Business Context and Reporting Period
Company: My Size, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: June 20, 2017
Reporting Period: Event date June 20, 2017; Report signed June 23, 2017.
Context: The Company, an emerging growth company incorporated in Delaware with principal offices in Israel, reports the resolution of a legal complaint filed on December 27, 2015, regarding the registration of shares purchased by a plaintiff in 2014.
Key Financial Metrics
The filing does not provide standard financial metrics such as revenue, profit, cash flow, margins, or total debt. The only specific financial figures disclosed relate to the settlement of the legal matter:
- Immediate Cash Obligation: NIS 325,000 (approximately USD $92,000) payable within 30 days.
- Share Issuance Obligation: 80,538 additional common shares to be issued within 60 days.
- Contingent Liability: Potential additional cash or share issuance if aggregate proceeds from the sale of Original and New Shares fall below NIS 1,600,000.
Material Changes
The primary material change is the conclusion of ongoing litigation through a settlement agreement. Previously, the Company was a defendant in a complaint alleging a failure to register shares for trade on the Tel Aviv Stock Exchange. Following completed mediation, the Company has agreed to specific financial and equity-based remedies to resolve the dispute.
Guidance, Outlook, and Risks
Settlement Terms and Risks:
- Payment Schedule: The Company must pay the "Down Payment" of NIS 325,000 within 30 days.
- Equity Issuance: The Company must issue 80,538 "New Shares" within 60 days. These shares will be registered, deposited in escrow, and sold for the plaintiff's benefit.
- Sale Restrictions: The New Shares are to be sold at a maximum aggregate price of NIS 10,000 or 2% of the average trading volume over the last 90 days (whichever is higher) in a single trading day.
- Default Risk: If the Company fails to issue the unrestricted New Shares within 60 days, the plaintiff retains the right to resume legal proceedings, provided the plaintiff deposits the Down Payment in escrow.
- Shortfall Provision: If the total proceeds from the sale of Original and New Shares are less than NIS 1,600,000, the Company must make up the difference in cash or additional shares at its discretion.
Management Commentary: The filing states that all pre-trial proceedings and evidence submissions were completed prior to the successful mediation.
Investor Verification Checklist
- Verify the Company's current cash position to ensure it can meet the NIS 325,000 payment obligation within 30 days.
- Confirm the timeline for the issuance and registration of the 80,538 New Shares to avoid the risk of resumed litigation.
- Monitor the trading volume of the Company's stock to calculate the potential maximum sale price of the New Shares and assess the likelihood of triggering the NIS 1,600,000 shortfall provision.
- Review the Company's authorized share count to ensure sufficient capacity exists to issue the additional shares without requiring shareholder approval.