Business Context and Reporting Period
Company: TopSpin Medical, Inc. (Note: Request metadata listed "My Size, Inc.", but the filing text identifies the registrant as TopSpin Medical, Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: June 2, 2009
Event: Entry into a Material Definitive Agreement (Item 1.01). On June 2, 2009, TopSpin Medical (Israel) Ltd., a wholly-owned subsidiary, entered into a share purchase and investment agreement to acquire a controlling interest in Kiryat Anavim – Silicon Technologies, Ltd. ("KAST").
Key Financial Metrics and Transaction Details
The filing details a specific acquisition transaction rather than general financial performance metrics (revenue, profit, cash flow) for the reporting period. Key financial terms of the agreement include:
- Acquisition Stake: Purchase of 89% of KAST's issued common shares and 65.93% on a fully diluted basis.
- Direct Cash Consideration: $10,000 paid to the seller (Anavid).
- Debt Assumption/Expense Payment: Approximately $205,975 (NIS 810,000) paid to KAST to satisfy existing expenses.
- Indirect Consideration: Approximately $254,291 (NIS 1,000,000) plus expenses paid by KAST to Anavid, funded by the Subsidiary.
- Debt Instruments Issued:
- Promissory note: Approximately $190,718 (NIS 750,000) in favor of Anavid.
- Bank guaranty: Approximately $25,429 (NIS 100,000) in favor of Anavid.
- Warrant Issuance: Warrant issued to Ahzakot to purchase up to 35 common shares of KAST at NIS 1 per share.
Material Changes and Conditions
The transaction is subject to several material conditions precedent, including:
- Completion of due diligence by the Company and Subsidiary.
- Release of Anavid from creditor obligations estimated at approximately $475,512 (NIS 1,869,953).
- Execution of employment agreements for KAST executives and directors.
- Termination of a Founders' Agreement.
- Post-Closing Obligation: The Subsidiary must secure a release from Hamit Hevrah LeSachar Mimun VeHackarah Ltd. regarding equipment lease obligations valued at approximately $170,755 (NIS 671,495) within one year of closing.
Outlook, Risks, and Management Commentary
Control Rights: The agreement grants the Subsidiary the right to appoint members of KAST's Board of Directors, along with preemptive and drag-along rights.
Termination Risk: The Subsidiary retains the right to terminate the agreement if KAST's relationship with its primary customer, Born Free Holdings Ltd, is terminated.
Future Liquidity Events: The warrant issued to Ahzakot becomes exercisable on the third anniversary of closing, or earlier upon an IPO, merger, or asset sale of KAST.
Financial Statements: The filing does not provide updated revenue, profit, or cash flow statements for TopSpin Medical, Inc. for the period; it focuses solely on the terms of the definitive agreement.
Investor Verification Checklist
- Verify the completion status of the due diligence and the release of Anavid from the ~$475,512 in creditor obligations.
- Confirm the financial health and customer concentration risk of KAST, specifically the status of its contract with Born Free Holdings Ltd.
- Assess the impact of the new promissory note (~$190,718) and bank guaranty (~$25,429) on the Company's liquidity and debt covenants.
- Monitor the timeline for securing the Hamit Release (~$170,755 obligation) within the required one-year window.
- Review the full text of the Share Purchase and Investment Agreement (Exhibit 10.1) for detailed indemnification and governance clauses.