Business Context and Reporting Period
Company: My Size, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: August 24, 2023
Event: Entry into a Material Definitive Agreement (Inducement Offer Letter) to facilitate the exercise of existing warrants and the issuance of new warrants.
Key Financial Metrics and Transaction Details
This filing details a capital raise transaction rather than periodic financial performance. Key metrics include:
- Expected Gross Proceeds: Approximately $4.2 million from the exercise of existing warrants.
- Existing Warrants Exercised: 2,018,012 shares at a reduced exercise price of $2.09 per share.
- New Warrants Issued: 5,367,912 shares at an exercise price of $2.09 per share.
- Placement Agent Fees: 7.0% cash fee plus 1.0% management fee on gross proceeds; additional 7.0% fee on future New Warrant exercises.
- Placement Agent Warrants: 141,261 shares at an exercise price of $2.6125 per share.
- Other Expenses: $85,000 for non-accountable expenses and $15,950 for clearing fees.
- Use of Proceeds: General corporate purposes.
Note: The filing does not provide current revenue, profit, cash flow, or debt levels.
Material Changes and Transaction Structure
The Company entered into an agreement with a holder of existing warrants (issued in 2020, 2021, and 2023) to induce cash exercise. The material changes include:
- Price Reduction: The exercise price for existing warrants was reduced to $2.09 per share (original prices ranged from $2.805 to $94.00).
- Share Issuance: The transaction results in the issuance of 2,018,012 shares upon exercise and the creation of 5,367,912 new warrant shares.
- Lock-up Provisions: The Company agreed not to issue common stock or equivalents for 45 days post-closing and not to effect Variable Rate Transactions for one year post-closing.
Guidance, Risks, and Contingencies
- Closing Date: Expected on or about August 28, 2023, subject to customary conditions.
- Stockholder Approval: Issuance of New Warrant Shares may require Nasdaq stockholder approval. If required, the Company must convene a meeting within 90 days of closing. If not required, warrants are immediately exercisable.
- Liquidity Risk: No established trading market exists for the New Warrants, and the Company does not intend to list them, resulting in extremely limited liquidity.
- Forward-Looking Statements: The closing is not guaranteed and is subject to contingencies. The Company disclaims any obligation to update forward-looking statements.
- Black Scholes Provision: In the event of a Fundamental Transaction, holders may elect to have the Company purchase unexercised warrants at their Black Scholes Value.
Investor Verification Checklist
- Verify the final closing date and confirmation of the $4.2 million gross proceeds.
- Confirm whether Nasdaq stockholder approval is required for the issuance of the 5,367,912 New Warrant Shares.
- Review the impact of the 2,018,012 new shares and potential 5,367,912 warrant shares on existing shareholder dilution.
- Monitor the Company's ability to file the required Form S-3 resale registration statement within 90 days of the Inducement Letter.
- Check for any subsequent filings regarding the satisfaction of closing conditions.