My Size, Inc.

MY SIZE, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -GENERAL

Following the acquisitions of Naiz Fit Bespoke Technologies, S.L (“Naiz”) in October 2022 and ShoeSize.Me AG (“ShoeSizeMe”) in September 2025 (refer to note 7), 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.

Following the formation of a new subsidiary, New Percentil S.L. (“New Percentil”), and acquisition of a new business unit in May 2025 (see note 7), the Company also operates a resale platform that enables consumers to buy and sell primarily secondhand apparel.

The Company has nine subsidiaries. My Size Israel 2014 Ltd. (“My Size Israel”), Topspin Medical (Israel) Ltd., Orgad and Rotrade Ltd., are all incorporated in Israel, My Size LLC, is incorporated in the Russian Federation, there are two limited liability companies incorporated under the laws of Spain namely Naiz Fit and New Percentil, and ShoeSizeMe, which is incorporated in Switzerland. On July 21, 2025, the Company established Ten Peacks Ltd. (“Ten Peacks”), which is incorporated in Israel and is a wholly-owned subsidiary of My Size Israel, that focuses on marketing and distribution of global apparel and shoes brands in Israel. 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.

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

On May 9, 2025, a newly-formed, wholly-owned subsidiary of the Company, New Percentil entered into a production unit transfer agreement with Casi Nuevo Kids, S.L., a limited liability company incorporated under the laws of Spain (“Casi Nuevo”), pursuant to which New Percentil acquired (the “Acquisition”) a production unit of Casi Nuevo with a trade name of Percentil that was judicially awarded to the Company in April 2025 within the framework of insolvency proceedings of Casi Nuevo filed with Commercial Court No. 13 of Madrid (Spain). The Acquisition was completed on May 9, 2025.

The Company paid a total transaction value of €610 (approximately $679), consisting of a €40 (approximately $45) cash payment and the assumption of certain customer and labor liabilities and debt and social security payments in the aggregate amount of approximately €570 (approximately $634). The Acquisition was financed through existing cash reserves and does not involve the issuance of additional shares or debt.

On September 8, 2025, the Company entered into a Share Sale and Purchase Agreement (the “Purchase Agreement”) with certain shareholders of ShoeSizeMe (the “Sellers”), who were the holders of 100% of the share capital of ShoeSizeMe, pursuant to which the Sellers sold to the Company all of the issued and outstanding shares of ShoeSizeMe. The acquisition of ShoeSizeMe closed on the same day. In consideration for the purchase of the shares of ShoeSizeMe and in accordance with the Purchase Agreement, the Company (i) paid a cash payment of $150 and (ii) issued 241,093 shares of the Company’s common stock. The fair value of the shares for the purchase price allocation was determined using the closing price on September 8, 2025 at $338. In addition, pursuant to the Purchase Agreement, the Company issued to a key employee of ShoeSizeMe a warrant to purchase up to 28,000 shares of the Company’s common stock. In connection with the acquisition of ShoeSizeMe, certain major shareholders of ShoeSizeMe entered into (i) a voting agreement with the Company and (ii) customary six-month lock up agreements with the Company.

The security situation in Israel 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. For the time being there is just effect on shipping costs that marginally affects the company.

On February 24, 2022, Russia invaded Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region. Following Russia’s actions, various countries, issued broad-ranging economic sanctions against Russia. Such sanctions included, among other things, a prohibition on doing business with certain Russian companies, officials and oligarchs; a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications (SWIFT) electronic banking network that connects banks globally; and restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions.

The Company shut down its operation in Russia and is expected to close down its subsidiary, My Size LLC, but due to technical reasons it is expected to occur in the near future. Therefore, the impact from the current situation is very limited.

MY SIZE, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

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 2 (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 8 – Goodwill and other Intangible assets.

The company estimates the provision for return based on previous return rates.

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, Orgad International Marketing Ltd., Rotrade Ltd and Ten Peacks Ltd functional currency is the New Israeli Shekel (“NIS”).

The currency of the primary economic environment in which the operation of the subsidiaries, Naiz Fit and New Percentil functional currency is the Euro.

The currency of the primary economic environment in which the operation of the subsidiary, ShoeSizeMe, functional currency is the Swiss Franc.

MY SIZE, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

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

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 and circumstances do not result in the restoration or increase in that newly established cost basis. In 2025 and 2024, the company didnot record inventory mark-down however in 2025 the company recorded a provision of 120 for inventory the company may sell for lower price.

Inventory of resale platform.

Inventories, consisting of merchandise that the Company has purchased and to which the Company holds title, are accounted for using the specific identification method, and are valued at the lower of cost or net realizable value. The cost of inventory is equal to the cost of the merchandise paid to the seller and related inbound shipping costs. Inventory valuation requires the Company to make judgments based on currently available information about the likely method of disposition, such as through sales to individual customers or liquidations, and expected recoverable values of each disposition category. The Company records an inventory write-down based on the age of the inventory and historical experience of expected sell-through.

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:

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.

MY SIZE, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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 $144 and $631 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, 2025 and 2024 respectively. See Note 8- Goodwill.

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:

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.

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.

The Company’s Spanish subsidiary is subject to statutory severance requirements under the Spanish Workers’ Statute (Estatuto de los Trabajadores). In the event of an unfair dismissal, employees are entitled to a severance payment of 33 days of salary per year of service, up to a maximum of 24 months of salary. For “objective” dismissals (e.g., economic or organizational reasons), the statutory rate is 20 days per year of service, capped at 12 months. The company currently has no plan to terminate any employee therefore did not record any liability.

MY SIZE, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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, 2025, and 2024, 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 tomeasure 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, 2025 and 2024 the Company has not recorded any unrecognized tax benefits.

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 Company recognizes forfeitures of awards as they occur.

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

The Company holds shares in My City Builders, Inc. (“MYCB”) formerly known as Diamante Minerals, Inc., a publicly-traded company on the OTCQB.

Due to sales restrictions on the sale of the MYCB 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.

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, 2025 and 2024, all outstanding options and warrants have been excluded from the calculation of the diluted net loss per share since their effect was anti-dilutive.

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, United States and Switzerland. 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.

For the year ended December 31, 2025,81% of the company revenue and 74% of Trade receivable balance comes from one customer Amazon.

Revenue Recognition

The Company’s revenues are primarily derived from: (i) selling products to customers through direct and third-party online channels; (ii) licensing cloud-enabled software subscriptions and associated maintenance and support; and (iii) services and product sales through its resale platform.The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.

Under this standard, revenue is recognized when a contract exists, the performance obligations are identified, the transaction price is determined, and the Company satisfies its performance obligation by transferring control of the promised goods or services to the customer.

The following is a description of the Company’s primary revenue streams:

The Company sells products directly to customers, primarily through its online Amazon stores. The Company has determined that it acts as the principal in these arrangements because it controls the promised product before it is transferred to the customer, is primarily responsible for fulfilling the promise, and has full discretion in establishing prices in addition the inventory risk is on the comapny. Accordingly, revenues are recorded on a gross basis. Revenue is recognized at the point in time when control of the product is transferred to the customer. Shipping fees charged to customers are included in revenue, while outbound shipping costs are recorded in cost of revenue.

MY SIZE, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Rights of Return:

Under standard contract terms, customers have a right of return of 90 days. The Company recognizes revenue net of an allowance for estimated returns based on historical experience. A refund liability is recorded for the amount of consideration the Company does not expect to receive. As of December 31, 2025, and 2024, the allowance for returns was $157 thousand and $164 thousand, respectively.

Revenue from cloud-enabled software subscriptions includes fees from customers accessing the Company’s enterprise cloud services. These services allow customers to use the software without taking physical possession. The Company’s performance obligation is satisfied over time as the customer receives and consumes the benefits of the cloud service. Revenue is recognized ratably over the contract term. Subscription arrangements are generally non-cancelable and do not contain refund-type provisions.

The Company operates a resale platform where both buyers and sellers may be customers.

Consignment Revenue:

The Company generates revenue from the sale of secondhand apparel on behalf of sellers. The Company does not take title to the consigned goods. In these transactions, the Company acts as an agent and recognizes revenue on a net basis, representing the percentage of the proceeds retained as a commission. Revenue is recognized at the point of purchase by the buyer, as the performance obligation to the consignor is satisfied at that time.

Platform Product Revenue:

For sales of Company-owned inventory on the platform, the Company acts as the principal due to inventory risk and control of the goods. Revenue is recognized on a gross basis at the time of delivery and acceptance by the customer.

Cost of Revenue

Cost of consignment revenue consists of outbound shipping, outbound labor, and packaging costs. Cost of product revenue primarily consists of the inventory cost, inbound and outbound shipping, labor, packaging costs, and inventory write-downs.

Shipping Fees

The Company charges shipping fees to buyers, which are included in revenue. All outbound shipping costs are accounted for in cost of revenue at the time revenue is recognized.

Cost of Revenue Cost of consignment revenue consists of outbound shipping, outbound labor and packaging costs. Cost of product revenue mainly consists of the inventory cost, inbound shipping related to the sold merchandise, outbound shipping, outbound labor, packaging costs and inventory write-downs.

Returns

For the Resale platform The Company generally has a 14-day return period, and possibly longer accordingly to regulations which may change from time to time, and recognizes a returns reserve based on historical experience, which is recorded in accrued and other current liabilities within the Company’s consolidated balance sheets and reduction of revenue within the Company’s consolidated statements of operations. As of December 31, 2025, and 2024, the allowance for returns was $6 thousand and $0 thousand, respectively.

Seller payable includes amounts owed to sellers upon the purchase of sellers’ goods by the Company. Amounts are initially provided as a credit to sellers. These credits may be applied towards purchases from the Company or redeemed for cash. Seller payables show up as seller payables in the consolidated balance sheet.

MY SIZE, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

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.

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.

In December, 2023, the FASB issued ASU 2023¬09, Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid and received, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income taxrelated 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 impacts the Company’s income tax disclosures, but not Consolidated Financial Statements. See Note 12 - Taxes on Income.

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.

In July 2025, the FASB issued ASU 2025-05 “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. The ASU introduces a practical expedient for all entities when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. Under the practical expedient, when developing reasonable and supportable forecast as part of estimating expected credit losses, an entity may assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The ASU is effective for annual periods beginning after December 15, 2026 and interim periods within those annual periods. Early adoption is permitted.

In September 2025, the FASB issued ASU 2025-06 “Targeted Improvements to the Accounting for In-ternal-Use Software”. The ASU removes all references to software development stages throughout ASU 350-40. Therefore, under the ASU, an entity will be required to start capitalizing software costs when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended (‘probable-to-complete’ recognition threshold). In applying the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software. The ASU is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual periods. The ASU allows adoption either on a prospective basis, a modified prospective approach or a retrospective approach. The Company is in the process of evaluating the effects of the ASU on its internal use software capitalization policy.

In September 2025, the FASB issued ASU 2025-07 “Derivatives Scope Refinements and Scope Clari-fication for Share-Based Noncash Consideration from a Customer in a Revenue Contract”. The ASU excludes from the derivative accounting certain non-exchange-traded contracts with contracts with un-derlying that are based on operations or activities specific to one of the parties to the contract. The ASU is effective for annual periods beginning after December 15, 2026 and interim periods within those annual periods. Early adoption is permitted. The amendment can be applied either prospectively to new contracts entered into on or after the date of adoption or on a modified retrospective basis through cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption. The Company is in the process of evaluating the effects of the ASU on its contracts; however, the adoption is not expected to have a material effect on its consolidated financial position or results of operations.

In December 2025, the FASB issued ASU 2025-11 to amend the guidance in “Interim Reporting” (Topic 270). The update provides clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period. The amendments do not change the underlying objectives of interim reporting but are designed to enhance clarity in application. The guidance is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. The Company is in the process of evaluating the effects of the ASU on interim reporting.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 -CASH AND CASH EQUIVALENTS

The Company’s cash and cash equivalents balance at December 31, 2025 and 2024 is denominated in the following currencies:

The company also maintains a balance of $254 which is held as collateral for credit card, the amount in held in US Dollars.

NOTE 4 -OTHER RECEIVABLES AND PREPAID EXPENSES

NOTE 5 -PROPERTY AND EQUIPMENT, NET

MY SIZE, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 anoption 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.

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. The company extended the office lease agreement to June 30, 2026.

In addition, 10 Peacks Ltd. entered an office space lease agreement in September 2025. The term is for 48 months beginning September 1,2025 and ending on August 30, 2029.

These operating leases are included in “Right of use asset” on the Company’s December 31, 2025 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, 2025 consolidated balance sheets. As of December 31, 2025, right-of-use of asset was $106. Operating lease liabilities were $26 and non current operating lease liabilities were $85.

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 weighted average interest rate used to discount future lease payment was 14.1%.

Maturities of lease liabilities as of December 31, 2025 were as follows:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 –BUSINESS COMBINATION

Acquisition of Percentil

On May 9, 2025, a newly-formed, wholly-owned subsidiary of the Company, New Percentil, entered into a production unit transfer agreement with Casi Nuevo, pursuant to which New Percentil acquired a production unit of Casi Nuevo with a trade name of Percentil that was judicially awarded to the Company in April 2025 within the framework of insolvency proceedings of Casi Nuevo filed with Commercial Court No. 13 of Madrid (Spain). The Acquisition was completed on May 9, 2025.

The results of operations of New Percentil have been included in the consolidated financial statements since the acquisition date of May 9 2025. New Percentil revenues and loss included in the Company’s consolidated statement of operations from May 9, 2025 through December 31, 2025 were $794 and $535 respectively. The Company has not presented supplemental pro forma information for the year ended December 31, 2024, or for the period from January 1, 2025, to May 9, 2025, as it was impracticable to do so. The acquired assets were a production unit obtained through a judicial insolvency process, and historical financial records for the specific unit were not available or were not prepared in accordance with US GAAP by the predecessor entity.

The Company paid €40,000 (approximately $45) and assumed liabilities which the Company had prior to bankruptcy as agreed with the insolvency court.

The Company acquired the Percentil production unit to accelerate its expansion into the European re-commerce and circular fashion markets. As an expert in both AI-driven sizing technology and online retail operations, the Company intends to integrate its proprietary Naiz Fit and MySizeID algorithms into an established marketplace. This combination aims to optimize the consumer experience, reduce high return rates common in the second-hand apparel industry, and provide a scalable B2B “Circularity as a Service” solution to global fashion brands.

Under the preliminary purchase price allocation, the Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of the acquisition. Such estimates are subject to change during the measurement period which is not expected to exceed one year. The purchase price allocation was not finalized due to examination of the net working capital of New Percentil at the acquisition date. Any adjustments to the preliminary purchase price allocation identified during the measurement period will be recognized in the period in which the adjustments are determined.

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

The Company incurred $7 in direct transaction costs during the year ended December 31, 2025 which were included in general and administrative expenses in the consolidated statements of income (loss).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – BUSINESS COMBINATION (Cont.)

Acquisition of ShoeSizeMe

On September 8, 2025, the company purchased 100% of the share capital of ShoeSizeMe AG.

The results of operations of ShoeSizeMe have been included in these consolidated financial statements since the acquisition date of September 8, 2025. ShoeSizeMe revenues included in the Company’s consolidated statement of operations from September 8 2025 through December 31, 2025 were $66.

In consideration for the purchase of the shares of ShoeSizeMe and in accordance with the Purchase Agreement, the Company (i) paid a cash payment of $142 and (ii) issued 241,093 shares of the Company’s common stock. The fair value of the shares for the purchase price allocation was determined using the closing price on September 8, 2025 at $338.

Under the preliminary purchase price allocation, the Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of the acquisition. Such estimates are subject to change during the measurement period which is not expected to exceed one year. The purchase price allocation was not finalized duo to examination of the net working capital of Shoe Size Me at the acquisition date. Any adjustments to the preliminary purchase price allocation identified during the measurement period will be recognized in the period in which the adjustments are determined.

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

The Company incurred $80 in direct transaction costs during the year-ended December 31, 2025 which were included in general and administrative expenses in the consolidated statements of income (loss).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 –Goodwill and other Intangible assets

A. Identified intangible assets

Schedule of Intangible assets

Amortization

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – Goodwill and other Intangible assets (Cont.)

Future amortization expenses are expected to be as follows:

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.

In the second quarter of 2025, the Company performed an impairment assessment of its finite-lived intangible assets. For the intangibles of SaaS solutions, the Company performed a recoverability test by comparing the estimated undiscounted future cash flows to their carrying values. The analysis confirmed that the undiscounted cash flows exceeded the carrying values, and therefore no impairment was recorded.

For the Resale Platform intangibles, given the proximity of the acquisition to the balance sheet date and the absence of significant changes in economic or market conditions since the purchase, the Company concluded that no impairment indicators existed and the carrying values remain recoverable.

The changes in the carrying amount of goodwill for the years ended December 31, 2025 and 2024 were as follows:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – Goodwill and other Intangible assets (Cont.)

The Company operates its business through four reporting segments: (i) fashion e-commerce platform, (ii) SaaS solutions (iii) resale platform and (iv) wholesale. There was a goodwill impairment recognized under the wholesale segment. There was no impairment recognized for SaaS solutions. The company did not check impairment for the resale platform as it did not see any foreseeable changes in the market or performance of the segment since the recent purchase. See Note 16 for additional segment information.

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 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 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 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 e-commerce platform reporting unit fair value. The estimated fair value of the Fashion e-commerce platform reporting unit exceeded its estimated carrying amount by 5%.

This was based on the following assumptions:

Goodwill impairment in 2025

During the second quarter of 2025, the Company experienced a triggering event in the reporting period due to 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 table below indicates changes in the most significant inputs to the Company’s impairment analysis on each testing date since its last annual test for the Fashion e-commerce platform segment.

The Company updated the forecasted future cash flows used in the impairment assessment, including revenues and margin to reflect current conditions. Other changes in valuation assumptions included selection of lower revenue growth rates based upon an assessment of current market conditions. As a result of this review, the Company did not identify an impairment to its definite-lived intangible assets or other long-lived assets, but the Company recorded a $144 non-deductible goodwill impairment charge during the second quarter of the year ended December 31, 2025 (level 3 fair value measurement).

No goodwill impairment was recorded for other reporting unit including the new reporting units – resale platform.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

Loans in the total amount of $132 (Euro 115) bearing interest between prime to prime +1.5% is due between March 2025 to May 2028.

Loan in the amount of $25 (CHF 21) payable quarterly with interest rate of 1.6% is due on September 2027.

Loan in the amount of $768 (CHF 600) with interest rate of 1.17% is payable on October 1, 2030.

NOTE 10 -RELATED PARTY TRANSACTIONS

A. Balances with related parties:

The following related party payables are included in liability to related parties:

B. Related parties’ benefits:

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:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - FINANCIAL INSTRUMENTS (Cont.)

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.

The recognized profit (loss) and fair value (based on quoted market prices with a discount due to security restrictions on MYCB shares) of the marketable securities at December 31, 2025 and 204 were $5 and $1, respectively.

NOTE 12 -TAXES ON INCOME

My Size, Inc. has final tax assessments through 2020.

The U.S. corporate income tax rate 21%.

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

2025 - 23%

2024 - 23%

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

2025 - 24%-25%

2024 - 24%

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

2025 – 20.5%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - TAXES ON INCOME (Cont.)

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:

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

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - TAXES ON INCOME (Cont.)

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, 2025 and 2024.

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:

The entire income tax benefit is a deferred tax benefit.

NOTE 13 -SHAREHOLDERS’ EQUITY

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - SHAREHOLDERS’ EQUITY (Cont.)

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:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - STOCK BASED COMPENSATION (Cont.)

Stock Option Plan for Employees:

The total number of shares of common stock which may be granted to directors, officers and employees under the 2017 Equity Incentive Plan (the “Plan”), is limited to 756,691 shares. In addition, in September 2025, the Company’s stockholders approved an amendment to the Plan to adopt an evergreen provision such that, beginning on January 1, 2026 and ending on and including January 1, 2029, the share reserve under the Plan will be automatically increased by a number of shares of the Company’s common stock equal to the lesser of (A)5% of the aggregate number of shares of the Company’s common stock outstanding on the final day of the immediately preceding calendar year or (B) such smaller number of shares as is determined by the Company’s board of directors.

On February 14, 2024, the Compensation Committee of the Company granted restricted common stock awards under the Company’s 2017 Equity Incentive Plan to Ronen Luzon, Or Kless (former Chief Financial Officer) 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 shall vest in three equal installments on January 1, 2025, January 1, 2026 and January 1, 2027, conditioned upon continuous employment with the Company and subject to accelerated vesting upon a change in control of the Company. On the same day, the Company granted a total of 10,000 restricted stock units (“RSUs”) to its directors that will vest on January 1, 2025 andfive-years options to purchase up to 6,875 shares of common stock to other employees of the Company at an exercise price of $3.832 per share. The option vesting period is over three years in three equal portions from the vesting commencement date.

The compensation cost resulting from the grant is approximately $314 and is expected to be recognized over a period of 3 years.

On June 4, 2025, the compensation committee of the Company’s board of directors reduced the exercise price of outstanding options granted under the Plan of certain employees, officers and directors of the Company for the purchase of an aggregate of 13,926 shares of common stock (with exercise prices ranging from $3.832 to $8.72 per share) to $1.28 per share, which was the closing price for the Company’s common stock on June 4, 2025 (the “Option Repricing”). No options were exercised. In connection with the Option Repricing, the Company accelerated the vesting options held by the Company’s former chief financial officer and the Company recorded one-time expenses of $6 and $17.

On December 15, 2025, the Compensation Committee of the Company granted restricted common stock awards under the Company’s 2017 Equity Incentive Plan to Officers of the company employees and directors. pursuant to which they were issued 515,000 restricted shares collectively. The restricted shares shall vest based on high level performance and or retention.

The compensation cost resulting from the grant is approximately $453 and is expected to be recognized over a period of 3 years.

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. 2024 Grants

There were 515,000 shares of restricted common stock or RSUs granted during the year-ended December 31, 2025, compared to an aggregate of 91,875 options, shares of restricted common stock and RSUs granted during year-ended December 31,2 2024, under the Plan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - STOCK BASED COMPENSATION (Cont.)

As of December 31, 2025, there was a total of $186 unrecognized compensation cost relating to non-vested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 0.8 years.

Share option activity during 2025 is as follows:

Share option activity during 2024 is as follows:

During the year ended December 31,2025 and 2024, no option was exercised.

Options issued to consultants

In July 2023, the Company entered into a six month agreement (the “Consultant Agreement”) with a consultant (the “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 Consultant 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.

During the year ended December 31, 2025, and 2024, the Company recorded $0 and $71, respectively, as stock-based equity awards with respect to the Consultant.

Warrant issued in connection with the acquisition of ShoeSizeMe

Pursuant to the Purchase Agreement, the Company issued a key employee of ShoeSizeMe a warrant (the “Warrant”) to purchase up to 28,000 shares of the Company’s common stock (such shares of common stock underlying the Warrant, the “Warrant Shares”). The Warrant provides for a tiered exercise structure, with (i)10,000 Warrant Shares exercisable at $2.00 per Warrant Share, (ii)6,000 Warrant Shares exercisable at $3.00 per Warrant Share, (iii)5,000 Warrant Shares exercisable at $4.00 per Warrant Share, (iv)4,000 Warrant Shares exercisable at $5.00 per Warrant Share, and (v)3,000 Warrant Shares exercisable at $6.00 per Warrant Share

The Warrant is subject to vesting upon satisfaction of certain service-based, financial performance and integration milestones, as follows:

●Continuing Service Milestone:50% of the Warrant shall vest and become exercisable on the 12-month anniversary of the issuance date of the Warrant, provided that the Warrant holder shall have been continuously providing services to the Company through such 12-month anniversary.

●Financial Result Milestone: The vesting of up to 25% of the Warrant is contingent on ShoeSizeMe’s gross revenue for the 12-month period following the closing date (beginning September 1, 2025) compared to the 12-month period ended August 31, 2025 (the prior-year revenue) as follows: (i) the entire 25% of the Warrant shall vest and become exercisable if ShoeSizeMe’s post-closing revenue is equal to or greater than 95% of the prior-year revenue, (ii) 12.5% of the Warrant (or 50% of the portion the Warrant subject to the vesting terms in connection with the Financial Result Milestone) shall vest and become exercisable if ShoeSizeMe’s post-closing revenue is equal to or greater than 80% but less than 95% of the prior-year revenue; and (iii) no portion of the Warrant subject to the vesting terms in connection with the Financial Result Milestone shall vest if ShoeSizeMe’s post-closing revenue is less than 80% of the prior-year revenue.

●Integration Milestone: The vesting of 25% of the Warrant is contingent on the completion of the full integration (as determined by the Company at its reasonable discretion) of ShoeSizeMe into the Company’s wholly-owned subsidiary, Naiz Bespoke Technologies, S.L., by March 31, 2026.

The award is a share-based payment accounted for under ASC 718, with vesting contingent upon continued service and the achievement of specific non-market performance and integration conditions. The grant-date fair value was measured using an option-pricing model and remains fixed for the duration of the award. In accordance with ASC 718, compensation expense is recognized only when it is deemed probable that the performance conditions will be achieved. As of December 31, 2025, management has determined that the achievement of these conditions is probable; accordingly, the grant-date fair value is being recognized as an expense over the requisite service period. The award is classified as equity, as it will be settled in a fixed number of shares with a fixed exercise price.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15-CONTINGENCIES AND COMMITMENTS

In July 2024, the Company was served with a legal complaint filed by Shimon Shukron in the Magistrate’s Court in Herzliya (the “Court”) 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. In June 2025, the Court appointed a third party appraiser to assess the damages. The Company evaluates the claim at a sum of NIS 325,000 (approximately $102), at this stage add and is recorded under current liabilities in the consolidated balance sheet.

Note 16–OPERATING SEGMENTS

The Company has the following four segments: (i) Fashion e-commerce platform, (ii) SaaS solutions, (iii) resale platform for apparel and (iv) wholesaling of footwear . This realignment reflects the way resources are allocated, and performance is assessed by the Chief Operating Decision Maker. The Fashion 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 the Company and certain of its subsidiaries, My Size Israel, My Size LLC, Naiz and ShoeSizeMe (purchased in September 2025, see note 6). The resale platform currently operates as a separate segment under New Percentil following the closing of the Acquisition in May 2025. The other segment currently operates under Ten Peacks.

The CODM 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 CODM regularly reviews segment operational 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 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, are mostly allocated based on revenues, most of which is allocated to the Fashion e-commerce platform segment.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16– OPERATING SEGMENTS (Cont.)

NOTE 17 –OTHER PAYABLES

Other payables under current liabilities in the consolidated balance sheets consisted of the following: