My Size Inc

Note 1 -General

Note 2 -Significant Accounting Policies

Note 3 –Financial Instruments

The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, other receivables, trade payables, accounts payable and short and long term loans approximate their fair value due to the short-term maturities of such instruments.

The Company holds share certificates 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 assets.

Note 3 - Financial Instruments (Cont.)

Note 4 -Stock Based Compensation

The stock-based expense equity awards recognized in the financial statements for services received is related to Cost of Revenues, Research and Development, Sales and Marketing and General and Administrative expenses as shown in the following table:

Note 4 - 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 this plan, is limited to 130,000 shares.

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, Oren Elmaliah 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 and five-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.

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

During the three-month periods ended March 31, 2024, and 2025 the Company granted options, restricted stock and RSUs to purchase 10,000 and 0 shares, respectively, of common stock under the 2017 Employee Plan (as described above), respectively. No options were exercised.

The total stock option compensation expense for employees during the three-month period ended March 31, 2025 and 2024 was $22 and $67, respectively.

The total stock option compensation expense relating to the Orgad acquisition during the three-month period ended March 31, 2025 and 2024 was $0 and $3, respectively.

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 three-month periods ended March 31, 2025 and 2024, the Company recorded $0 and $71, respectively, as stock-based equity awards with respect to the Consultant.

Note 5 -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 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. Based on the Company’s legal advisors, the Company cannot evaluate the chances of the claim to succeed, at this stage.

Note 6 -Goodwill

The aggregate carrying amounts of goodwill allocated to each reporting unit are as follows:

Note 7 –Operating Segments

The Company has the followingtwo segments: (i) fashion and equipment e-commerce platform, and (ii) SaaS based innovative artificial intelligence driven measurement solutions. This realignment reflects the way resources are allocated and performance is assessed by the Chief Operating Decision Maker. The fashion and equipment e-commerce platform which represents Orgad’s activity that was acquired by the Company in 2022, mainly operates on Amazon. The SaaS based innovative artificial intelligence driven measurement solutions, or SaaS Solutions operating segment consists of the Company and certain of its subsidiaries, My Size Israel, My Size LLC and Naiz.

The Company operating segments are the same as its reportable segments.

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 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, are 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:

Note 8 –Significant events during the reporting period.

On January 21, 2025, the Company entered into an At The Market Offering Agreement (the “Offering Agreement”), with H.C. Wainwright & Co., LLC (“Wainwright”), 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 shares of common stock sold under the Offering Agreement. As of March 31, 2025, the Company sold 60,589 shares pursuant to the Offering Agreement for aggregate gross proceeds of approximately $142.

**Note 9 –Events subsequent to the balance sheet date **

The Company paid a total transaction value of 610 euro (approximately $679), consisting of a 40 euro (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 euro (approximately $634). The Acquisition was financed through existing cash reserves and does not involve the issuance of additional shares or debt.

The initial accounting for the business combination is incomplete at the time the financial statements are issued as The acquisition was completed a few days before the filling.