Form 4: My Size, Inc. Director's Stock Options Repriced Amidst Recent Reverse Stock Splits

My Size, Inc. has repriced stock options for Director Arik Kaufman to $1.28 per share, aligning with the closing price on June 4, 2025, following two significant reverse stock splits in 2022 and 2024.

Summary

• Arik Kaufman, a Director of My Size, Inc., had 150 options to purchase common stock repriced.
• The exercise price of these options was reduced from $8.72 to $1.28 per share.
• The new exercise price of $1.28 per share matches the closing price of My Size, Inc.'s common stock on June 4, 2025.
• The repricing was approved by the Company's Board of Directors on June 4, 2025.
• These options were granted under the My Size, Inc. 2017 Equity Incentive Plan and are fully vested.
• The company previously implemented a 1-for-25 reverse stock split on December 8, 2022, and a 1-for-8 reverse stock split on April 23, 2024.
• All figures in the filing are adjusted to reflect these reverse stock splits.

Sentiment

Score: 2

Explanation: The document reveals significant negative indicators, primarily the need for two substantial reverse stock splits and a drastic option repricing, both of which point to severe stock price depreciation and potential underlying business challenges. While the repricing benefits the option holder, it reflects poorly on overall shareholder value and company performance.

Positives

• For the option holder (Arik Kaufman), the repricing significantly reduces the exercise price, making the options more 'in-the-money' or reducing their 'out-of-the-money' status, potentially increasing their value.

Negatives

• The necessity of two reverse stock splits (1-for-25 and 1-for-8) within a relatively short period (2022 and 2024) indicates a severely depressed stock price, often a sign of poor company performance or market sentiment.
• Option repricing, especially when the stock price has fallen significantly, can be viewed negatively by existing shareholders as it effectively grants new value to executives/directors at the expense of shareholder equity, potentially increasing dilution if exercised.
• The repricing from $8.72 to $1.28 represents a substantial loss in value for the company's stock since the original option grant.

Risks

• Share Price Volatility and Decline: The history of two significant reverse stock splits (1-for-25 and 1-for-8) suggests a persistent decline in the company's stock price, indicating potential ongoing operational or market challenges.
• Delisting Risk: Companies often undertake reverse stock splits to maintain compliance with minimum bid price requirements of stock exchanges, implying a risk of delisting if the price continues to fall.
• Shareholder Dilution: While not directly stated as a risk, the repricing of options, especially if followed by further grants or exercises, could contribute to dilution of existing shareholder value.
• Corporate Governance Concerns: Unilateral option repricing, particularly when the stock has performed poorly, can raise questions about corporate governance practices and alignment of management incentives with shareholder interests.

Future Outlook

The document does not provide any explicit forward-looking statements or guidance regarding the company's future financial performance or strategic direction, beyond the expiration date of the repriced options.

Management Comments

• "Effective June 4, 2025, the Board of Directors of the Company approved a unilateral option repricing, which resulted in the reduction of the exercise price to $1.28 per share, which is the closing price of the Company's common stock on June 4, 2025. All of the other terms of the option remained unchanged."
• "On December 8, 2022, the Company implemented a 1-for-25 reverse stock split... and on April 23, 2024, the Company implemented a 1-for-8 reverse stock split... All amounts have been adjusted to give effect to the 2022 Reverse Stock Split and the 2024 Reverse Stock Split."

Industry Context

The repricing of executive stock options and the implementation of multiple reverse stock splits are often observed in micro-cap or small-cap companies experiencing significant stock price depreciation. This typically occurs when a company's stock price falls below exchange minimums, necessitating reverse splits to avoid delisting. Option repricing in such scenarios is a mechanism to re-incentivize management, but it can also signal underlying challenges in the company's business model or market position, contrasting with more stable, growth-oriented companies that typically see option values appreciate without repricing.

Comparison to Industry Standards

• The occurrence of two reverse stock splits (1-for-25 and 1-for-8) within a two-year period is highly unusual and significantly deviates from industry standards for healthy, growing companies. Such actions are typically last-resort measures for companies struggling to maintain exchange listing requirements, unlike established tech or retail companies (e.g., Apple, Amazon) that rarely, if ever, resort to reverse splits.
• Option repricing, while not unheard of, is generally viewed with skepticism by institutional investors, especially when it occurs after substantial stock price declines. It contrasts with best practices in corporate governance where executive incentives are more closely tied to sustained long-term shareholder value creation, rather than being adjusted downwards to compensate for poor stock performance. For example, well-governed companies like Microsoft or Google typically rely on original grant terms and performance-based vesting, rather than repricing.
• The repricing of options to the current market price ($1.28) suggests a reset of incentives for the director, but it also highlights the significant erosion of shareholder value from the original option price of $8.72, a situation not commonly seen in companies that are meeting or exceeding industry growth and profitability benchmarks.

Corporate Governance

Stakeholder Impact

• Shareholders: Existing shareholders face significant value erosion as evidenced by the need for two reverse stock splits and the drastic repricing of options, which reflects a substantial decline in the company's stock price. This could lead to further dilution if the repriced options are exercised.
• Management/Directors: The repricing of options benefits the director, Arik Kaufman, by making his options significantly more 'in-the-money' or less 'out-of-the-money,' thereby restoring or increasing the incentive value of his equity compensation.

Key Dates

Recommendation

Keywords

My Size Inc., MYSZ, SEC Form 4, Stock Option Repricing, Reverse Stock Split, Arik Kaufman, Beneficial Ownership, Equity Incentive Plan, Corporate Governance