Business Context and Reporting Period
This Form 8-K filing by Muscle Maker, Inc. (trading symbol: GRIL) reports a material definitive agreement entered into on November 17, 2021. The company, incorporated in Nevada, is an emerging growth company. The filing details a private placement of equity securities that closed on November 22, 2021.
Key Financial Metrics and Transaction Details
The company executed a private placement with accredited investors for an aggregate purchase price of approximately $15,000,000. The securities issued include:
- Common Stock: 6,772,000 shares sold at a combined offering price of $1.385 per share (including warrants).
- Common Warrants: Warrants to purchase up to 10,830,305 shares with an exercise price of $1.385, exercisable immediately and expiring in five years.
- Pre-Funded Warrants: Warrants to purchase up to 4,058,305 shares sold at a combined offering price of $1.3849, immediately exercisable at $0.0001 per share.
Placement Agent Fees: The company paid A.G.P./Alliance Global Partners a cash fee equal to 8% of gross proceeds and issued a warrant to purchase shares equal to 4% of the total shares and warrant shares sold. The agent warrant has an exercise price of $1.662 and is exercisable after six months for five years.
Financial Performance: The filing text does not provide specific revenue, profit, cash flow, margin, or debt figures for the reporting period.
Material Changes and Obligations
The primary material change is the influx of approximately $15 million in capital and the significant dilution from the issuance of new shares and warrants. The company is obligated to file a registration statement with the SEC within 30 days of the agreement to register the resale of these securities. The company must use commercially reasonable efforts to have the statement declared effective within 90 days of the closing.
Liquidated Damages: If the registration statement is not filed within 30 days or declared effective within 60 days (or 90 days in the event of a full SEC review), the company must pay the purchasers 2.0% of the aggregate purchase price as partial liquidated damages.
Guidance, Risks, and Contingencies
The filing does not contain forward-looking guidance, management commentary on future operations, or specific risk factors beyond the standard registration obligations. The primary contingency is the timely effectiveness of the resale registration statement to avoid the 2.0% penalty payment. The securities were issued under Section 4(a)(2) and/or Rule 506 of Regulation D exemptions and are not registered under the Securities Act of 1933.
Investor Verification Checklist
- Verify the closing date of November 22, 2021, and the receipt of the full $15,000,000 proceeds.
- Confirm the filing of the resale registration statement within the required 30-day window to avoid the 2.0% liquidated damages penalty.
- Review the total share count post-transaction to assess the dilution impact from the 6,772,000 new shares and the potential issuance of over 14.8 million shares via warrants.
- Check the status of the placement agent warrant (4% of total issuance) and its impact on future capital structure.
- Confirm the company's cash position and liquidity status following the transaction, as no specific balance sheet data is provided in this filing.