Company: MYSZ
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000990
Chunk: 29

Company: My Size, Inc.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1B
Chunk 29
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 are not recorded as an asset in its balance sheet. These
contributions for compensation represent defined contribution plans and expenses are recorded based on actual deposits.

    F-10

MY
SIZE, INC. AND ITS SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

k.
Research and development costs:

Research
and development costs are charged to the statement of operations, as incurred. Most of the research and development expenses are for
wages, related expenses and subcontractors.

Software
development costs also include costs to develop software to be used solely to meet internal needs and cloud-based applications used to
deliver our services. The Company capitalizes development costs related to these software applications once the preliminary project stage
is complete and it is probable that the project will be completed and the software will be used to perform the function intended. Costs
capitalized for developing such software applications were not material for the periods presented and therefore were not capitalized.

l.
Income taxes:

The
Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Companies’
tax returns. Deferred taxes are determined based on the difference between the financial statement carrying amount and the tax basis
of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company
assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based
upon the weight of available evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized.
The Company establishes a valuation allowance, if necessary, to reduce deferred tax assets to the amount more likely than not to be realized.
As of December 31, 2023, and 2022, a valuation allowance was established by the Company to reduce the deferred tax assets to the amount
supported by future reversals of existing temporary taxable differences.

The
Company implements a two-step approach to recognize and measure the benefit of its tax positions. The first step is to evaluate the tax
position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely
than not that, on an evaluation