My Size, Inc.

Note 1 -General

Note 2 -Significant Accounting Policies

The Company generally receives payments from buyers before payments to the sellers are due.

Consignment Revenue

The Company generates consignment revenue primarily from the sale of secondhand apparel on behalf of sellers. The Company retains a percentage of the proceeds received as payment for its consignment service. The Company reports consignment revenue on net. Title to the consigned goods remain with the seller until transferred to the buyer, which occurs 90 days subsequent to purchase of the consigned goods and upon expiration of the allotted return period. The Company does not take title of consigned goods at any time except in certain cases where the consignment window of 90 days expires or returned goods become Company owned inventory and becomes product revenue. Consignment revenue is generally recognized upon purchase of the consigned good by the buyer as its performance obligation of providing consignment services to the consignor is satisfied at that point. Consignment revenue is also recognized upon purchase of the consigned good for which the consignment window has already expired and the Company has taken title to the consigned good. Consignment revenue is recognized gross of seller payouts but net of discounts, incentives and returns. Value added tax assessed by governmental authorities is excluded from revenue.

Product Revenue

The Company recognizes product revenue on a gross basis as the Company acts as the principal in the transaction. Revenue is recognized at the time control of the asset is transferred to the customer, which is typically upon delivery and acceptance by the customer. The Company is the seller and not an agent due to inventory risk.

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.

Returns

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.

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.

Seller Payable

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.

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 writedowns.

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 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 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 the 2017 Equity Incentive Plan (the “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 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.

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.

There were no options, shares of restricted common stock or RSUs granted during the six-month period June 30, 2025, compared to an aggregate of 91,875 options, shares of restricted common stock and RSUs granted during the six-month period ended June 30, 2024, under the Plan. No options were exercised.

On June 4, 2025, the compensation committee of the Company 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.

The total stock option compensation expense for employees during the six and three-month period ended June 30, 2025 and 2024 was $68, $46 and $146, and $79, respectively.

The total stock option compensation expense relating to the Orgad acquisition during the six and three-month period ended June 30, 2025 and 2024 was $0, $0, $3, and $0 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 six and three-month periods ended June 30, 2025 and 2024, the Company recorded $0, $0 and $71, and $0 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 (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 175,000 (approximately $51), at this stage.

Note 6 –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 included in the Company’s consolidated statement of operations from May 9, 2025 through June 30, 2025 were $168.

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

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 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.

Note 6 – Business Combination (Cont.)

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

The Company did not incur any direct transaction costs during the six month period ended June 30, 2025 which were included in general and administrative expenses in the consolidated statements of income (loss).

Note 7 –Goodwill

As of June 30, 2025 the Company has 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 and equipment e-commerce platform segment.

Schedule of Impairment Analysis

In June 2025, 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 for the quarter ended June 30, 2025 (level 3 fair value measurement).

This impairment charge was recorded within Impairment of goodwill, within the Consolidated Statement of Operations, and within the Fashion and equipment e-commerce platform segment for the six months ended June 30, 2025.

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

Note 8 –Operating Segments

The Company has the following three segments: (i) fashion and equipment e-commerce platform, (ii) SaaS based innovative artificial intelligence driven measurement solutions and (iii) resale platform for apparel. 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 resale platform currently operates as a sperate segment under New Percentil following the closing of the Acquisition in May 2025. The Company is evaluating and integrating into this segment and may consolidate it in the future.

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 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 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 9 –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 Common Stock sold under the Offering Agreement. As of June 30, 2025, the Company sold 1,052,917 shares pursuant to the Offering Agreement for aggregate gross proceeds of approximately $2,201 ($1,987 net). Prepaid legal and auditing costs are classified as other receivables in the balance sheet.

Note 10 –Events subsequent to the balance sheet date