Business Context and Reporting Period
This Form 8-K Current Report, filed on May 6, 2020, covers events occurring on May 8, 2020, for My Size, Inc., a Delaware corporation listed on the Nasdaq Capital Market under the symbol MYSZ. The filing primarily details the completion of a public equity offering and the company's efforts to regain compliance with Nasdaq listing standards.
Key Financial Metrics and Capital Structure
- Offering Proceeds: The Company raised net proceeds of approximately $4.3 million after deducting placement agent fees and offering expenses.
- Capital Raised Structure:
- 1,925,001 Units sold at $1.10 per unit (each consisting of one share of Common Stock and one Warrant).
- 2,620,453 Pre-funded Units sold at $1.099 per unit (each consisting of one Pre-funded Warrant and one Warrant).
- Warrant Issuance: An aggregate of 4,545,454 Warrants were issued to purchase Common Stock at an exercise price of $1.10 per share, exercisable immediately and expiring in five years.
- Transaction Costs: Total fees paid to the placement agent, H.C. Wainwright & Co., LLC, included a $350,000 cash placement fee (7.0% of gross proceeds), a $50,000 management fee (1.0%), $35,000 for non-accountable expenses, $70,000 for legal fee reimbursement, and $12,900 in closing fees.
- Placement Agent Compensation: The placement agent received warrants to purchase up to 272,727 shares (6.0% of gross proceeds) with an exercise price of $1.375 per share.
Note: This filing does not provide specific revenue, profit, cash flow, margin, or debt figures for the reporting period.
Material Changes and Nasdaq Compliance
The most significant material change is the successful completion of the equity offering, which was executed to address a prior deficiency in stockholders' equity. Previously, on November 19, 2019, the Company was notified by Nasdaq that it failed to meet the minimum $2.5 million stockholders' equity requirement for continued listing as of September 30, 2019. The Company had been granted an extension until May 18, 2020, to regain compliance. Management believes the proceeds from this offering satisfy the equity requirement and all other applicable criteria for continued listing on the Nasdaq Capital Market.
Outlook, Management Commentary, and Covenants
- Use of Proceeds: The Company intends to use the net proceeds for the establishment of a joint venture, working capital, and general corporate purposes.
- Lock-up and Restrictions: Under the Securities Purchase Agreement, the Company is prohibited from issuing Common Stock or convertible securities for 90 days following the agreement date. Additionally, the Company is prohibited from entering into variable rate transactions for 12 months, subject to exceptions.
- Ownership Limitations: Warrant holders cannot exercise rights if doing so would result in beneficial ownership exceeding 4.99% (or 9.99% at the holder's election) of outstanding shares, unless notice is provided and a 61-day waiting period is observed for increases.
- Regulatory Status: The Company is awaiting formal confirmation from Nasdaq that the listing deficiency matter is closed.
Investor Verification Checklist
- Verify the formal confirmation from Nasdaq regarding the closure of the stockholders' equity deficiency notice.
- Confirm the specific terms and timeline for the "joint venture" mentioned as a primary use of proceeds.
- Review the full text of the Securities Purchase Agreement (Exhibit 10.1) for detailed covenants and termination rights.
- Monitor the dilution impact of the 4.5+ million warrants issued and the 272,727 placement agent warrants.
- Check subsequent filings for the actual cash balance and working capital status post-offering.