My Size, Inc. MYSZ US Equity☆

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

FORM

10-K

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For

the fiscal year ended December 31, 2022

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For

the transition period from ________ to _________

Commission

file number 001-37370

MY

SIZE, INC.

(Exact

name of registrant as specified in charter)

(Address of principal executive offices) (Zip code)

+972-3-

6009030

(Registrant’s

telephone number, including area code)

Securities

registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of Each Exchange on Which Registered

Common Stock, par value $0.001 per share MYSZ The Nasdaq Capital Market

Securities

registered pursuant to Section 12(g) of the Act: None.

Indicate

by check mark whether the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange

Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)

has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule

405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant

was required to submit and post such files). Yes ☒ No ☐

Indicate

by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, a smaller reporting

company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller

reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller Reporting Company ☒

Emerging Growth Company ☐

If

an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate

by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

Indicate

by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness

of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered

public accounting firm that prepared or issued its audit report. ☐

If

securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant

included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation

received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

The

aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2022, the last

business day of the registrant’s most recently completed second fiscal quarter, was approximately $25,551,906.

Number

of shares of common stock outstanding as of March 31, 2023 was 2,446,780.

Documents

Incorporated by Reference: None.

Table

of Contents

Part I

Item 1. Business 2

Item 1A. Risk Factors 18

Item 1B. Unresolved Staff Comments 41

Item 2. Properties 41

Item 3. Legal Proceedings 41

Item 4. Mine Safety Disclosures 42

Part II

Item 6. Selected Financial Data 43

Item 7A. Quantitative and Qualitative Disclosures about Market Risk 50

Item 8. Financial Statements and Supplementary Data F-1

Item 9A. Controls and Procedures 51

Item 9B. Other Information 51

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 51

Part III

Item 10. Directors, Executive Officers and Corporate Governance 52

Item 11. Executive Compensation 57

Item 14. Principal Accounting Fees and Services 65

Part IV

Item 15. Exhibits, Financial Statement Schedules 66

Signatures 69

i

PART

I

In

this Annual Report on Form 10-K, unless the context requires otherwise, the terms “we,” “our,” “us,”

or “the Company” refer to MySize, Inc., a Delaware corporation, and its subsidiaries, including MySize Israel 2014 Ltd. My Size LLC, Orgad International Marketing Ltd., or Orgad, and Naiz Bespoke

Technologies, S.L, or Naiz, taken

as a whole.

References

to “U.S. dollars” and “$” are to currency of the United States of America, and references to “NIS”

are to New Israeli Shekels. Unless otherwise indicated, U.S. dollar translations of NIS amounts presented in this Annual Report on Form

10-K for the year ended on December 31, 2022 are translated using the rate of NIS 3.358 to $1.00.

All information in this Annual

Report on Form 10-K relating to shares or price per share reflects the 1-for-25 reverse stock split effected by us on December 8, 2022.

CAUTIONARY

NOTE ON FORWARD-LOOKING STATEMENTS

This

Annual Report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section

21E of the Exchange Act. Any statements in Annual Report on Form 10-K about our expectations, beliefs, plans, objectives, assumptions

or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always,

made through the use of words or phrases such as “believe,” “will,” “expect,” “anticipate,”

“estimate,” “intend,” “plan” and “would.” For example, statements concerning financial

condition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management,

markets for our common stock and future management and organizational structure are all forward-looking statements. Forward-looking statements

are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results,

levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements

expressed or implied by any forward-looking statement.

Any

forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout this Annual Report on

Form 10-K. Some of the risks, uncertainties and assumptions that could cause actual results to differ materially from estimates or projections

contained in the forward-looking statements include but are not limited to:

● risks related to our ability to continue as a going concern;

● the new and unproven nature of the measurement technology markets;

● our ability to achieve customer adoption of our products;

● our ability to realize the benefits of our acquisitions of Orgad and Naiz;

● our dependence on assets we purchased from a related party;

● our ability to enhance our brand and increase market awareness;

● the success of our strategic relationships with third parties;

● information technology system failures or breaches of our network security;

● competition from competitors;

● our reliance on key members of our management team;

● current or future litigation;

● the impact of the political and security situation in Israel on our business.

The

foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any forward-looking

statements. You should read this Annual Report on Form 10-K and the documents that we reference herein and have filed as exhibits to

the Annual Report on Form 10-K, completely and with the understanding that our actual future results may be materially different from

what we expect. You should assume that the information appearing in this Annual Report on Form 10-K is accurate as of the date hereof.

Because the risk factors referred to in this Annual Report on Form 10-K, could cause actual results or outcomes to differ materially

from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking

statements.

Further,

any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking

statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated

events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot

assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results

to differ materially from those contained in any forward-looking statements. We qualify all of the information presented in this Annual

Report on Form 10-K, and particularly our forward-looking statements, by these cautionary statements.

ITEM

1. BUSINESS

Overview

We

are an omnichannel e-commerce platform and provider of AI-driven apparel sizing and digital experience solutions that drive revenue growth

and reduce costs for our business clients for online shopping and physical stores.

Our

flagship innovative tech products, MySizeID, enables shoppers to generate highly accurate measurements of their body to find the accurate

fitting apparel by using our application on their mobile phone or through MySizeID Widget: a simple questionnaire which uses a database

collected over the years.

MySizeID

syncs the user’s measurement data to a sizing chart integrated through a retailer’s (or a white labeled) mobile application,

and only presents items for purchase that match their measurements to ensure a correct fit.

We

are positioning ourselves as a consolidator of sizing solutions and new digital experience due to new developments for the fashion industry

needs. Our other product offerings include First Look Smart Mirror for physical stores and Smart Catalog to empower brand design teams,

which are designed to increase end consumer satisfaction, contributing to a sustainable world and reduce operation costs.

Recent

Developments

Orgad

Acquisition

On

February 7, 2022, My Size Israel 2014 Ltd, or 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 111,602 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.

The

Orgad Cash Consideration is payable to the Orgad Sellers in three installments, according to the following payment schedule: (i) $300,000

which we paid upon closing, (ii) $350,000 payable on the two-year anniversary of the closing, and (iii) $350,000 payable on the three-year

anniversary of the closing, provided that in the case of the second and third installments certain revenue targets are met and subject

further to certain downward post-closing adjustment.

The

Equity Consideration is payable to the Orgad Sellers according to the following payment schedule: (i) 55,801 shares were issued at

closing, and (ii) 55,801 shares will be issued in eight equal quarterly installments until the lapse of two years from closing,

subject to certain downward post-closing adjustment.

The

payment of the second and third cash installments, the equity installments and the earn out are 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, 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 94,632 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.

Warehouse

Fire

On January 2, 2023, Orgad experienced a fire at its warehouse in Israel.

we are not aware of any casualties or injuries associated with the fire. We shifted Orgad’s operation to its headquarters. The value

of the inventory that was in the warehouse was approximately $450,000. We believe that this incident did not affect the future sales results

of Orgad for the year of 2023. The inventory was not insured and it is too early to determine the potential impact of this incident on

the other parties that were involved in the incident (lessor and others that leased properties near the warehouse).

January

2023 Financing

On

January 10, 2023, we entered into a securities purchase agreement, or the

RD Purchase Agreement, pursuant to which we agreed to sell and issue in the RD Offering an aggregate of 162,000 of our shares of common

stock, or the RD Shares, and pre-funded warrants, or the Pre-funded Warrants, to purchase up to 279,899 shares of common stock and, in

a concurrent private placement, unregistered warrants to purchase up to 883,798 shares of common stock, or the RD Warrants, consisting

of Series A warrants, or Series A Warrants, to purchase up to 441,899 shares of common stock and Series B warrants, or Series B Warrants,

to purchase up to 441,899 shares of common stock, at an offering price of $3.055 per RD Share and associated Series A and Series B Warrants

and an offering price of $3.054 per Pre-funded Warrant and associated Series A and Series B Warrants.

In

addition, we entered into a securities purchase agreement, or the PIPE

Purchase Agreement, and together with the RD Purchase Agreement, the Purchase Agreements, pursuant to which we agreed to sell and issue

in the PIPE Offering an aggregate of up to 540,098 unregistered Pre-funded Warrants and unregistered warrants to purchase up to an aggregate

of 1,080,196 shares of common stock, or the PIPE Warrants and together with the RD Warrants, the Warrants, consisting of Series A Warrants

to purchase up to 540,098 shares of common stock and Series B Warrants to purchase up to 540,098 shares of common stock at an offering

price of $3.054 per Pre-funded Warrant and associated Series A and Series B Warrants.

The

Pre-funded Warrants are immediately exercisable at an exercise price of $0.001 per share and will not expire until exercised in full.

The Warrants are immediately exercisable upon issuance at an exercise price of $2.805 per share, subject to adjustment as set forth therein.

The Series A Warrants have a term of five and one-half years from the date of issuance and the Series B Warrants have a term of 28 months

from the date of issuance. The Warrants may be exercised on a cashless basis if there is no effective registration statement registering

the shares underlying the warrants.

In

connection with the PIPE Purchase Agreement, we entered into a registration

rights agreement, or the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, we are required to file a resale

registration statement, or the Registration Statement, with the Securities and Exchange Commission, or the SEC, to register for resale

the shares issuable upon exercise of the unregistered Pre-funded Warrants and the Series A and Series B Warrants, within 20 days of the

signing date of the PIPE Purchase Agreement, or the Signing Date, and to have such Registration Statement declared effective within 60

days after the Signing Date in the event the Registration Statement is not reviewed by the SEC, or 90 days of the Signing Date in the

event the Registration Statement is reviewed by the SEC. we will be obligated to pay certain liquidated damages if we fail to maintain

the effectiveness of the Registration Statement.

The

Purchase Agreements and the Registration Rights Agreements also contain

representations, warranties, indemnification and other provisions customary for transactions of

this nature. In addition, subject to limited exceptions, the Purchase Agreements provide that for a period of one year following the closing

of the Offerings, we will not effect or enter into an agreement to effect a “variable rate transaction” as defined in the

Purchase Agreements.

Aggregate

gross proceeds to the Company in respect of the Offerings was approximately $3.0 million, before deducting fees payable to the placement

agent and other offering expenses payable by the Company.

We

also entered into a letter agreement, or the Engagement Agreement, with H.C. Wainwright & Co., LLC, or Wainwright, pursuant to which

Wainwright agreed to serve as the exclusive placement agent for the Company in connection with the Offerings. We paid Wainwright

a cash placement fee equal to 7% of the aggregate gross proceeds raised in the Offerings, a management fee of 1% of the aggregate gross

proceeds raised in the Offerings, a non-accountable expense allowance of $85,000 and clearing fees of $15,950. Wainwright also received

placement agent warrants, or the Placement Agent Warrants, with substantially the same terms as the Series A Warrants issued in the Offering

in an amount equal to 7% of the aggregate number of Shares and Pre-funded Warrants sold in the Offerings, or 68,740 shares, at an exercise

price of $3.8188 per share and a term expiring on January 10, 2028.

Our

Solution

Our

cloud-based software platform provides highly accurate sizing and measurement with broad applications including the online fashion/apparel

industry, logistics and courier services and home DIY. Currently, we are mainly focusing on the e-commerce fashion/apparel industry.

This proprietary technology is driven by several patented algorithms which are able to calculate and record measurements in a variety

of novel ways. Although specific functionality varies by product, we believe that our core solutions address the need for highly accurate

measurements in a variety of consumer friendly, every day uses.

We

have developed three products, MySizeID for the fashion/apparel industry, BoxSize for the logistics and courier services

market and SizeUp for the home DIY market.

The

following are some select key features of our solutions:

Our

Growth Strategy

We

aim to drive revenue primarily through penetration of the U.S. and Europe markets through a business to business to consumer (B2B2C)

model in the verticals we are targeting. We are pursuing the following growth strategies:

Market

Opportunity

The

global e-commerce market was $5.7 trillion in 2022, and the industry is expected to grow significantly in the coming years with no signs

of slowing down. Market specialists expect a compound annual growth rate of 27.43% from 2023 to 2028: according to data from Statista,

the market is expected to reach $6.5 trillion in 2023. While many sectors have found ways to increase revenue through e-commerce, e-commerce

is still plagued by issues that cut into profits and negatively impact the bottom line, such as customer returns, low consumer conversion,

and associated restocking and shipping costs.

Fashion/Apparel

Since

the onset of the COVID-19 pandemic, an immense shift to digital was recorded, with 85.9% growth vs. pre-pandemic, according to Mastercard,

and over 2 billion people worldwide who shop online, according to data from Oberlo. In November 2022, online shoppers broke records with

$11.3 billion in spending on Cyber Monday, driving 5.8% year-over-year growth and making the day the biggest online shopping day of all

time, according to Adobe Analytics.

In

2021, fashion companies invested between 1.6% and 1.8% of their revenues in technology, according to Mckinsey, and are expected to double

the investment by 2030 in order to keep up with digital natives and keep a competitive edge. Personalization in e-commerce and hybrid

connectivity in brick-and-mortar retail are two key themes in the future of fashtech, according to Mckinsey’s 2022 State of Fashion

Technology.

In

the upcoming years, inflation is expected to impact the fashion world. As prices for goods increase, the challenge will be to inspire

confidence in consumers, via different smart digital tools. Brands will need to embrace creative digital tools and new channels to deepen

customer relationships, and as Mckinsey forecasts in their State of Fashion report for 2023, they will need to execute on priorities

such as sustainability and digital acceleration.

The

global fashion e-commerce market size is expected to grow from $744.4 billion in 2022 to $821.19 billion in 2023 at a compound annual

growth rate of 10.3%. In 2027, the market size is expected to grow to $1,222.32 billion, at a compound annual growth rate of 10.5%, according

to BRC.

Based

on the importance which shoppers attribute to free shipping - 50% of cart abandonment rate is due to extra shipping costs (Baymard Institute)

- the need for fashion retailers to substantiate the optimal size for a customer, thus minimizing returns, has never been more crucial.

As

brands move online or significantly expand their online presence, we believe that developing innovative ways to connect with shoppers,

both online and offline, has become a top priority.

Shipping/Parcel

According

to Pitney Bowes, parcel revenue in 13 major countries around the world increased by 17% year over year from $420 billion in 2020 (reflecting

131 billion parcels) to $491 billion in 2021 (reflecting 159 billion parcels). In the shipping/parcel industry, the dimensions of a package

are critical. It is not merely the measurement of a package or box – but rather the amount of space that the package or box will

take up on a truck, airplane, or ship that will be transporting the package or box. Far too often, retailers use unfit packaging for

their items, adding additional costs in materials and shipping fees.

DIY

Similar

to issues in the apparel and fashion market, big box, hardware, furniture, and DIY stores are plagued by returns due to incorrect fit

and measurements. In an industry where precise measurement for projects is an absolute necessity, e-commerce has not grown as quickly

as in other industries which we believe is due to lack of consumer confidence in measurements at home and buying the correct item online.

MySizeID

We

have released the MySizeID app for both iOS and Android which assists consumers to take highly accurate measurement of their own

body in order to size clothing in the best way possible without the need to try the clothes on before purchasing. MySizeID is

designed to simplify the process of purchasing clothes online and significantly reduce the rate of returns of poor-fitting clothing.

During 2022, MySizeID delivered over 23.5 million size recommendations.

The

application is the result of a research and development effort that combines:

MySizeID

allows consumers to create a secure, online profile of their personal measurements, which can then be utilized, with partnered online

retailers, to ensure that no matter the manufacturer or size chart, they will get the right fit. MySizeID operates based on the

use of existing sensors in smart phones which enable, through a specific purpose application, the measurement of the body of any consumer

by moving the smartphone along his or her body. The MySizeID application does not rely on user photographs or any additional hardware;

all a user needs to do is scan their body with their smartphone and the application records their measurements. The measurements can

then be saved in our database in the cloud, enabling the user to search for clothes in various retailer websites without worrying about

size. When a search is made, the retailer will connect to our cloud database, and then provide results based on the user’s measurements

and other parameters as he or she may have defined. This data is also saved for use when a customer enters a brick-and-mortar store to

help serve the customer more efficiently and to provide a better shopping experience.

Figure

1: Screenshot of MySizeID on smartphone and e-commerce website

As

part of the integration process, we offer to the retailer five main components:

The

widget has two features:

AI

Wizard mode - allows the user to obtain size from the following parameters: gender, height, weight, belly shape, hip shape and bra

size only. The gender, height and weight questions are mandatory, while the body shape questions are optional and can be added to increase

accuracy for specific apparel categories.

Guest

mode - allows a user that does not wish to sign up to MySizeID as a user to obtain size recommendations as well.

Use

your own device - using MySizeID instore solution, shoppers can receive size recommendations for all store items, when shopping in the

offline stores. The shoppers can build their body profile using an easy to use 3 to 6 questions form, scan an item barcode and receive

a size recommendation for the scanned item based on their body profile and the item’s size chart.

Another

feature we added is the “in-between sizing” feature. Our system can detect a user that has body dimensions that place the

user in-between the clothes sizes being offered and lets the user know that. A user can then choose between the two sizes according to

the user’s fit preference (tight/loose/average).

In

addition, we have recently released our Instant-App feature which allows shoppers to generate their body measurements directly from our

widget, without the need to download our mobile app. Using this technology, the shoppers can create their online profile of their personal

measurements and complete a purchase faster and easier with minimum distractions.

The

body profile can be created while shoppers are viewing the page from their mobile phone, or by scanning a QR code on desktop that will

open the same page on the mobile phone.

Screenshot

of Instant-App widget on desktop on yumyumfashion website

Figure

3: Screenshot of Back-Office System

Illustration

of MySizeID “first look” smart mirror in a fashion store

We

are currently offering MySizeID technology to retailers through either a pay-per-use model or a monthly subscription model. In

our pay-per-use business model, every time the consumer obtains a recommended size, the retailer is charged for the usage.

BoxSize

BoxSize

is a parcel measurement application that can provide real-time logistic data on package volumes and transportation, resulting in

improved operational efficiency and reduced operating expenses. In addition, BoxSize allows customers to easily measure the size

of their parcel with their smartphone, calculate shipping costs and arrange for a convenient pick-up time for the package. BoxSize

is available both on iOS and Android.

In

2020 we released the “One Click” feature on BoxSize that enables the user to measure a package with just one swipe

of the handheld device. Previously, measurements through BoxSize would require three separate swipes.

Figure

4: Screenshot of BoxSize

Our

BoxSize mobile measurement solution is available on the Honeywell Marketplace. In addition, BoxSize was approved for Honeywell’s

Global Vendor Program, and is available to provide highly accurate mobile measurement solutions for thousands of Honeywell clients. We

also developed a new dashboard for the courier companies to have all the required data about each package in one place. It includes package

dimensions, pictures, scan geo location and more. The dashboard also let the courier use Webhooks, which allows him to get the information

from his own system.

In

2020, we announced our partnership with Datalogic, a company focused on the automatic data capture and process automation markets. The

partnership makes our BoxSize measurement solution available to thousands of Datalogic customers in the Transportation and Logistics

vertical.

Agreement

with Delhivery Private Limited, India

We

entered into an agreement with Delhivery Private Limited, one of the largest courier pickup, delivery, and online shipping services in

India. Delhivery’s reputation as a front-runner in delivery and logistics tech makes its decision to select Boxsize a particularly

strong testament to the value the solution provides. BoxSize provides Delhivery’s employees on the B2B side with critical

information that will allow them to effortlessly optimize loading efficiency and add even more real-time visibility to operations.

SizeUp

We

are working on additional consumer applications, including a DIY application. Our SizeUp application is a smart tape measure for

the business to consumer market which allows users to utilize their smartphone as a tape measure. The application provides measurements

with an accuracy of within two centimeters. Through the use of SizeUp, users will be able to visualize how an object or a piece

of furniture will fit in an existing room in their home or office. It also added Google Vision for image content analysis, object detection,

and title suggestions.

Currently

the SizeUp app for Android and iOS is available for free for the first 30 days, after which a user will be required to register

via e-mail and pay a one-time fee of $1.99 to continue using the application. To date, revenues from downloads have been minimal.

Research

and Development

Our

research and development team are responsible for the research, algorithm, design, development, and testing of all aspects of our measurement

platform technology. We invest in these efforts to continuously improve, innovate, and add new features to our solutions.

We

incurred research and development expenses of approximately $1.7 million

in 2022 and $4.25 million in 2021, relating to the development of its applications and technologies. The decrease from the corresponding

period primarily resulted from share based payment in amount of $2,618,000 attributed to the share issuance to Shoshana Zigdon under the

Amendment to Purchase Agreement dated May 26, 2021. We intend to continue to invest in our research and development capabilities to extend

our platform and bring our measurement technology to a broader range of applications.

In

2022, the R&D department experienced significant success in their efforts to improve the performance of their size recommendation

system. Through a combination of optimized algorithms and the incorporation of cutting-edge technologies, the team was able to achieve

a threefold increase in the system’s speed. This breakthrough not only makes the system one of the fastest and most accurate on

the market, but also reduced the operation costs, making it more cost-effective for businesses to use. Additionally, the solution is

now highly scalable, allowing it to easily adapt to the needs of businesses of any size. The R&D team is now focused on further improving

the system and exploring new applications for the technology.

Sales

and Marketing

In

2019, we launched a commercialization strategy that directs our sales efforts toward both sales to e-commerce players in specific

vertical markets such as fashion/apparel and shipping/delivery as well as to e-commerce third-party platform providers. As of March

15, 2023, our products are being sold in the following countries: US, UK, France, Netherlands, Spain, Portugal Turkey, Germany, Israel and Italy, generating customer leads, building out a sales pipeline, and developing customer

relationships.

We

believe an effective method to market our suite of products is for users to actively use and explore its capabilities. We encourage free

trials of one or more of our products in order to successfully convert those accounts to paid subscriptions.

Proprietary

Rights

We

rely on a combination of patent, copyright, trademark and trade secret laws in the United States and other jurisdictions, as well as

contractual protections, to protect our proprietary technology.

As

of December 31, 2022, we owned 18 issued patents: six in Europe, four in the U.S., three in each of Russia and Japan and one in each

of Canada and Israel which expire between January 20, 2033 and August 18, 2036, and we have two additional patent applications in process.

As of such date, we do not have any registered trademarks.

We

cannot provide any assurance that our proprietary rights with respect to our products will be viable or have value in the future since

the validity, enforceability and type of protection of proprietary rights in software-related industries are uncertain and still evolving.

Despite

our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use

information that we regard as proprietary. Policing unauthorized use of our products is difficult, and while we are unable to determine

the extent to which piracy of our software products exists, software piracy can be expected to be a persistent problem. In addition,

the laws of some foreign countries do not protect proprietary rights to as great an extent as do the laws of the United States, and effective

copyright, trademark, trade secret and patent protection may not be available in those jurisdictions. Our means of protecting our proprietary

rights may not be adequate to protect us from the infringement or misappropriation of such rights by others.

Further,

in recent years, there has been significant litigation in the United States involving patents and other intellectual property rights,

particularly in the software and Internet-related industries. We can become subject to intellectual property infringement claims as the

number of our competitors grows and our products and services overlap with competitive offerings. These claims, even if not meritorious,

could be expensive to defend and could divert management’s attention from operating our business. If we become liable to third

parties for infringing their intellectual property rights, we could be required to pay a substantial award of damages and to develop

non-infringing technology, obtain a license or cease selling the products that contain the infringing intellectual property. We may be

unable to develop non-infringing technology or obtain a license on commercially reasonable terms, if at all.

Government

Regulation

We

are subject to a number foreign and domestic laws and regulations that involve matters central to our business. These laws and regulations

may involve privacy, data protection, intellectual property, or other subjects. Many of the laws and regulations to which we are subject

are still evolving and being tested in courts and could be interpreted in ways that could harm our business. In addition, the application

and interpretation of these laws and regulations often are uncertain, particularly in the new and rapidly evolving industry in which

we operate. Because global laws and regulations have continued to develop and evolve rapidly, it is possible that we, our products, or

our platform may not be, or may not have been, compliant with each such applicable law or regulation.

In

particular, we are subject to a variety of federal, state and international laws and regulations governing the processing of personal

data. Many U.S. states have passed laws requiring notification to data subjects when there is a security breach of personally identifiable

data. There are also a number of legislative proposals pending before the U.S. Congress, various state legislative bodies and foreign

governments concerning data protection. In addition, data protection laws in Europe and other jurisdictions outside the United States

can be more restrictive than those within the United States, and the interpretation and application of these laws are still uncertain

and in flux.

For

example, the General Data Protection Regulation, or GDPR, which took effect on May 25, 2018, enhances data protection obligations for

entities that process personal data about individuals, including obligations to cooperate with European data protection authorities,

implement security measures and keep records of personal data processing activities. Noncompliance with the GDPR can trigger fines equal

to the greater of €20 million or 4% of global annual revenue. In addition, the California Consumer Privacy Act of 2018, or CCPA,

effective as of January 1, 2020, gives California residents expanded rights to access and require deletion of their personal information,

opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA

provides for civil penalties for violations, as well as a private right of action for data breaches, that is expected to increase data

breach litigation. Further, failure to comply with the Israeli Privacy Protection Law of 1981, and its regulations, as well as the guidelines

of the Israeli Privacy Protection Authority, may expose us to administrative fines, civil claims (including class actions) and in certain

cases criminal liability. Current pending legislation may result in a change of the current enforcement measures and sanctions. Given

the breadth and depth of changes in data protection obligations, meeting the requirements of GDPR and other applicable laws and regulations

has required significant time and resources, including a review of our technology and systems currently in use against the requirements

of GDPR and other applicable laws and regulations. We have taken various steps to prepare for complying with GDPR and other applicable

laws and regulations however there can be no assurance that these steps are sufficient to assure compliance. Further, additional EU laws

and regulations (and member states’ implementations thereof) further govern the protection of individuals and of electronic communications.

If our efforts to comply with GDPR or other applicable laws and regulations are not successful, we may be subject to penalties and fines

that would adversely impact our business and results of operations, and our ability to use personal data of individuals could be significantly

impaired.

Competition

We

operate in a highly competitive industry that is characterized by constant change and innovation. Changes in the applications and the

programing languages used to develop applications, devices, operating systems, and technology landscape result in evolving customer requirements.

Our competitors include True Fit, Fit analytics and 3DLook.

The

principal competitive factors in our market include the following:

● Integration

○ Easy 1 line of “all included” script implementation

● Technical Advantages

○ Ultra-Fast loading and size recommendation presenting

○ Restful API option (API integration with any website or app)

● Optimizations

○ Adjustments of size charts based on performance

○ Widget usage analysis by FashTech and BI teams

○ Automatic pairing of size charts with products/collections

● User Experience

○ Easy to use interface (10-15 seconds to receive size recommendations)

○ Option to add/deduct questions to/from widget wizards

● Digital operations expertise;

● Ease of use of products and platform capabilities;

● Total cost of ownership;

● Adherence to industry standards and certifications;

● Strength of sales and marketing efforts;

● Brand awareness and reputation; and

● Focus on customer success

We

believe we generally compete favorably with our competitors on the basis of these factors. We expect competition to increase as other