and 2023; Issued and outstanding: 2,040,159 and 452,724 (*) as of December 31,2024 and 2023, respectively 2 4 Additional paid-in capital 71,608 65,383 Accumulated other comprehensive loss ( 825 ) ( 771 ) Accumulated deficit ( 63,876 ) ( 59,881 ) Total shareholders’ equity 6,909 4,735 Total liabilities and shareholders’ equity 10,059 8,991 (*) Adjusted to give retroactive effect of 1:8 reverse stock split effected in April 2024, see note 13 (b) The accompanying notes are an integral part of the consolidated financial statements. F- 3 MY SIZE, INC. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS U.S. dollars in thousands (except share data and per share data) Note 2024 2023 Year ended December 31, Note 2024 2023 Revenues 8,257 6,996 Cost of revenues ( 4,934 ) ( 4,265 ) Gross profit 3,323 2,731 Operating expenses Research and development ( 429 ) ( 974 ) Sales and marketing 17 ( 3,114 ) ( 3,856 ) General and administrative 18 ( 3,368 ) ( 3,971 ) Other income 2 0 275 - Impairment of goodwill 7 ( 631 ) ( 671 ) Total operating expenses ( 7,267 ) ( 9,472 ) Operating loss ( 3,944 ) ( 6,741 ) Financial income (expense), net 19 ( 51 ) 99 Equity loss of equity method investees - ( 71 ) Loss before income taxes ( 3,995 ) ( 6,713 ) Income tax benefit 12 - 333 Net loss for the year ( 3,995 ) ( 6,380 ) Other comprehensive income (loss): Foreign currency translation differences ( 54 ) ( 134 ) Total comprehensive loss ( 4,049 ) ( 6,514 ) Basic and diluted loss per share ( 4.39 ) ( 20.4 ) Basic and diluted weighted average number of shares outstanding 910,758 318,848 The accompanying notes are an integral part of the consolidated financial statements. F- 4 MY SIZE, INC. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY U.S. dollars in thousands (except share data) Number** Amount ** capital ** loss Deficit equity Common stock Additional paid-in Accumulated other comprehensive Accumulated Total stockholders’ Number** Amount** capital** loss Deficit equity Balance as of December 31, 2022 183,015 1 58,673 ( 637 ) ( 53,501 ) 4,536 Stock-based compensation related to options and restricted shares granted to employees and consultants ( 1,000 ) - 453 - - 453 Issuance of shares, net of issuance cost of $ 959 54,000 - * 6,258 - - 6,258 Issuance of Exercise of warrants and prefunded warrants 216,709 - * 2 - - 2 Total comprehensive income (loss) - - - ( 134 ) ( 6,380 ) ( 6,514 ) Balance as of December 31, 2023 452,724 1 65,386 ( 771 ) ( 59,881 ) 4,735 Balance 452,724 1 65,386 ( 771 ) ( 59,881 ) 4,735 Stock-based compensation related to options and restricted shares granted to employees and consultants 80,000 - * 390 - - 390 Issuance of shares for sellers post Business Combination 4,360 - * 3 - - 3 Effect of reverse stock split 74,683 - * - - - - Issuance of shares, net of issuance cost of $ 442 (***) 79,000 - * 2,819 2,819 Exercise of shares in abeyance 696,364 - * - - - - Exercise of Warrants 653,028 1 3,010 3,011 Total comprehensive income (loss) - - - ( 54 ) ( 3,995 ) ( 4,049 ) Balance as of December 31, 2024 2,040,159 2 71,608 ( 825 ) ( 63,876 ) 6,909 Balance 2,040,159 2 71,608 ( 825 ) ( 63,876 ) 6,909 (*) Represents an amount of less than $1. (**) Adjusted to give retroactive effect of 1:8 reverse stock split effected in April 2024, see note 13 (b). (***) See note 13 The accompanying notes are an integral part of the consolidated financial statements. F- 5 MY SIZE, INC. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands 2024 2023 Year ended December 31, 2024 2023 Cash flows from operating activities: Net loss ( 3,995 ) ( 6,380 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 20 27 Loss on Disposal of property and equipment 29 - Change in operating lease right-of-use asset 147 137 Amortization of intangible assets 294 302 Foreign exchange differences - ( 99 ) Change in liabilities to related parties ( 442 ) ( 93 ) Interest on long term liabilities 47 57 Interest paid ( 41 ) ( 23 ) Revaluation of investment in marketable securities ( 1 ) 41 Deferred tax benefits - ( 328 ) Change in Investment in JV - 71 Stock based compensation 390 453 Change in inventory 112 ( 1,839 ) Impairment of goodwill 631 671 Change in account receivables 335 1,200 Changes in operating lease liabilities ( 96 ) ( 115 ) Change in other receivables and prepaid expenses ( 268 ) ( 84 ) Change in trade payables ( 65 ) ( 306 ) Change in other payables ( 189 ) 202 Net cash used in operating activities ( 3,092 ) ( 6,106 ) Cash flows from investing activities: Proceeds from short term deposits 22 - Proceeds from liquidating JV 38 - Purchase of property and equipment ( 7 ) ( 7 ) Net cash (used in) provided by investing activities 53 ( 7 ) Cash flows from financing activities: Proceeds from issuance of shares, net of issuance costs and exercise of warrants 5,829 6,258 Loans received 500 - Repayment of loans ( 735 ) ( 124 ) Net cash provided by financing activities 5,594 6,134 Effect of exchange rate fluctuations on cash and cash equivalents 61 ( 120 ) Change in cash and cash equivalents and restricted cash 2,616 ( 99 ) Cash and cash equivalents and restricted cash at the beginning of the year 2,264 2,363 Cash and cash equivalents and restricted cash at the end of the year 4,880 2,264 Non cash activities: Change in operating lease right-of-use asset and liability due to termination of the lease agreement 181 - F- 6 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 1 - GENERAL a. My Size, Inc. is developing unique measurement technologies based on algorithms with applications focused on the apparel e-commerce market. The technology is driven by proprietary algorithms, which are able to calculate and record measurements in a variety of novel ways. Following the acquisition of Naiz Fit Bespoke Technologies, S.L (“Naiz”) in October 2022, the Company expanded its offering outreach and customer base. Following the acquisition of Orgad International Marketing Ltd. (“Orgad”) in February 2022, the Company also operates an omnichannel e-commerce platform. The 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. References to the Company include the subsidiaries unless the context indicates otherwise. My Size, Inc., was incorporated and commenced operations in September 1999, as Topspin Medical Inc. (“Topspin”), a private company registered in the State of Delaware. In December 2013, the Company changed its name to Knowledgetree Ventures Inc. Subsequently, in February 2014, the Company changed its name to My Size, Inc. Topspin was engaged, through its Israeli subsidiary, in research and development in the field of cardiology and urology. b. 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 war with Hamas has had an immaterial effect on its operations and financial results so far. This is attributable to its 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. On January 19, 2025, a temporary ceasefire went into effect, the result of which is uncertain. On February 24, 2022, Russia invaded Ukraine. The 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 expects to close down the subsidiary in the near future therefore the impact from current situation is very limited. F- 7 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 1 - GENERAL (Cont.) c. On July 25, 2016, the Company’s common stock began publicly trading on the Nasdaq Capital Market under the symbol “MYSZ”. From September 1, 2005 to March 27, 2024, the Company’s common stock was traded on the Tel Aviv Stock Exchange. d. Since inception, the Company has incurred significant losses and negative cash flows from operations and has an accumulated deficit of $ 63,876 . The Company has financed its operations mainly through fundraising from various investors. The Company’s management expects that the Company will continue to generate losses and negative cash flows from operations for the foreseeable future. Based on the projected cash flows and cash balances as of the date of these financial statements, management is of the opinion that there is an uncertainty that its existing cash will be sufficient to fund operations for a period of more than 12 months. As a result, there is substantial doubt about the Company’s ability to continue as a going concern. Management’s plans include the continued commercialization of the Company’s products and 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 all. If the Company is unsuccessful in commercializing its products and securing sufficient financing, it may need to cease operations. The financial statements include no adjustments for measurement or presentation of assets and liabilities, which may be required should the Company fail to operate as a going concern. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S. GAAP”), applied on a consistent basis, as follows: a. Use of estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. 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 units reporting: Estimated 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. The fair value calculations of reporting units require the use of estimates. For information on key assumptions used in calculation of the fair value, see NOTE 7 – Goodwill and other Intangible assets. b. Functional currency: The currency of the primary economic environment in which the operations of the Company is conducted is the U.S. Dollar and thus it is the Company’s functional currency. The reporting currency according to which these financial statements are prepared is the U.S. dollar. The currency of the primary economic environment in which the operation of the subsidiaries, My Size Israel and Orgad International Marketing Ltd. functional currency is the New Israeli Shekel (“NIS”). The currency of the primary economic environment in which the operation of the subsidiary, My Size LLC, functional currency is the Russian Ruble. The currency of the primary economic environment in which the operation of the subsidiary, Naiz fit, functional currency is the Euro. F- 8 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) c. Principles of consolidation: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. d. Cash equivalents: Cash 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. e. Restricted cash Restricted cash are deposits for rent, credit card and for hedging activities. f. Inventories: Inventories 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. 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 2024 and 2023, the company recorded an inventory mark-down of $ 30 and $ 39 respectively. g. Property and equipment: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets, at the following annual rates: SCHEDULE OF PROPERTY AND EQUIPMENT ANNUAL RATE % Computers and peripheral equipment 33 Office furniture and equipment 7 - 20 Leasehold improvements Over the term of the lease or the useful life of the improvements, whichever is shorter h. Impairment of long-lived assets: The Company’s property and equipment are reviewed for impairment in accordance with ASC 360, “Property Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. F- 9 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) i. Goodwill: Goodwill 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 test. ASC 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. ASC 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 performed. 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, ASC 350 permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step of the goodwill impairment test. An impairment charges of $ 631 and $ 671 were recorded as the carrying value of the 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. These impairment charges were recorded within the Consolidated Statement of Operations and within the SaaS Solution segment for the year ended December 31, 2024 and 2023 respectively. See Note 7- Goodwill. j. Intangible assets: Intangible assets consist of identifiable intangible assets that the Company has acquired from previous business combinations. Intangible assets are recorded at costs, net of accumulated amortization. The Company amortizes its intangible assets reflecting the pattern in which the economic benefits of the intangible assets are consumed. When a pattern cannot be reliably determined, the Company uses a straight-line amortization method. Amortization is calculated by the straight-line method over the estimated useful lives of the following assets. The estimated useful lives of the company’s intangible assets are as follows: SCHEDULE OF INTANGIBLE ASSETS ESTIMATED USEFUL LIVES years Customer Relationships 7 Technology 7 Trademark 5 Selling Platform 3 Each 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. l. Severance pay: My Size Israel’s liability for severance pay is covered by Section 14 of the Israeli Severance Pay Law (“Section 14”). Under Section 14, employees in Israel are entitled to have monthly deposits, at a rate of 8.33 % of their monthly salary, made on their behalf to their insurance funds. Payments in accordance with Section 14 exempt My Size Israel from any additional obligation for these employees. As a result, My Size Israel does not recognize any liability for severance pay due to these employees and the deposits under Section 14 are not recorded as an asset in its balance sheet. These contributions for compensation represent defined contribution plans and expenses are recorded based on actual deposits. F- 10 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) k. Research and development costs: Research and development costs are charged to the statement of operations, as incurred. Most of the research and development expenses are for 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 capitalizes 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 intended. Costs capitalized for developing such software applications were not material for the periods presented and therefore were not capitalized. l. Income taxes: The 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’ tax returns. 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. 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, 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 temporary taxable differences. The 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 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, 2024 and 2023 the Company has not recorded any unrecognized tax benefits. m. Accounting for stock-based compensation: The Company accounts for its employees’ stock-based compensation as an expense in the financial statements based on ASC 718. All awards are equity classified and therefore such costs are measured at the grant date fair value of the award and graded vesting attribution approach to recognize compensation cost over the vesting period. The Company estimates stock option grant date fair value using the Binomial and Black Scholes option pricing-model. The Company recorded stock options issued to non-employees at the grant date fair value and recognizes expenses over the related service period by using the straight-line attribution approach in accordance with ASU 2018-07. All awards are equity classified. The expected volatility of the share prices reflects the assumption that the historical volatility of the share prices is reasonably indicative of expected future trends. The risk-free interest rate for grants with an exercise price denominated in USD for employees and several consultants is based on the yield from US treasury zero-coupon bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends. F- 11 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) n. Fair value of financial instruments: ASC 820, Fair Value Measurements and Disclosures, relating to fair value measurements, defines fair value and established a framework for measuring fair value. The ASC 820 fair value hierarchy distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price. In addition, the fair value of assets and liabilities should include consideration of non-performance risk, which for the liabilities described below includes the Company’s own credit risk. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The Company holds shares in iMine Corporation (“iMine”) formerly known as Diamante Minerals, Inc., a publicly-traded company on the OTCQB. Due to sales restrictions on the sale of the iMine shares, the fair value of the shares was measured on the basis of the quoted market price for an otherwise identical unrestricted equity instrument of the same issuer that trades in a public market, adjusted to reflect the effect of the sales restrictions and is therefore, ranked as Level 2 asset. o. Basic and diluted net loss per share: Basic net loss per share is computed based on the weighted average number of shares of common stock outstanding during each year. Diluted net income per share is computed based on the weighted average number of shares of common stock outstanding during each year plus dilutive potential equivalent common stock considered outstanding during the year, in accordance with ASC 260, “Earnings per Share”. For the years ended December 31, 2024 and 2023, all outstanding options and warrants have been excluded from the calculation of the diluted net loss per share since their effect was anti-dilutive. p. Concentrations of credit risk: Financial instruments that potentially subject the Company and its subsidiaries to concentrations of credit risk consist principally of cash and cash equivalents. Cash and cash equivalents are invested in banks in Israel, Spain and United States. Such deposits in Israel may be in excess of insured limits and are not insured in other jurisdictions. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments. The Company and its subsidiaries have no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. F- 12 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) q. Revenue Recognition: The Company’s revenues are comprised of two main categories: (1) selling products to customers, and (2) licensing cloud-enabled software subscriptions, associated software maintenance and support. The Company recognizes revenue in accordance with ASC Topic 606, Revenues from Contracts with Customers (“ASC 606”). A contract with a customer exists only when: the parties to the contract have approved it and are committed to perform their respective obligations, the Company can identify each party’s rights regarding the distinct goods or services to be transferred (“performance obligations”), the Company can determine the transaction price for the goods or services to be transferred, the contract has commercial substance and it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Revenues 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. Revenue 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. The Company recorded an allowance for returns in the amounts of $ 164 thousand and $ 260 thousand as of December 31, 2024, and 2023, respectively. The allowance for returns is recorded as decrease in revenues against other payables. The Company maintains a returns policy that allows its customers to return product within a specified period of time. The estimate of the provision for returns is based upon historical experience with actual returns. Principal versus Agent Considerations The Company follows the guidance provided in ASC 606 for determining whether it is a principal or an agent in arrangements with customers, by assessing whether the nature of the Company’s promise is a performance obligation to provide the specified goods (principal) or to arrange for those goods to be provided by the other party (agent). With regard to products being sold by Orgad through Amazon, this determination involves judgment. The Company 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. F- 13 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) r. Contingencies and Commitments Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. s. Derivative instruments The Company accounts for its derivative instruments as either assets or liabilities and measures them at fair value through profit or loss. t. Leases The Company leases include an office space lease agreement for 12 months, with an option to extend for an additional 12 months and 36 months cancelable operating lease agreements on behalf of personnel vehicles. The lease term includes a non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For the office rent lease, the Company has elected to account for the lease and non-lease maintenance components as a single lease component. Therefore, the lease payments used to measure the lease liability include all of the fixed consideration in the contract, including in-substance fixed payments, owed over the lease term. u. Recent adopted accounting pronouncements 1. 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. 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 adoption of ASC 2022-03 did not have a material impact on the Company’s consolidated financial statements and related disclosures. 2. 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. This ASU will impact the Company’s income tax disclosures, but not Consolidated Financial Statements. 3. 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. The amendments were applied retrospectively to all prior periods presented in the financial statements. the Company adopted ASU 2023-07 in 2024, see Note 16—Segment Reporting. v. Recently issued not yet adopted accounting pronouncements 1. In March 2024, the SEC adopted new rules relating to the disclosure of a range of climate-change-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. 2. In November 2024, the FASB issued ASU No. 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The ASU improves the disclosures about a public business entity’s expenses and provides more detailed information about the types of expenses in commonly presented expense captions. The amendments require that at each interim and annual reporting period an entity will, inter alia, disclose amounts of purchases of inventory, employee compensation, depreciation and amortization included in each relevant expense caption (such as cost of sales, SG&A and research and development). The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures. F- 14 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 3 - CASH AND CASH EQUIVALENTS The Company’s cash and cash equivalents balance at December 31, 2024 and 2023 is denominated in the following currencies: SCHEDULE OF CASH AND CASH EQUIVALENT BALANCE 2024 2023 December 31, 2024 2023 US Dollars 4,216 1,746 New Israeli Shekels 497 375 Other 167 66 Cash and cash equivalents 4,880 2,187 NOTE 4 - OTHER RECEIVABLES AND PREPAID EXPENSES SCHEDULE OF OTHER RECEIVABLES AND PREPAID EXPENSES 2024 2023 December 31, 2024 2023 Prepaid expenses and other current assets 332 65 Government authorities 409 511 Loan (*) - 75 Insurance reimbursement 270 - Other 107 196 Total 1,118 847 (*) 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 was December 31,2024. The loan was paid in full on December 16, 2024. NOTE 5 - PROPERTY AND EQUIPMENT, NET SCHEDULE OF PROPERTY AND EQUIPMENT, NET Computers and peripheral equipment Office furniture and equipment Leasehold improvements Total Cost Balance as at January 1, 2023 236 78 54 368 Additions 5 2 - 7 Translation adjustments ( 3 ) ( 1 ) - ( 4 ) Balance as at December 31, 2023 238 79 54 371 Balance as at December 31, 2023 238 79 54 371 Additions 4 1 2 7 Disposal ( 162 ) ( 34 ) ( 54 ) ( 250 ) Translation adjustments 8 ( 20 ) - ( 12 ) Balance as at December 31, 2024 88 26 2 116 Accumulated Depreciation Balance as at January 1, 2023 172 26 30 228 Additions 15 4 8 27 Translation adjustments ( 1 ) ( 3 ) ( 1 ) ( 5 ) Balance as at December 31, 2023 186 27 37 250 Balance as at December 31, 2023 186 27 37 250 Additions 11 3 5 20 Disposal ( 161 ) ( 17 ) ( 42 ) ( 221 ) Translation adjustments 4 ( 4 ) - - Balance as at December 31, 2024 40 9 - 49 Carrying amounts As at December 31, 2023 52 52 17 121 As at December 31, 2024 48 17 2 67 F- 15 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 6 - LEASES In August 2019, the Company entered into an office space lease agreement. The lease term was for 36 months beginning on August 20, 2019 and ending on August 20, 2022 , with an option to extend for an additional 36 months . During 2022, the Company extended the lease period until August 20, 2025. On January 8, 2024 the Company provided a six month notice termination to the lessor that the lease will end on July 8, 2024. As a result the Company reduced its “Right of use asset” against current liabilities as “Operating lease liability” and in the non-current liabilities as “Operating lease liability – long term” on the Company’s December 31, 2024 consolidated balance sheets in an amount of $ 181 . In August 2024, the Company entered into a new office space lease agreement. The lease term is for 12 months beginning on July 1, 2024 and ending on June 30, 2025, with an option to extend for an additional 12 months. Monthly rent payments for the previous office space including utilities amounted to approximately USD 14 (NIS 49,500 ) per month. For the new office space the monthly rent payments including utilities amounted to approximately $ 2 per month. In addition, the Company entered into a three-year cancelable operating lease agreement for cars. These operating leases are included in “Right of use asset” on the Company’s December 31, 2024 consolidated balance sheets and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligations to make lease payments are included in the current liabilities as “Operating lease liability” and in the non-current liabilities as “Operating lease liability - long term” on the Company’s December 31, 2024 consolidated balance sheets. As of December 31, 2024, right-of-use of asset was $ 23 based on the extension of the lease period ( 24 months in total). Operating lease liabilities were $ 15 and non current operating lease liabilities were $ 8 . Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. The interest rate used to discount future lease payment was 21.8 %. Maturities of lease liabilities as of December 31, 2024 were as follows: SCHEDULE OF MATURITIES OF LEASE LIABILITIES Year Ending: 2025 $ 18 2026 $ 9 Thereafter $ - Less imputed interest: $ ( 4 ) Total lease liabilities $ 23 F- 16 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 7 – Goodwill and other Intangible assets A. Identified intangible assets Schedule of Intangible assets SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS Selling Platform Technology Customer Relationships Other Total Thousands USD Thousands USD Thousands USD Thousands USD Thousands USD Cost As of January 1, 2023 346 311 791 84 1,532 Effect of changes in exchange rates ( 13 ) 10 25 2 24 As of December 31, 2023 333 321 816 86 1,556 Effect of changes in exchange rates ( 2 ) ( 19 ) ( 48 ) ( 5 ) ( 74 ) As of December 31, 2024 331 302 768 81 1,482 Goodwill and intangible assets, Cost, beginning balance 331 302 768 81 1,482 Amortization As of January 1, 2023 ( 109 ) ( 15 ) ( 27 ) ( 4 ) ( 155 ) Amortization for the year ( 111 ) ( 62 ) ( 112 ) ( 17 ) ( 302 ) Effect of changes in exchange rates 7 ( 3 ) ( 6 ) - ( 2 ) As of December 31, 2023 ( 213 ) ( 80 ) ( 145 ) ( 21 ) ( 459 ) Amortization for the year ( 109 ) ( 55 ) ( 113 ) ( 17 ) ( 294 ) Effect of changes in exchange rates - 7 12 2 21 As of December 31, 2024 ( 322 ) ( 128 ) ( 246 ) ( 36 ) ( 732 ) Goodwill and intangible assets, Amortization, ending balance ( 322 ) ( 128 ) ( 246 ) ( 36 ) ( 732 ) Carrying amount As of December 31, 2023 120 241 671 65 1,097 As of December 31, 2024 9 174 522 45 750 Goodwill and intangible assets, Carrying amount, ending balance 9 174 522 45 750 Amortization Amortization expenses recorded for identified intangible assets in the Consolidated Statements of Operations for each period and were as follows: SCHEDULE OF AMORTIZATION EXPENSES INTANGIBLE ASSETS Line Item December 31, 2024 December 31, 2023 Selling platform Costs of revenues 109 111 Trademark Sales and marketing 17 17 Technology Costs of revenues 55 62 Customer relationships Sales and marketing 113 112 Total amortization expenses 294 302 Future amortization expenses are expected to be as follows: SCHEDULE OF FUTURE AMORTIZATION EXPENSES 2025 2026 2027 2028 2029 Thereafter Total Future amortization expenses 160 151 146 135 108 50 750 In the fourth quarter of 2024, the Company performed the annual assessment of the useful life of its finite-lived intangibles. The Company updated the useful life of its technology intangibles as a result of analyzing recent quantitative and qualitative observations in the market and factors impacting our business.  The change in estimate will be accounted for prospectively.  The weighted average remaining life was increased from approximately 3 years to 7 years to reflect the new estimated useful lives. The Company estimates that there will be an approximately 55 - 60 % decrease to annual amortization expense. b. Goodwill The changes in the carrying amount of goodwill for the years ended December 31, 2024 and 2023 were as follows: SCHEDULE OF GOODWILL Fashion and equipment e-commerce platform SaaS Solutions Total Balance as of December 31, 2022 138 1,257 1,395 Translation differences ( 4 ) 38 34 Goodwill impairment - ( 671 ) ( 671 ) Balance as of December 31, 2023 134 624 758 Translation differences ( 1 ) 7 6 Goodwill impairment - ( 631 ) ( 631 ) Balance as of December 31, 2024 133 - 133 The 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 16 for additional segment information. F- 17 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 7 – Goodwill and other Intangible assets (Cont.) The Company determines the fair value of its reporting units using the income approach. According to the income, the Company uses discounted cash flows to estimate the fair value. Cash flow projections are based on the Company’s estimates of revenue growth rates and operating margins, taking into consideration the industry’s and market’s conditions. The discount rate used is based on the weighted average cost of capital (“WACC”), adjusted for the relevant risk associated with business-specific characteristics. Goodwill impairment in 2023 The Company performed a quantitative assessment as of December 31, 2023 for the reporting units’ fair value. Based on the December 31, 2023 revised discounted cash flows analysis, the Company recorded a goodwill impairment of $ 671 to its SaaS Solution reporting unit. This, based the following assumptions: SCHEDULE OF ESTIMATED FAIR VALUE Fashion and equipment e-commerce platform SaaS Solutions Discount rate 21.5 % 25 % Terminal growth rate 3 % 3 % Revenue growth rate 12.4 %- 50 % 15 %- 70 % No goodwill impairment was recorded for the Fashion and equipment e-commerce platform reporting unit. Goodwill impairment in 2024 During the third quarter of 2024, the Company has experienced sustained decreases in the Company’s share price and a decline in actual and forecasted operating results, prompting impairment assessments of goodwill and long-lived assets including definite-lived intangibles. The Company updated the forecasted future cash flows used in the impairment assessment, including revenues, margin, and capital expenditures to reflect current conditions. Other changes in valuation assumptions included selection of lower revenue growth rates based upon an assessment of current market conditions. Considering the adverse developments in its businesses which are described above, the Company recorded a goodwill impairment of $ 631 in the third quarter, which was attributable to the entire remaining goodwill associated with its SaaS solutions segment (level 3 fair value measurement). The resulting cash flow for the SaaS based innovative artificial intelligence driven measurement solutions reporting unit amounts were discounted using the same rate of 25 % compared to prior quarters, the Company used revenue growth rate of 4 %- 32 % compared to 15 %- 70 % at December 2023. The Company still assumed a terminal growth rate of 3 %. For the tests performed in September 30, 2024, the resulting cash flow for the fashion and equipment e-commerce platform segment amounts were discounted using a slightly increased rate of 22 % compared to 21.5 % in prior quarters, The Company used a revenue growth rate of 7.5 % - 36.5 % compared to 12.4 % - 50 % at December 2023. The Company still assumed a terminal growth rate of 3 % . No goodwill impairment was recorded for this reporting unit. The Company performed it annual quantitative assessment as of December 31, 2024 for the fashion and equipment e-commerce platform reporting unit fair value. The estimated fair value of the fashion and equipment e-commerce platform reporting unit exceeded its estimated carrying amount by 5 % . This was based on the following assumptions: Fashion and equipment e-commerce platform Discount rate 22.5 % Terminal growth rate 3 % Revenue growth rate 7.5 % - 65.6 % F- 18 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 8 - Investment in JV In August 2022, the Company established a joint venture (“JV”) in Brazil with Santista Têxtil. The Company holds 51 % and Santista Têxtil holds 49 % of the JV. 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. During March 2024, the Company closed the joint venture (“JV”) in Brazil with Santista Têxtil and liquidating the remaining of its investment of $ 38 . During the years ended December 31, 2024 and 2023, the Company recognized equity loss from the JV in an amount of $ 0 and $ 71 respectively. NOTE 9 - Financial Liabilities The book value of each of the financial liability categories is an acceptable approximation of fair value. The financial liability maturities during the five years following the end of the financial year are shown below: SCHEDULE OF FINANCIAL LIABILITY MATURITIES Until Until Until Until Until TOTAL 31-12-25 31-12-26 31-12-27 31-12-28 31-12-29 31-12-24 Debts with credit institutions 107 83 51 12 - 253 Loans in an amount of $ 48 bearing interest between prime to prime + 1.5 % is due between March 2025 to February 2028. Loans in an amount of $ 191 bearing interest between 1.5 %- 3.5 % is due between December 2024 and June 2028. During February 2024, the Company received a loan from a commercial lender in an amount of $ 500 . The loan bears interest at a fix rate of 6 % of the principal and is payable in installments during a six month term. The Company repaid the loan in full by August 2024. NOTE 10 - RELATED PARTY TRANSACTIONS A. Balances with related parties: The following related party payables are included in liability to related parties: SCHEDULE OF RELATED PARTY PAYABLES 2024 2023 December 31, 2024 2023 Officers (*) 70 22 Other related parties (**) - 686 Other related parties 66 ( 119 ) Directors 15 16 Due to related parties 151 605 (*) The amount includes the net salary payable. (**) 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. B. Related parties benefits: SCHEDULE OF RELATED PARTIES BENEFITS 2024 2023 Year ended December 31, 2024 2023 Salaries and related expenses 1,344 1,173 Share based payments 204 324 Cash liability and equity liability expenses related to acquisitions (**) - 155 Directors 60 55 Related parties benefits 1,608 1,707 (**) 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 are entitled to additional cash consideration. NOTE 11 - FINANCIAL INSTRUMENTS The following tables present the Company’s significant assets and liabilities that are measured at fair value on recurring basis and their classification within the fair value hierarchy: SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS December 31, 2024 Fair value hierarchy Level 1 Level 2 Level 3 Financial assets Investment in marketable securities - 7 - F- 19 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 11 - FINANCIAL INSTRUMENTS (Cont.) December 31, 2023 Fair value hierarchy Level 1 Level 2 Level 3 Financial assets Investment in marketable securities - 6 - The 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. At December 31, 2024, the recognized profit (loss) and fair value (based on quoted market prices with a discount due to security restrictions on iMine shares) of the marketable securities were $ 1 and $ 7 , respectively (at December 31, 2023 $( 41 ) and $ 6 , respectively). NOTE 12 - TAXES ON INCOME a. On December 31, 2024, the Company had U.S. federal net operating loss carryforwards of approximately $ 28,097 available to reduce future taxable income of which $ 16,323 will expire from 2025 until 2037 and the remaining amount of $ 11,774 may be carried forward to offset against future income for an indefinite period of time. Utilization of the U.S. net operating losses may be subject to substantial limitations due to the change of ownership provisions of the Internal Revenue Code of 1986. My Size, Inc. has final tax assessments through 2020. The U.S. corporate income tax rate 21%. b. Foreign tax: 1. Tax rates: Presented hereunder are the income tax rates relevant to the Company’s Israeli subsidiaries: SCHEDULE OF TAX RATES RELEVANT TO THE COMPANY'S ISRAELI SUBSIDIARY 2024 - 23 % 2023 - 23 % Presented hereunder are the income tax rates relevant to the Company’s Spanish subsidiary: 2023 - 24 % 2024 - 24 % 2. The Company’s Israeli subsidiaries have estimated total available operating loss carryforwards of approximately $ 68,014 as of December 31, 2024. Of these carryforwards, a total of $ 40,378 are owned by Topspin Medical (Israel) Ltd. 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. 3. Topspin Medical (Israel) Ltd. and My Size (Israel) 2014 Ltd. has final tax assessments through 2017. 4. Naiz has estimated total available operating loss carryforwards of approximately $ 1,922 as of December 31, 2024. Naiz’s operating loss carryforward may be used to offset against future income for an indefinite period of time. c. U.S. and foreign components of loss, before income taxes consisted of: SCHEDULE OF COMPONENTS OF LOSS FROM CONTINUING OPERATIONS, BEFORE INCOME TAXES 2024 2023 December 31, 2024 2023 U.S ( 1,168 ) ( 2,375 ) Non-U.S. (foreign) ( 2,827 ) ( 4,338 ) Loss before income taxes ( 3,995 ) ( 6,713 ) F- 20 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 12 - TAXES ON INCOME (Cont.) d. Deferred taxes: Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows: SCHEDULE OF DEFERRED TAX ASSETS 2024 2023 December 31, 2024 2023 Deferred tax assets: Operating loss carryforwards 22,005 21,172 Stock based compensation expense 102 102 Investment in marketable securities 419 419 Capitalized research and development expenses 140 226 Other temporary differences 24 16 Total deferred tax assets 22,690 21,935 Valuation allowance ( 22,509 ) ( 21,663 ) Net deferred tax assets after valuation allowance 181 272 Deferred tax liabilities: Intangible assets ( 181 ) ( 272 ) Net deferred tax liability - - The following table presents a reconciliation of the beginning and ending valuation allowance: SCHEDULE OF RECONCILIATION OF VALUATION ALLOWANCE 2024 2023 December 31, 2024 2023 Balance at beginning of the year 21,663 21,455 Additions in valuation allowance to the income statement 795 988 Additions in valuation allowance due to exchange rate foreign currency translation differences 51 ( 780 ) Net change in the valuation allowance 846 208 Balance at end of the year ( 22,509 ) ( 21,663 ) In assessing the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and net operating losses are utilized. Based on consideration of these factors, the Company recorded a valuation allowance to reduce deferred tax assets to the amount supported by future reversals of existing taxable temporary differences at December 31, 2024 and 2023. e. Theoretical tax The following presents the adjustment between the theoretical income tax benefit that would result from applying the U.S. federal statutory income tax rate to loss before income taxes amount and the reported income tax benefit included in the financial statements: SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSES BENEFITS 2024 2023 December 31, 2024 2023 Loss before income taxes 3,995 6,713 Statutory income tax rate 21 % 21 % Computed “expected” income tax benefit 839 1,410 Foreign tax rate differences 60 73 Exchange rate differences 6 47 Nondeductible expenses 42 ( 41 ) Impairment of goodwill ( 152 ) ( 168 ) Change in valuation allowance ( 795 ) ( 988 ) Income tax benefit - 333 The entire income tax benefit is a deferred tax benefit. F- 21 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 13 - SHAREHOLDERS’ EQUITY a. Common 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. b. On April 19, 2024, the Company effected a one-for-eight reverse stock split of its common stock (the “Reverse Stock Split”) with the Company’s shares beginning trading on a post-split basis on the Nasdaq Capital Market on April 23, 2024. Upon the effectiveness of the Reverse Stock Split, every eight shares of the Company’s issued and outstanding common stock was automatically converted into one share of common stock, without any change in the par value per share. In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding options and warrants entitling the holders to purchase common stock. Any fraction of a share of common stock that would otherwise have resulted from the Reverse Stock Split was rounded up to the next whole number. All the per-share data was adjusted to give retroactive effect of 1:8 reverse stock split effected in April 2024. c. On August 24, 2023, the Company entered into an inducement offer letter agreement (the “2023 Inducement Letter”) with a certain 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 “2023 Existing Warrants). Pursuant to the 2023 Inducement Letter, the holder agreed to exercise for cash its 2023 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 to purchase up to an aggregate of 5,367,912 shares of the Company’s common stock 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 2023 Existing Warrants by the holder, before deducting placement agent fees and other offering expenses payable by the Company. The net proceeds were approximately $ 3.6 million. As of December 31, 2024, the Company issued to the holder all of the exercised shares. d. On May 16, 2024, the Company entered into an inducement offer letter agreement (the “2024 Inducement Letter”) with a certain holder of certain of the Company’s existing warrants to purchase up to (i) 326,514 shares of the Company’s common stock issued on August 28, 2023 with a twenty-eight month term at an exercise price of $ 16.72 per share, and (ii) 344,475 shares of the Company’s common stock issued on August 28, 2023 with a five and one-half year term at an exercise price of $ 16.72 per share, ((i) and (ii) collectively, the “ 2024 Existing Warrants). Pursuant to the 2024 Inducement Letter, the holder agreed to exercise for cash its 2024 Existing Warrants to purchase an aggregate of 670,989 shares of the Company’s common stock at a reduced exercise price of $ 4.86 per share in consideration of the Company’s agreement to issue new common stock purchase warrants to purchase up to an aggregate of 1,341,978 shares of the Company’s common stock, at an exercise price of $ 4.61 per share. The Company received aggregate gross proceeds of approximately $ 3.26 million from the exercise of the 2024 Existing Warrants by the Holder, before deducting placement agent fees and other offering expenses payable by the Company. As of December 31, 2024, the Company issued to the holder all of the shares exercised. On December 27, 2024, the holder exercised warrants to purchase 653,028 shares of common stock of the Company resulting in gross proceeds of approximately $ 3.0 million. F- 22 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 13 - SHAREHOLDERS’ EQUITY (Cont.) c. A summary of the warrant activity during the years ended December 31, 2024 and 2023 is presented below: SCHEDULE OF WARRANT ACTIVITY Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life in Years Outstanding, December 31, 2022 33,758 241.68 3.36 Issued 1,080,225 - - Expired or exercised ( 383,447 ) - - Outstanding, December 31, 2023 730,536 27.28 3.75 Issued 1,413,947 - Expired or exercised ( 1,328,639 ) - Outstanding, December 31, 2024 815,844 13.93 4.65 Exercisable, December 31, 2024 815,844 13.93 4.65 NOTE 14 - STOCK BASED COMPENSATION The stock-based expense recognized in the financial statements for services received is related to cost of goods, research and development, sales and marketing and general and administrative expenses as shown in the following table: SCHEDULE OF STOCK BASED COMPENSATION EXPENSES 2024 2023 Year ended December 31, 2024 2023 Stock-based compensation expense – Cost of goods - 20 Stock-based compensation expense - Research and development 59 71 Stock-based compensation expense - Sales and marketing 46 160 Stock-based compensation expense - General and administrative 285 202 Stock-based compensation expense 390 453 F- 23 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 14 - STOCK BASED COMPENSATION (Cont.) Options issued to consultants a. In March 2023, the Company entered into a two-year agreement with a consultant 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 the consultant options to purchase up to 500 shares of the Company’s common stock upon execution of the agreement. The options are exercisable at $ 24.00 per share and shall vest in two equal instalments every twelve months starting March 2023. Unexercised options shall expire 3 years from the effective date. b. In July 2023, the Company entered into a six month agreement with a consultant to provide services to the Company, including assisting the Company to promote, market and sell the Company’s technology to potential customers and make strategic introductions and inquiries with interested parties in the financial community. Pursuant to the agreement and in partial consideration for such consulting services, the Company issued to the consultant (i) 5,000 shares of restricted common stock of the Company, (ii) a warrant to purchase 12,500 shares of common stock at an exercise price of $4.00 per share and exercisable for a term of 36 months from the date of issuance, and (iii) a warrant to purchase 12,500 shares of common stock at an exercise price of $6.00 per share and exercisable for a term of 36 months from the date of issuance. The issuance was approved by the Company’s board of directors in February 2024. In the year ended December 31, 2024, the Company recorded $ 71 , as stock-based equity awards with respect to the consultant. No expenses were recorded in the fiscal year ended December 31, 2023 with respect to the consultant. F- 24 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 14 - STOCK BASED COMPENSATION (Cont.) The Company’s outstanding options granted to consultants as of December 31, 2024 are as follows: SCHEDULE OF OPTIONS GRANTED TO CONSULTANTS Issuance date Options for Common stock Weighted Average exercise price per share Options exercisable Expiration date September-October 2020 112 USD 216 112 September 2025 March 2023 500 USD 24 225 March 2026 Total 612 337 The Company uses the Black Scholes model to measure the fair value of the stock options with the assistance of a third party valuation. The fair value of the Company’s stock options granted to non-employees was calculated using the following weighted average assumptions: SCHEDULE OF FAIR VALUE ASSUMPTIONS OF STOCK OPTIONS 2023 Grants Dividend yield - Expected volatility 82.49 % Risk-free interest 3.96 % expected term of up to (years) 3 F- 25 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 14 - STOCK BASED COMPENSATION (Cont.) Stock Option Plan for employees In March 2017, the Company adopted a stock option plan (the “Plan”) pursuant to which the Company’s Board of Directors may grant stock options to officers and key employees. The total number of options which may be granted to directors, officers, employees under this plan, is limited to 36,125 options. Stock options can be granted with an exercise price equal to or less than the stock’s fair market value at the date of grant. The fair value of each option award is estimated on the date of grant using the Binomial option-pricing model that used the weighted average assumptions in the following table. The risk free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. SCHEDULE OF FAIR VALUE ASSUMPTIONS OF STOCK OPTIONS 2024 Grants 2023 Grants Dividend yield 0 % 0 % Expected volatility 86.22 % 82.49 % Risk-free interest 4.3 % 3.96 % expected term 2.0 - 2.8 5 In the years ended December 31, 2024 and 2023, 6,875 and 11,625 options, respectively, were granted. On December 27, 2023, the Company’s stockholders approved an increase in the shares available for issuance under the 2017 Equity Incentive Plan from 36,125 shares to 130,000 shares. 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 37,500 restricted shares, 18,750 restricted shares and 18,750 restricted shares, respectively. The restricted shares vest in three equal instalments 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. F- 26 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 14 - STOCK BASED COMPENSATION (Cont.) The total stock option compensation expense in the year ended December 31, 2024 amounted to $ 390 as follows: research and development expenses amounted to $ 59 , sales and marketing expenses amounted to $ 46 and general and administrative expenses amounted to $ 285 . The 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 . As of December 31, 2024, there was a total of $ 117 unrecognized compensation cost relating to non-vested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 2.0 years. Share option activity during 2024 is as follows: SCHEDULE OF SHARES OPTION ACTIVITY 2024 Number of options Weighted average exercise price US$ Outstanding at January 1 13,832 8.88 Granted 6,875 3.832 Exercised - - Expired ( 6,781 ) - Outstanding at year end 13,926 6.97 Vested at year end 7,926 8.72 Share option activity during 2023 is as follows: 2023 Number of options Weighted average Exercise price US$ Outstanding at January 1 5,201 179.84 Granted 11,625 8.72 Exercised - - Expired ( 2,994 ) - Outstanding at year end 13,832 8.88 Vested at year end 6,082 8.80 F- 27 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 15 - CONTINGENCIES AND COMMITMENTS a. On 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 in which it sought 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 alleged 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 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 . North Empire also filed a third-party complaint against the Company’s CEO and 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 November 15, 2018, the Company’s CEO and 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 filed motions for summary judgment in connection with the claims and counterclaims. On December 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. On February 3, 2022, the Company filed a motion to reargue the Court’s decision denying the Company’s motion for summary judgment. On or about September 12, 2022, the Court issued its Decision and Order denying the Company’s motion to reargue. North Empire 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. 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 parties agreed on settlement terms, including a global settlement with a third party with related claims. On November 19, 2024, the settlement agreement was executed and on December 2, 2024, the parties filed the Stipulation of Discontinuance with the Court and the action was dismissed. The Company did not recognize any a loss or expenses from the settlement agreement. b. In July 2024, the Company was served with a legal complaint filed by Shimon Shukron in the Magistrate’s Court in Herzliya for a monetary award in an amount of NIS 1,895,345 (approximately $ 510 ). The plaintiff alleges that due to the fire that broke out at Orgad’s warehouse in January 2023, the fire spread to the plaintiff’s business and caused heavy damage to the structure and contents, inventory of the business and loss of profits. The Company filed its statement of defense in September 2024. At this preliminary stage, the plaintiff did not provide sufficient documents to support his claims regarding the extent of the alleged damage. The Company and the plaintiff agreed to go to mediation and are waiting for a suitable date to be set. The Company cannot evaluate the chances of the mediation or the claim to succeed. F- 28 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) Note 16 – Operating Segments The Company reports its financial results for the two reportable segments: (i) fashion and equipment e-commerce platform, and (ii) SaaS based innovative artificial intelligence driven measurement solutions. The Company chief executive officer who is the Chief Operating Decision Maker (“CODM”) reviews, accompanied by disaggregated information about revenues and contributed profit by the two identified reportable segments. 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 operating segments are the same as its reportable segments. The C ODM reviews total operating expenses and consolidated net loss to assess performance, forecast future financial results and allocate resources. In assessing the Company’s financial performance and making strategic decisions, the C ODM regularly reviews segment loss and operating expenses by function. This includes a review of budget versus actual expenses and cost of goods, sales and marketing salaries and other segment expenses. For the fashion and equipment e-commerce platform operating segment the CODM also reviews gross profit and Amazon fees. For the SaaS Solutions operating segment, the CODM also reviews research and development expenses. Revenue, costs of goods and other costs and expenses are generally directly attributed to the segments. These expenses include research and development related expenses, costs of Amazon fees, cost of goods, and legal-related costs. Indirect costs are allocated to segments based on a reasonable allocation methodology, when such costs are significant to the performance measures of the operating segments. Indirect operating expenses, such as insurance, legal and audit services, mostly allocated based on revenues, most of which is allocated to the fashion and equipment e-commerce platform segment. Information related to the operations of the Company’s reportable operating segments is set forth below: SCHEDULE OF REPORTABLE OPERATING SEGMENTS Fashion and equipment e-commerce platform SaaS Solutions Total As of the year ended December 31, 2024 Revenues from external customers 7,528 729 8,257 Cost of revenues ( 4,866 ) ( 68 ) ( 4,934 ) Research and development expenses - ( 429 ) ( 429 ) Amazon fees ( 2,094 ) - ( 2,094 ) Sales and marketing Salaries ( 137 ) ( 415 ) ( 552 ) Impairment of goodwill - ( 631 ) ( 631 ) Other Segment Items (*) ( 2,493 ) ( 1,068 ) ( 3,561 ) Segment loss ( 2,062 ) ( 1,882 ) ( 3,944 ) Reconciliation of Profit or Loss Financial income (expense), net ( 51 ) Loss before income taxes ( 3,995 ) Significant non-cash items: Amortization (**) ( 109 ) ( 185 ) ( 294 ) Other Income ( *** ) 275 - 275 Impairment of goodwill (**) - ( 631 ) ( 631 ) Share based payments ( 256 ) ( 134 ) ( 390 ) (*) Other segments items include shared based payments, rent and related expenses, professional services, insurance and other expenses. (**) See Note 7. (***) See Note 2 0 . Fashion and equipment e-commerce platform Saas Solution As of December 31, 2024: Assets 8,066 1,993 Fashion and equipment e-commerce platform SaaS Solutions Total As of the year ended December 31, 2023 Revenues from external customers 6,367 629 6,996 Cost of revenues ( 4,203 ) ( 62 ) ( 4,265 ) Research and development expenses - ( 974 ) ( 974 ) Amazon fees ( 1,858 ) - ( 1,858 ) Sales and marketing Salaries ( 133 ) ( 744 ) ( 877 ) Impairment of goodwill - ( 671 ) ( 671 ) Other Segment Items (*) ( 3,529 ) ( 1,563 ) ( 5,092 ) Segment loss ( 3,356 ) ( 3,385 ) ( 6,741 ) Reconciliation of Profit or Loss Financial income (expense), net 99 Equity loss of equity method investees ( 71 ) Loss before income taxes ( 6,713 ) Significant non-cash items: Amortization (**) ( 111 ) ( 191 ) ( 302 ) Impairment of goodwill (**) - ( 671 ) ( 671 ) Share based payments ( 234 ) ( 219 ) ( 453 ) (*) Other segments items include shared based payments, rent and related expenses, professional services, insurance and other expenses. (* *) See Note 7. Fashion and equipment e-commerce platform Saas Solution As of December 31, 2023: Assets 6,352 2,639 The Company elected to present geographic information in respect with revenues generated from external customers based on the selling location. Long-lived 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 2024 2023 Year ended December 31, 2024 2023 Israel 229 718 Spain 744 1,609 Other - 24 Total Assets 973 2,351 For the year ended December 31, 2024, 91.64 % 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. 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. F- 29 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 17 - SALES AND MARKETING SCHEDULE OF SALES AND MARKETING 2024 2023 Year ended December 31, 2024 2023 Salaries 552 877 Consultants and subcontractors 26 139 Marketing 103 375 Selling fees 2,094 1,858 Cash and equity liability expenses related to Orgad acquisition 1 100 Share based payments for consultants and employees 47 131 Travel 25 75 Other 266 301 Sales and marketing expenses 3,114 3,856 NOTE 18 - GENERAL AND ADMINISTRATIVE EXPENSES SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES 2024 2023 Year ended December 31, 2024 2023 Salaries 931 954 Professional services 725 1,322 Share based payments for consultants, directors and employees 285 168 Rent, office expenses and communication 296 349 Insurance 359 463 Cash liability and equity liability expenses related to Orgad acquisition (*) 7 81 Cash liability expenses related to Naiz acquisition (*) - ( 52 ) Directors 60 55 Other 705 631 General and administrative expenses 3,368 3,971 (*) See Note 16. NOTE 19 - FINANCIAL INCOME (EXPENSE), NET SCHEDULE OF FINANCIAL INCOME (EXPENSES), NET A. Financial income Year ended December 31, 2024 2023 Exchange rate differences - 99 Other 114 97 Total Financial income 114 196 F- 30 MY SIZE, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data and per share data) NOTE 19 - FINANCIAL INCOME (EXPENSE), NET (Cont.) B. Financial expense Year ended December 31, 2024 2023 Exchange rate differences 87 - Revaluation of loan granted - - Revaluation investment in marketable securities - 41 Other 78 56 Total Financial expense 165 97 NOTE 20 – SIGNIFICANT EVENTS DURING THE REPORTING PERIOD a. On February 7, 2022, the Company acquired 100 % of the shares and voting interests in Orgad an omnichannel e-commerce platform. The Company agreed to pay to the former owners of Orgad cash consideration of $ 300 and issuance of shares of common stock. 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 of the transaction pursuant to which the Company acquired 100 % of the shares and voting interests in Orgad, $ 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. In February 2024, the amount of $ 700 was fully paid to the former owners of Orgad net of a settlement amount of $ 275 which was recorded as other income. Towards the end of 2023, the Company negotiated with the sellers to reduce the amounts owed to them, based on the fact that the actual working capital was different from that reflected in the financial statements attached to the contract. The gaps were mainly from provision for customer returns and value of the inventory. In a settlement agreement between the parties signed on February 2024, it was determined that the sellers would waive an amount of $ 275 . b. 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) (the “Rule”) for continued listing on the Nasdaq. The Notification Letter provided that the Company had 180 calendar days, or until May 1, 2024, to regain compliance with the Rule. To regain compliance, the bid price of the Company’s common stock must have had a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days. On May 7, 2024, the Company received a letter from Nasdaq that, for the 10 consecutive business days from April 23, 2024 to May 6, 2024, the closing bid price of the Company’s common stock had been at $1.00 per share or greater. Accordingly, the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2) and Nasdaq considers the prior bid price deficiency matter now closed. NOTE 21 - EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE On January 21, 2025, the Company entered into an At The Market Offering Agreement (the “Offering Agreement”), with H.C. Wainwright & Co., LLC, pursuant to which the Company may offer and sell, from time to time through Wainwright shares of the Company’s common stock having an aggregate offering price of up to $ 4.1 million. The Company is not obligated to make any sales of the shares under the Offering Agreement. The offering of shares pursuant to the Offering Agreement will terminate upon the earliest of (a) the sale of all of the shares subject to the Offering Agreement and (b) the termination of the Offering Agreement by Wainwright or the Company, as permitted therein. The Company agreed to pay to Wainwright a cash commission of 3 % of the gross sales price of any Common Stock sold under the Offering Agreement and has agreed to provide. As of March 10, 2025, the Company sold 60,589 shares pursuant to the Offering Agreement for aggregate gross proceeds of approximately $ 142 . F- 31 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE There were no disagreements with accountants on accounting and financial disclosure of a type described in Item 304 (a)(1)(iv) or any reportable event as described in Item 304 (a)(1)(v) of Regulation S-K.