My Size, Inc. Goodwill & Intangibles Disclosure

NOTE 7 – Goodwill and other Intangible assets

 

A.	Identified intangible assets

 

Schedule of Intangible assets

 

SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS

		Selling Platform				Technology				Customer Relationships				Other				Total
		Thousands USD				Thousands USD				Thousands USD				Thousands USD				Thousands USD
Cost
As of January 1, 2023			346				311				791				84				1,532
Effect of changes in exchange rates			(13	)			10				25				2				24
As of December 31, 2023			333				321				816				86				1,556
Effect of changes in exchange rates			(2	)			(19	)			(48	)			(5	)			(74	)
As of December 31, 2024			331				302				768				81				1,482
Goodwill and intangible assets, Cost, beginning balance			331				302				768				81				1,482
Amortization
As of January 1, 2023			(109	)			(15	)			(27	)			(4	)			(155	)
Amortization for the year			(111	)			(62	)			(112	)			(17	)			(302	)
Effect of changes in exchange rates			7				(3	)			(6	)			-				(2	)
As of December 31, 2023			(213	)			(80	)			(145	)			(21	)			(459	)
Amortization for the year			(109	)			(55	)			(113	)			(17	)			(294	)
Effect of changes in exchange rates			-				7				12				2				21
As of December 31, 2024			(322	)			(128	)			(246	)			(36	)			(732	)
Goodwill and intangible assets, Amortization, ending balance			(322	)			(128	)			(246	)			(36	)			(732	)
Carrying amount
As of December 31, 2023			120				241				671				65				1,097
As of December 31, 2024			9				174				522				45				750
Goodwill and intangible assets, Carrying amount, ending balance			9				174				522				45				750

 

Amortization

 

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

 

SCHEDULE OF AMORTIZATION EXPENSES INTANGIBLE ASSETS

		Line Item		December 31, 2024				December 31, 2023
Selling platform		Costs of revenues			109				111
Trademark		Sales and marketing			17				17
Technology		Costs of revenues			55				62
Customer relationships		Sales and marketing			113				112
Total amortization expenses					294				302

 

Future amortization expenses are expected to be as follows:

 

SCHEDULE OF FUTURE AMORTIZATION EXPENSES

		2025				2026				2027				2028				2029				Thereafter				Total
Future amortization expenses			160				151				146				135				108				50				750

 

In the fourth quarter of 2024, the Company performed the annual assessment of the useful life of its finite-lived intangibles. The Company updated the useful life of its technology intangibles as a result of analyzing recent quantitative and qualitative observations in the market and factors impacting our business.  The change in estimate will be accounted for prospectively.  The weighted average remaining life was increased from approximately 3 years to 7 years to reflect the new estimated useful lives. The Company estimates that there will be an approximately 55-60% decrease to annual amortization expense.

 

b.

Goodwill

 

The changes in the carrying amount of goodwill for the years ended December 31, 2024 and 2023 were as follows:

 

SCHEDULE OF GOODWILL

		Fashion and equipment e-commerce platform				SaaS Solutions				Total
Balance as of December 31, 2022			138				1,257				1,395
Translation differences			(4	)			38				34
Goodwill impairment			-				(671	)			(671	)
Balance as of December 31, 2023			134				624				758
Translation differences			(1	)			7				6
Goodwill impairment			-				(631	)			(631	)
Balance as of December 31, 2024			133				-				133

 

The Company operates its business through two reporting segments: (i) fashion and equipment e-commerce platform, and (ii) SaaS based innovative artificial intelligence driven measurement solutions See Note 16 for additional segment information.

 

 

MY SIZE, INC. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

U.S. dollars in thousands (except share data and per share data)

 

NOTE 7 – Goodwill and other Intangible assets (Cont.)

 

The Company determines the fair value of its reporting units using the income approach. According to the income, the Company uses discounted cash flows to estimate the fair value. Cash flow projections are based on the Company’s estimates of revenue growth rates and operating margins, taking into consideration the industry’s and market’s conditions. The discount rate used is based on the weighted average cost of capital (“WACC”), adjusted for the relevant risk associated with business-specific characteristics.

 

Goodwill impairment in 2023

 

The Company performed a quantitative assessment as of December 31, 2023 for the reporting units’ fair value.

 

Based on the December 31, 2023 revised discounted cash flows analysis, the Company recorded a goodwill impairment of $671 to its SaaS Solution reporting unit.

 

This, based the following assumptions:

SCHEDULE OF ESTIMATED FAIR VALUE

		Fashion and equipment e-commerce platform				SaaS Solutions
Discount rate			21.5	%			25	%
Terminal growth rate			3	%			3	%
Revenue growth rate			12.4%-50	%			15%-70	%

 

No goodwill impairment was recorded for the Fashion and equipment e-commerce platform reporting unit.

 

Goodwill impairment in 2024

 

During the third quarter of 2024, the Company has experienced sustained decreases in the Company’s share price and a decline in actual and forecasted operating results, prompting impairment assessments of goodwill and long-lived assets including definite-lived intangibles.

 

The Company updated the forecasted future cash flows used in the impairment assessment, including revenues, margin, and capital expenditures to reflect current conditions. Other changes in valuation assumptions included selection of lower revenue growth rates based upon an assessment of current market conditions.

 

Considering the adverse developments in its businesses which are described above, the Company recorded a goodwill impairment of $631 in the third quarter, which was attributable to the entire remaining goodwill associated with its SaaS solutions segment (level 3 fair value measurement).

 

The resulting cash flow for the SaaS based innovative artificial intelligence driven measurement solutions reporting unit amounts were discounted using the same rate of 25% compared to prior quarters, the Company used revenue growth rate of 4%-32% compared to 15%-70% at December 2023. The Company still assumed a terminal growth rate of 3%.

 

For the tests performed in September 30, 2024, the resulting cash flow for the fashion and equipment e-commerce platform segment amounts were discounted using a slightly increased rate of 22% compared to 21.5% in prior quarters, The Company used a revenue growth rate of 7.5%-36.5% compared to 12.4%-50% at December 2023. The Company still assumed a terminal growth rate of 3%. No goodwill impairment was recorded for this reporting unit.

 

The Company performed it annual quantitative assessment as of December 31, 2024 for the fashion and equipment e-commerce platform reporting unit fair value. The estimated fair value of the fashion and equipment e-commerce platform reporting unit exceeded its estimated carrying amount by 5%.

 

This was based on the following assumptions:

 

MY SIZE, INC. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

U.S. dollars in thousands (except share data and per share data)