Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULT OF OPERATIONS

You should read the following discussion along with our financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions, including those discussed under "Risk Factors." Our actual results, performance and achievements may differ materially from those expressed in, or implied by, these forward-looking statements.

Overview

We are a fashion technology company operating an integrated portfolio of businesses designed to address the most pressing challenges facing fashion brands and retailers today-size and fit accuracy, excess inventory management, circular economy solutions, and international market distribution. Through our subsidiaries, we provide end-to-end support across the fashion value chain: Naiz Fit, our technology subsidiary, delivers AI-driven size and fit solutions for fashion e-commerce companies, and includes ShoeSize.Me, a European AI-powered footwear sizing solution we acquired in September 2025; Orgad, an online retailer and technology-enabled consumer products company operating principally as a third-party seller on Amazon; Percentil, a managed second-hand fashion recommerce platform operating across Southern and Central Europe; and Ten Peacks Ltd., a distribution subsidiary focused on marketing and distributing global apparel and footwear brands in Israel.

Our strategy is to build an integrated fashion platform-the infrastructure layer that enable fashion brands to address four critical pain points simultaneously: size and fit challenges that drive returns and suppress conversion rates; overstocked and unsold inventory that erodes margins; sustainability obligations that increasingly require brands to offer circular economy solutions; and international growth ambitions that require local distribution expertise and relationships.

We believe this integrated approach is differentiated in the market. Unlike point solutions that address a single problem, our platform allows brands to work with one group-level partner across technology, commerce, circularity, and distribution-each business unit reinforcing the others through shared data, commercial relationships, and infrastructure.

Orgad Acquisition

On February 7, 2022, My Size Israel entered into a Share Purchase Agreement, or the Orgad Agreement, with Amar Guy Shalom and Elad Bretfeld, or the Orgad Sellers, pursuant to which the Orgad Sellers agreed to sell to My Size Israel all of the issued and outstanding equity of Orgad.

Orgad operates an omnichannel e-commerce platform engaged in online retailing in the global market. It operates as a third-party seller on Amazon.com, eBay and others. Orgad currently manages more than 1,000 stock-keeping units, or SKUs, mainly in fashion, apparel and shoes.

The Orgad Sellers are the sole title and beneficial owners of 100% of the shares of Orgad. In consideration of the shares of Orgad, the Orgad Sellers are entitled to receive (i) up to $1,000,000 in cash, or the Orgad Cash Consideration, (ii) an aggregate of 111,682 shares, or the Orgad Equity Consideration, of our common stock, and (iii) earn-out payments of 10% of the operating profit of Orgad for the years 2022 and 2023. The transaction closed on the same day. In February 2024, we paid the remaining $700,000 of the Orgad Cash Consideration to the Orgad Sellers, net of a settlement amount of $275,000.

The payment of the earn out is further subject in each case to the Orgad Sellers being actively engaged with Orgad at the date such payment is due (except if the Orgad Sellers resign due to reasons relating to material reduction of salary or adverse change in their position with Orgad or its affiliates).

In connection with the Orgad Agreement, each of the Orgad Sellers entered into employment agreements with Orgad and six-month lock-up agreements with us.

Naiz Acquisition

On October 7, 2022, we entered into a Share Purchase Agreement, or the Naiz Agreement, with Borja Cembrero Saralegui, or Borja, Aritz Torre Garcia, or Aritz, Whitehole, S.L., or Whitehole, Twinbel, S.L., or Twinbel and EGI Acceleration, S.L., or EGI. Each of Borja, Aritz, Whitehole, Twinbel and EGI shall be referred to as the Naiz Sellers herein. Pursuant to the Naiz Agreement, the Naiz Sellers agreed to sell to My Size all of the issued and outstanding equity of Naiz Bespoke Technologies, S.L., or Naiz, a limited liability company incorporated under the laws of Spain. The acquisition of Naiz was completed on October 11, 2022.

In consideration of the purchase of the shares of Naiz, the Naiz Agreement provided that the Naiz Sellers are entitled to receive (i) an aggregate of 240,000 shares, or the Naiz Equity Consideration, of My Size common stock, or the Shares, representing in the aggregate, immediately prior to the issuance of such shares at the closing of the transaction, not more than 19.9% of the issued and outstanding Shares and (ii) up to $2,050,000 in cash, the Naiz Cash Consideration.

The Naiz Equity Consideration was issued to the Naiz Sellers at closing of the transaction of which 2,365,800 shares of My Size common stock were issued to Whitehole constituting 6.6% of our outstanding shares following such issuance. The Naiz Agreement also provides that, in the event that the actual value of the Naiz Equity Consideration (based on the average closing price of the Shares on the Nasdaq Capital Market over the 10 trading days prior to the closing of the transaction, or the Equity Value Averaging Period) is less than $1,650,000, My Size shall make an additional cash payment, or the Shortfall Value to the Naiz Sellers within 45 days of our receipt of Naiz's 2025 audited financial statements; provided that certain revenue targets are met. Following the Equity Value Averaging Period, it was determined that the Shortfall Value is $459,240.

The Naiz Cash Consideration is payable to the Naiz Sellers in five installments, according to the following payment schedule: (i) US$500,000 at closing, (ii) up to US$500,000 within 45 days of My Size's receipt of Naiz's 2022 audited financial statements, (iii) up to US$350,000 within 45 days of My Size's receipt of Naiz's unaudited financial statements for the six months ended June 30, 2023, (iv) up to $350,000 within 45 days of My Size's receipt of Naiz's unaudited financial statements for the six months ended December 31, 2023, and (v) up to $350,000 within 45 days of My Size's receipt of Naiz's 2024 audited financial statements; provided that in the case of the second, third, fourth and fifth installments certain revenue targets are met.

The payment of the second, third, fourth and fifth cash installments are further subject to the continuing employment or involvement of Borja and Aritz, or the Key Persons, by or with Naiz at the date such payment is due (except if a Key Person is terminated from Naiz due to a Good Reason (as defined in the Naiz Agreement).

The Naiz Agreement contains customary representations, warranties and indemnification provisions. In addition, the Naiz Sellers are subject to non-competition and non-solicitation provisions pursuant to which they agree not to engage in competitive activities with respect to My Size's business.

In connection with the Naiz Agreement, (i) each of the Naiz Sellers entered into six-months lock-up agreements, or the Lock-Up Agreement, with My Size, (ii) Whitehole, Twinbel and EGI entered into a voting agreement, or the Voting Agreement, with My Size and (iii) each of the Key Persons entered into employment agreements and services agreements with Naiz.

The Lock-Up Agreement provides that each Naiz Seller will not, for the six-months period following the closing of the transaction, (i) offer, pledge, sell, contract to sell, sell any option, warrant or contract to purchase, purchase any option, warrant or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Shares or any securities convertible into or exercisable or exchangeable for Shares in each case, that are currently or hereafter owned of record or beneficially (including holding as a custodian) by such Naiz Seller, or publicly disclose the intention to make any such offer, sale, pledge, grant, transfer or disposition; or (ii) enter into any swap, short sale, hedge or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of such Naiz Seller's Shares regardless of whether any such transaction described in clause (i) or this clause (ii) is to be settled by delivery of Shares or such other securities, in cash or otherwise. The Lock-Up Agreement also contains an additional three-months "dribble-out" provision that provides following the expiration of the initial six-months lock-up period, without My Size's prior written consent (which My Size shall be permitted to withhold at its sole discretion), each Naiz Seller shall not sell, dispose of or otherwise transfer on any given day a number of Shares representing more than the average daily trading volume of the Shares for the rolling 30 day trading period prior to the date on which such Seller executes a trade of the Shares.

The Voting Agreement provides that the voting of any Shares held by each of Whitehole, Twinbel and EGI, or the Naiz Acquisition Stockholders, will be exercised exclusively by a proxy designated by My Size's board of directors from time to time, or the Proxy, and that each Naiz Acquisition Stockholder will irrevocably designate and appoint the then-current Proxy as its sole and exclusive attorney-in-fact and proxy to vote and exercise all voting right with respect to the Shares held by each Naiz Acquisition Stockholder. The Voting Agreement also provides that, if the voting power held by the Proxy, taking into account the proxies granted by the Naiz Acquisition Stockholders and the Shares owned by the Proxy, represents 20% or more of the voting power of My Size's stockholders that will vote on an item, or the Voting Power, then the Proxy shall vote such number of Shares in excess of 19.9% of the Voting Power in the same proportion as the Shares that are voted by My Size's other stockholders. The Voting Agreement will terminate on the earliest to occur of (i) such time that such Naiz Acquisition Stockholder no longer owns the Shares, (ii) the sale of all or substantially all of the assets of My Size or the consolidation or merger of My Size with or into any other business entity pursuant to which stockholders of My Size prior to such consolidation or merger hold less than 50% of the voting equity of the surviving or resulting entity, (iii) the liquidation, dissolution or winding up of the business operations of My Size, and (iv) the filing or consent to filing of any bankruptcy, insolvency or reorganization case or proceeding involving My Size or otherwise seeking any relief under any laws relating to relief from debts or protection of debtors.

Acquisition of Production Unit (Casi Nuevo Kids, S.L.)

On May 9, 2025, we acquired, through our wholly-owned Spanish subsidiary New Percentil, the Production Unit of Casi Nuevo, that was judicially awarded to us 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 the same day.

The total purchase price for the acquisition was €610,806.81 (approximately $679,000), which consists of (i) €40,000 (approximately $44,500) paid by our wholly-owned subsidiary, Naiz Fit., (ii) €358,196 (approximately $398,000) for the assumption of certain liabilities owed by Casi Nuevo to its customers, (iii) €48,000 (approximately $53,500) for the assumption of certain debt and social security payments related to former employees of Casi Nuevo who have transferred to New Percentil in connection with the acquisition, or the Percentil Employees, and (iv) €164,610 (approximately $183,000) for the assumption of accrued labor liabilities related to the Percentil Employees.

Acquisition of ShoeSize.Me

On September 8, 2025, we entered into the ShoeSize Purchase Agreement with the Sellers, who are the holders of 100% of the share capital of ShoeSize.Me, pursuant to which the Sellers agreed to sell us all of the issued and outstanding shares of ShoeSize.Me. The transaction was closed on the same day, or the ShoeSize Closing Date.

In consideration for the purchase of the shares of ShoeSize.Me and in accordance with the ShoeSize Purchase Agreement, the Sellers received (i) a cash payment of $150,000 and (ii) 241,093 shares of our common stock having an aggregate value of $290,000, determined by dividing $290,000 by the average closing price of our common stock during the seven trading days immediately preceding the ShoeSize Closing Date. In addition, pursuant to the ShoeSize Purchase Agreement, we issued to a key employee of ShoeSize a warrant, or the ShoeSize Warrant, to purchase up to 28,000 shares of our common stock. The ShoeSize Warrant, which is subject to vesting upon satisfaction of certain service-based, financial performance and integration milestones, provides for a tiered exercise structure, with (i) 10,000 shares exercisable at $2.00 per share, (ii) 6,000 shares exercisable at $3.00 per share, (iii) 5,000 shares exercisable at $4.00 per share, (iv) 4,000 shares exercisable at $5.00 per share, and (v) 3,000 shares exercisable at $6.00 per share.

Operations in Russia

In addition to our Israel operations, we historically had operations in Russia through our wholly owned subsidiary, My Size LLC. To date, mainly due to the invasion of Ukraine by Russia and the ongoing sanctions we ceased all of our efforts in Russia and expect to dissolve the subsidiary in the near future.

Results of Operations

The table below provides our results of operations for the periods indicated.

		Year ended December 31
		2025				2024
		(dollars in thousands)
Revenues		$	9,362			$	8,257
Cost of revenues			(6,362	)			(4,934	)
Gross profit			3,000				3,323
Research and development expenses			(597	)			(429	)
Sales and marketing			(3,212	)			(3,114	)
General and administrative			(4,787	)			(3,368	)
Other income			-				275
Impairment of goodwill			(144	)			(631	)
Operating loss			(5,740	)			(3,944	)
Financial income (expenses), net			(112	)			(51	)
Equity accounted losses			-				-
Income tax benefit			-				-
Net loss		$	(5,852	)		$	(3,995	)

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Revenues

Our revenues for the year ended December 31, 2025 amounted to $9,362,000 compared to $8,257,000 for year ended December 31, 2024. The increase from the corresponding period is primarily attributable to Orgad sales as well the inclusion of New Percentil, ShoeSizeMe and Ten Peacks in the consolidated reporting as of December 31, 2025.

Cost Of Revenues

Our cost of revenues for the year ended December 31, 2025 amounted to $6,362,000 compared to $4,934,000 for the year ended December 31, 2024. The increase in comparison with the corresponding period was due to the inclusion of New Percentil, ShoeSizeMe and Ten Peacks in the consolidated reporting as of December 31, 2025.

Research and Development Expenses

Our research and development expenses for the year ended December 31, 2025 amounted to $597,000, an increase of $168,000, or approximately 39% compared to $429,00 for the year ended December 31, 2024. The increase was mainly due to the annual salary increase of the retained employees in Naiz Fit as well as the hiring of new employees.

Sales and Marketing Expenses

Our sales and marketing expenses for the year ended December 31, 2025 amounted to $3,212,000, an increase of $98,000, or approximately 3% compared to $3,114,000 for the year ended December 31, 2024. The increase in comparison with the corresponding period was due to the inclusion of New Percentil in the consolidated reporting as of December 31, 2025.

General and Administrative Expenses

Our general and administrative expenses for the year ended December 31, 2025 amounted to $4,787,000, an increase of $1,419,000, or approximately 42% compared to $3,368,000 for the year ended December 31, 2024. The increase from the corresponding period is primarily attributable the inclusion of New Percentil, ShoeSizeMe and Ten Peacks in the consolidated reporting as of December 31, 2025.

Other income

There was no other income recorded for the year ended December 31, 2025 as compared to the to $275,000 other income for the year ended December 31, 2024. The other income for the year ended December 31, 2024 resulted from certain downward post-closing adjustment that were made in the Orgad acquisition.

Impairment of goodwill

Based on our analysis, we determined that the carrying value of our SaaS Solutions reporting unit exceeded its fair value and an impairment charge of $144,000 was recorded for year ended December 31, 2025, compared to $631,000 recorded in impairment of goodwill for year ended December 31, 2024 for the same reason.

Operating Loss

As a result of the foregoing, for the year ended December 31, 2025, our operating loss was $5,740,000, an increase of $1,796,000 or 46%, compared to our operating loss for the year ended December 31, 2024 of $3,944,000.

Financial (Expenses) Income, Net

Our financial expense, net for the year ended December 31, 2025 amounted to $112,000 compared to $51,000 for the year ended December 31, 2024. In 2025, the financial income is attributable to the exchange rate differences.

Net Loss

As a result of the foregoing, our net loss for the year ended December 31, 2025 was $5,852,000 compared to net loss of $3,995,000 for the year ended December 31, 2024. The increase in net loss was mainly due to the reasons mentioned above.

Liquidity and Capital Resources

Since our inception, we have funded our operations primarily through public and private offerings of debt and equity in Israel and in the U.S.

As of December 31, 2025, we had cash, cash equivalents and restricted cash of $2,557,000 compared to $4,880,000 cash, cash equivalents, restricted cash as of December 31, 2024. This decrease primarily resulted from the payments that were made to suppliers, resources that were deployed to grow our businesses and payments related to acquisition of New Percentil, ShoeSizeMe and Ten Peacks.

In January 2025, we entered into an At The Market Offering Agreement, (the "Offering Agreement") with H.C. Wainwright & Co., LLC, as agent ("Wainwright") pursuant to which we may offer and sell, from time to time through Wainwright shares of our common stock having an aggregate offering price of up to $4.1 million. We agreed to pay Wainwright a commission at a fixed rate of 3.0% of the aggregate gross proceeds from each sale of the shares under the Offering Agreement. As of the date hereof, we sold 1,833,532 shares pursuant to the Offering Agreement for aggregate gross proceeds of approximately $3,127,000.

Net cash used in operating activities was $5,142,000 for the year ended December 31, 2025 compared to $3,092,000 for the year ended December 31, 2024. The increase in cash used in operating activity is attributable to the increase in the net loss, impairment charge, share-based compensation, amortization of intangibles assets of New Percentil and ShoeSizeMe offset by net working assets.

Net cash flow used in investing activities was $196,000 for the year ended December 31, 2025 compared to net cash provided by investing activities of $53,000 for the year ended December 31, 2024. The net cash provided to investing activities for the year ended December 31, 2025 was the result of the acquisition of New Percentil and ShoeSizeMe.

Net cash provided by financing activities was $2,995,000 for the year ended December 31, 2025 compared to net cash of $5,594,000 for the year ended December 31, 2024. The net cash provided by financing activities for the year ended December 31, 2025 was the result of the proceeds from the sale of ordinary shares from the Offering Agreement with Wainwright offset by the payment of loans.

We expect that we will continue to generate losses and negative cash flows from operations for the foreseeable future. Based on the projected cash flows and cash balances as of December 31, 2025, we believe our existing cash will not be sufficient to fund operations for a period of more than 12 months. As a result, there is substantial doubt about our ability to continue as a going concern . We will need to raise additional capital, which may not be available on reasonable terms or at all. Additional capital would be used to accomplish the following:

	●	finance our current operating expenses;
	●	pursue growth opportunities;
	●	hire and retain qualified management and key employees;
	●	respond to competitive pressures;
	●	comply with regulatory requirements; and
	●	maintain compliance with applicable laws.

Current conditions in the capital markets are such that traditional sources of capital may not be available to us when needed or may be available only on unfavorable terms. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets, economic conditions, the Russian invasion of Ukraine, the security situation in Israel, and a number of other factors, many of which are outside our control, and on our financial performance. Accordingly, we cannot assure you that we will be able to successfully raise additional capital at all or on terms that are acceptable to us. If we cannot raise additional capital when needed, it may have a material adverse effect on our business, results of operations and financial condition.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities could result in substantial dilution for our current stockholders. The terms of any securities issued by us in future capital transactions may be more favorable to new investors, and may include preferences, superior voting rights and the issuance of warrants or other derivative securities, which may have a further dilutive effect on the holders of any of our securities then-outstanding. We may issue additional shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock in connection with hiring or retaining personnel, option or warrant exercises, future acquisitions or future placements of our securities for capital-raising or other business purposes. The issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline and existing stockholders may not agree with our financing plans or the terms of such financings. In addition, we may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial condition. Furthermore, any additional debt or equity financing that we may need may not be available on terms favorable to us, or at all. If we are unable to obtain such additional financing on a timely basis, we may have to curtail our development activities and growth plans and/or be forced to sell assets, perhaps on unfavorable terms, or we may have to cease our operations, which would have a material adverse effect on our business, results of operations and financial condition.

We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

Recently Issued Accounting Pronouncements

Certain recently issued accounting pronouncements are discussed in Note 2, Significant Accounting Policies, to the consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

Application of Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles issued by the Financial Accounting Standards Board, or FASB. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies were revenue from contracts with customers which are more fully described in the notes to our financial statements included herein. We believe these accounting policies discussed below are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management's estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate; and (2) changes in the estimate could have a material impact on our financial condition or results of operations.

Goodwill impairment assessment

We determine the fair value of our reporting units using the income approach. According to the income, we use discounted cash flows to estimate the fair value. Cash flow projections require us to make significant 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, adjusted for the relevant risk associated with business-specific characteristics.

Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to the discount rate, the terminal growth rate and the revenue growth rate.

Based on our analysis, we the carrying value of the fashion e-commerce 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. and an impairment charge of $144,000 was recorded.