Business Context and Reporting Period
My Size, Inc. (MYSZ), a Delaware corporation, filed this Form 8-K on February 7, 2022, to report the completion of an asset acquisition. The Company's Israeli subsidiary, My Size Israel 2014 Ltd., acquired 100% of the equity of Orgad International Marketing Ltd. ("Orgad") on the same date.
Key Financial Metrics and Transaction Terms
The filing details the consideration for the acquisition of Orgad rather than the Company's consolidated financial performance for a reporting period. The total consideration structure includes:
- Cash Consideration: Up to US$1,000,000, payable in three installments:
- US$300,000 at closing.
- US$350,000 on the two-year anniversary (subject to revenue targets and adjustments).
- US$350,000 on the three-year anniversary (subject to revenue targets and adjustments).
- Equity Consideration: An aggregate of 2,790,049 shares of My Size, Inc. common stock.
- 50% issued at closing.
- Remaining 50% issued in eight equal quarterly installments over two years (subject to adjustments).
- Earn-out: 10% of Orgad's operating profit for the years 2022 and 2023.
The filing text does not provide clear values for the Company's current revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes
The primary material change is the expansion of the Company's operations through the acquisition of Orgad. The transaction closed immediately upon the signing of the Share Purchase Agreement. The sellers, Amar Guy Shalom and Elad Bretfeld, have entered into employment agreements with Orgad and six-month lock-up agreements with the Company.
Guidance, Risks, and Contingencies
Contingencies and Conditions:
- Future cash and equity payments are contingent upon the sellers remaining actively engaged with Orgad at the time of payment, unless resignation is due to material salary reduction or adverse position changes.
- The second and third cash installments are subject to meeting certain revenue targets and downward post-closing adjustments.
- Equity installments are subject to downward post-closing adjustments.
Regulatory and Financial Reporting:
- The issuance of equity consideration is exempt from registration under Section 4(a)(2) of the Securities Act.
- Financial statements of the acquired business and pro forma financial information are not included in this filing; the Company intends to file these within 71 calendar days via an amendment.
Risks: The agreement includes customary non-competition and non-solicitation provisions for the sellers.
Investor Verification Checklist
- Verify the specific revenue targets required to trigger the US$700,000 in deferred cash payments.
- Review the forthcoming amendment (due within 71 days) for Orgad's historical financial statements and pro forma impact on My Size, Inc.
- Confirm the exact number of shares issued at closing versus those scheduled for future issuance.
- Assess the impact of the 10% operating profit earn-out on future earnings per share.