Business Context and Reporting Period
This Form 8-K was filed by Muscle Maker, Inc. (trading symbol: GRIL) on March 25, 2021, reporting events occurring on March 21, 2021. The Company is an emerging growth company incorporated in Nevada. The filing details a strategic acquisition by the Company's wholly-owned subsidiary, Superfit Foods LLC, to expand its prepared health food meal sales, delivery, catering, and subscription business.
Key Financial Metrics and Transaction Details
The filing discloses a specific asset purchase transaction rather than periodic financial performance metrics such as revenue, profit, or cash flow. The transaction terms are as follows:
- Acquisition Target: Operating materials and intellectual property of "Superfit Foods" from Superfit Foods, LLC (Florida) and Jared Graybeal.
- Cash Consideration: $500,000 paid to the Seller.
- Equity Consideration: 268,240 shares of common stock issued to the Guarantor (Jared Graybeal).
- Contingent Consideration: An additional $25,000 in common stock to be issued to the Seller within sixty days of closing, subject to post-closing conditions.
- Significance: The acquisition is deemed not significant pursuant to Rule 1-02(w) of Regulation S-X; therefore, no financial statements of the acquired business are required.
Material Changes and Covenants
The primary material change is the expansion of the Company's asset base and operational capabilities through the acquisition of the Superfit Foods brand assets. A key covenant included in the agreement requires the Guarantor to refrain from consulting, sponsoring, or providing services to any direct competitor of the subsidiary for a period of three years from the closing date.
Guidance, Risks, and Contingencies
The filing does not provide updated financial guidance or outlook. The primary contingency noted is the potential issuance of an additional $25,000 in stock, which is dependent on the satisfaction of certain post-closing conditions. The agreement includes customary representations, warranties, and indemnification provisions for breaches by either party.
Investor Verification Checklist
- Verify the exact closing date of the Asset Purchase Agreement to determine the vesting timeline for the contingent $25,000 stock issuance.
- Confirm the total number of shares outstanding post-transaction to assess the dilution impact of the 268,240 shares issued.
- Review the full text of the Asset Purchase Agreement (Exhibit 10.1) for specific details on the "post-closing conditions" and the scope of the non-compete covenant.
- Monitor future filings for any press releases or updates regarding the integration of the Superfit Foods assets into the Company's operations.