As
filed with the Securities and Exchange Commission on January 12, 2018
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
My
Size, Inc.
(Exact
name of registrant as specified in its charter)
Delaware
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|
N/A
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(State
or other jurisdiction of
incorporation
or organization)
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|
(I.R.S.
Employer
Identification
No.)
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3
Arava St. P.O.B. 1026, Airport City, Israel, 7010000
+972
72 3331002
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Corporation
Service Company
2711
Centerville Road, Suite 400
Wilmington,
DE 19808
1-800-927-9800
(Name,
address including zip code, and telephone number, including area code, of agent for service)
With
copies to:
Richard
A. Friedman, Esq.
Andrea
Cataneo, Esq.
Sheppard,
Mullin, Richter & Hampton LLP
30
Rockefeller Plaza
New
York, New York 10112
Phone:
(212) 653-8700
Facsimile:
(212) 658-8701
Approximate
date of commencement of proposed sale to the public
:
From time to time after the effective date of this registration statement.
If
the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please
check the following box. ☐
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check
the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become
effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☐
If
this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register
additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following
box. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of ”
large accelerated filer
“, ”
accelerated
filer
“, ”
smaller reporting company
” and “
emerging growth company
” in Rule 12b-2
of the Exchange Act. (Check one):
Large
accelerated filer ☐
|
Accelerated
filer ☐
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Non-accelerated
filer ☐
(do
not check if smaller reporting company)
|
Smaller
reporting company ☒
Emerging
growth company ☐
|
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. ☐
CALCULATION
OF REGISTRATION FEE
Title
of each class of securities to be registered
|
|
Amount to be
registered/
proposed
maximum
offering price
per unit/
proposed
maximum
aggregate
offering price
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|
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Amount of
registration
fee
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Common Stock
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|
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(1)(2)
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|
|
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Debt Securities
|
|
|
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(1)
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|
|
|
|
Warrants
|
|
|
|
(1)
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|
|
|
|
Units
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(1)
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Total
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$
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50,000,000
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(3)
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$
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6,225
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(4)
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(1)
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An
unspecified number of securities or aggregate principal amount, as applicable, is being registered as may from time to time
be offered at unspecified prices.
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(2)
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Includes
rights to acquire common stock of the Company under any shareholder rights plan then in effect, if applicable under the terms
of any such plan.
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(3)
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Estimated
solely for the purpose of calculating the registration fee. No separate consideration will be received for shares of common
stock that are issued upon conversion of debt securities or upon exercise of warrants registered hereunder. The aggregate
maximum offering price of all securities issued by the registrant pursuant to this registration statement will not exceed
$50,000,000.
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(4)
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The
registration fee has been calculated in accordance with Rule 457(o) under the Securities Act of 1933, as amended.
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The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act or until this Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities or accept an offer to buy
these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is
not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
SUBJECT
TO COMPLETION, DATED JANUARY 12, 2018
PROSPECTUS
MY
SIZE, INC.
$50,000,000
Common
Stock
Debt
Securities
Warrants
Units
We
may offer and sell, from time to time in one or more offerings, any combination of common stock, debt securities, warrants
to purchase common stock or debt securities, or any combination of the foregoing, either individually or as units comprised
of one or more of the other securities, having an aggregate initial offering price not exceeding $50,000,000.
This
prospectus provides a general description of the securities we may offer. Each time we sell a particular class or series of securities,
we will provide specific terms of the securities offered in a supplement to this prospectus. The prospectus supplement and
any related free writing prospectus may also add, update or change information contained in this prospectus. We may also authorize
one or more free writing prospectuses to be provided to you in connection with these offerings. You should read carefully this
prospectus, the applicable prospectus supplement and any related free writing prospectus, as well as any documents incorporated
by reference herein or therein before you invest in any of our securities.
This
prospectus may not be used to offer or sell our securities unless accompanied by a prospectus supplement relating to the offered
securities.
Our
common stock is presently listed on The NASDAQ Capital Market under the symbol “MYSZ.” On January 11, 2018, the
last reported sale price of our common stock was $1.49. The applicable prospectus supplement will contain information, where applicable,
as to any other listing on The NASDAQ Capital Market or any securities market or other exchange of the securities, if any, covered
by the prospectus supplement.
These
securities may be sold directly by us, through dealers or agents designated from time to time, to or through underwriters, dealers
or through a combination of these methods on a continuous or delayed basis. See “Plan of Distribution” in this
prospectus. We may also describe the plan of distribution for any particular offering of our securities in a prospectus
supplement. If any agents, underwriters or dealers are involved in the sale of any securities in respect of which this prospectus
is being delivered, we will disclose their names and the nature of our arrangements with them in a prospectus supplement. The
price to the public of such securities and the net proceeds we expect to receive from any such sale will also be included in a
prospectus supplement.
Investing
in our securities involves various risks. See “Risk Factors” contained herein for more information on these
risks. Additional risks will be described in the related prospectus supplements under the heading “Risk Factors”. You
should review that section of the related prospectus supplements for a discussion of matters that investors in our securities
should consider.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or
passed upon the adequacy or accuracy of this prospectus or any accompanying prospectus supplement. Any representation to
the contrary is a criminal offense.
The
date of this Prospectus is , 2018.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “Securities Act”) using a “shelf” registration process.
Under this shelf registration process, we may from time to time sell common stock, debt securities or warrants to purchase common
stock, debt securities, or any combination of the foregoing, either individually or as units comprised of one or more of the other
securities, in one or more offerings up to a total dollar amount of $50,000,000. We have provided to you in this prospectus a
general description of the securities we may offer. Each time we sell securities under this shelf registration, we will, to the
extent required by law, provide a prospectus supplement that will contain specific information about the terms of that offering.
We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating
to these offerings. The prospectus supplement and any related free writing prospectus that we may authorize to be provided to
you may also add, update or change information contained in this prospectus or in any documents that we have incorporated by reference
into this prospectus. To the extent there is a conflict between the information contained in this prospectus and the prospectus
supplement or any related free writing prospectus, you should rely on the information in the prospectus supplement or the related
free writing prospectus; provided that if any statement in one of these documents is inconsistent with a statement in another
document having a later date — for example, a document incorporated by reference in this prospectus or any prospectus supplement
or any related free writing prospectus — the statement in the document having the later date modifies or supersedes the
earlier statement.
We
have not authorized any dealer, agent or other person to give any information or to make any representation other than those contained
or incorporated by reference in this prospectus, any accompanying prospectus supplement or any related free writing prospectus
that we may authorize to be provided to you. You must not rely upon any information or representation not contained or incorporated
by reference in this prospectus or an accompanying prospectus supplement, or any related free writing prospectus that we may authorize
to be provided to you. This prospectus, the accompanying prospectus supplement and any related free writing prospectus, if any,
do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered securities
to which they relate, nor do this prospectus, the accompanying prospectus supplement or any related free writing prospectus, if
any, constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it
is unlawful to make such offer or solicitation in such jurisdiction. You should not assume that the information contained in this
prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate on any date subsequent to
the date set forth on the front of the document or that any information we have incorporated by reference is correct on any date
subsequent to the date of the document incorporated by reference (as our business, financial condition, results of operations
and prospects may have changed since that date), even though this prospectus, any applicable prospectus supplement or any related
free writing prospectus is delivered or securities are sold on a later date.
As
permitted by the rules and regulations of the SEC, the registration statement, of which this prospectus forms a part, includes
additional information not contained in this prospectus. You may read the registration statement and the other reports we file
with the SEC at the SEC’s web site or at the SEC’s offices described below under the heading “Where You Can
Find Additional Information.”
Company
References
In
this prospectus, “My Size,” “the Company,” “we,” “us,” and “our” refer
to My Size, Inc., a Delaware corporation, unless the context otherwise requires.
OUR
BUSINESS
Overview
The
Company is a technology company whose strategy is based on the development of applications that can be utilized to accurately
take measurements of a variety of items via a smartphone. By downloading the application to a smartphone, the user is then able
to run the smartphone over the surface of an item the user wishes to measure. The information is then automatically sent to a
cloud-based server where the dimensions are calculated through the Company’s proprietary algorithms, and the accurate measurements
(+ or - 2 centimeters) are then sent back to the users smartphone. We believe that the commercial applications for this technology
are significant in many areas.
Currently,
we are focusing on the following market segments:
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E-commerce
apparel industry – our main target-market;
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Do
it yourself (“DIY”) uses; and
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Usage
as a tape measure.
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While
we are currently devoting much of our focus on the applications for the apparel business, management believes that all of the
above mentioned applications will be useful to users, retailers and vendors alike.
The
Market - The Apparel Industry
The
growth in online apparel shopping has been positive and negative for retailers. The positive: what was an approximately $72.13
billion apparel and accessories market in 2016 is projected to increase to approximately $116.3 billion U.S. dollars by 2021 (https://www.statista.com/statistics/278890/us-apparel-and-accessories-retail-e-commerce-revenue).
The negative: although online apparel shopping is growing quickly, customer returns are also growing quickly due to a bad fit.
For
apparel retailers, both in retail and online, customer returns are a necessary pain point, backed by flexible return policies
and in some instances, free return shipping. However, online retailers have higher operating costs as at least 30% of all products
ordered online are returned, compared to 8.89% from retail stores, according to recent data (http://www.business2community.com/infographics/e-commerce-product-return-statistics-trends-infographic-01505394#Js0FFKfd6xZEorqz.97).
The U.S. Census Bureau estimated that total e-commerce sales for 2016 were $394.9 billion, an increase of 15.1% from 2015. According
to Euromonitor International, most online apparel retailers have average return rates of 15-20%, of which around 80% are fit-based.
According to the National Retail Federation, when translating these figures into hard currency, in the United States, online consumers
returned approximately $260 billion in merchandise to retailers in 2015, or 8% of all purchases.
MySizeID
We
are currently in development of an application (“MySizeID”) which assists the consumer to accurately take the measurements
of his or her own body using a smartphone in order to fit clothing in the best way possible without the need to try the clothes
on. The purpose of our application is to simplify the process of clothing acquisition through the internet and to significantly
reduce the rate of returns of ill-fitting clothing which are acquired through the internet.
The
application is the result of a research and development effort that combines:
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Anthropometric
research – analyses of information pertaining to body measurements derived from
a survey and the subsequent determination of correlations between body parts;
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Body
measurement algorithm research – an algorithm created by the Company to measure
body parts; and
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Retailers
size chart analyses – adopting a deep understanding of the size charts of retailers
and the corresponding “body to garment size.”
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MySizeID
will operate based on the use of existing sensors in smart phones which enable, through a specific purpose application, the measurement
of the body of consumers independently by moving the cellular phone along his or her body. The measurements will then be saved
on the Company’s cloud database, enabling the user to search for clothes in various retailer websites without worrying about
size. When a search is made, the retailer will connect to the Company’s cloud database and then provide results based on
the user’s measurements and other parameters as he or she may have defined. This data will also be saved for use when a
customer enters a brick and mortar store to help serve the customer more efficiently and to provide a better shopping experience.
As
soon as the item is found and the acquisition is completed, the retailer will pay-per-click or be charged a certain percentage of the acquisition
price. The rate to be charged by My Size for the acquisition has not yet been fixed, and will be determined following negotiations
with fashion companies, in a more advanced stage of the development
.
How
MySizeID Can be Utilized by the Apparel Industry
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1.
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MySizeID: This application will
allow consumers to create a secure, online profile of their personal measurements, which
can then be utilized with partnered online retailers to insure that no matter the manufacturer
or size chart, they will get the right fit. The MySizeID application will utilize a patent-pending
measurement technology that does not rely on user photographs or any additional hardware;
all a user needs to do is scan their body with their smartphone and the app records their
measurements.
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2.
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In Store Shopping Tool: The Company
is developing technology which will permit users of MySizeID to allow brick and mortar
merchants to access their profile to receive more personalized attention. This anticipated
concierge like service will enable a salesperson to better serve customers by accessing
the user’s size and style preferences to make the in-store shopping experience
more pleasant, time efficient and satisfactory.
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3.
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Cross Site Search Feature: The
Company is developing the MySizeID profile which will enable users to search for a specific
product or item across multiple online retailers, but, unlike most shopping comparison
shopping tools, MySizeID will deliver results that fit each individual user’s measurements.
The Company will develop this feature so that it can be customized for personalized filters
that go beyond sizing and measurements, and can also include a user’s favorite
colors, brands, styles and more.
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The
application is being designed to use a person’s body measurements to help determine correct apparel sizes when shopping
on-line. To begin, the app will measure the hip breadth, and uses statistical, mathematical algorithms to recommend the most appropriate
size trousers.
True
Size
In
November 2016, the Company introduced a new product called TrueSize.
TrueSize
is a customizable, white-label, mobile application that empowers retailers to improve the online shopping experience of their
customers by perfectly matching their true measurements with the retailer’s offerings. The level of accuracy and ease of
use integrated into the retailer’s website ensures that the customers will select the right size apparel every time, and
we believe this will significantly reduce the amount of returns.
How
Does TrueSize Work?
TrueSize
has two components: a white label application and a small application located on each page of the retailer’s website. First,
the customer downloads the TrueSize app, branded to a specific retailer’s website, and signs in, using the same credentials
used for the online store. The application will then guide the customer through the process.
Using
the TrueSize app, the customer next takes accurate measurements of an item of clothing from their wardrobe by placing the smartphone
first on one end of the item and then on the other end. The app. will then prompt the user to take several different measurements
to get a complete reading. The information pertaining to each item is then saved, but can be updated at any time. Measurements
are next stored in the cloud and a recommended size for the user is calculated. The user may continue shopping directly from the
app by clicking the “Go Shopping” button, which will direct them to the retailer’s mobile website.
The
chart below illustrates how consumers can interact with the prompts from the TrueSize application.
Shopping
with TrueSize
A
“TrueSize” widget in the form of a button is located in proximity to the size selection feature on each product page
of the retailer’s website. If the customer has signed in to the website and has already downloaded the TrueSize app and
taken measurements, a recommended size will automatically appear in the widget. Users then have the option to manually update
their size parameters – height, weight, and an item’s parameters – at any time by simply clicking on the widget.
If the customer has not yet signed into the website, a prompt will appear requesting the customer to do so.
TRUCCO
– RealSize
RealSize
is a white label measurement application developed based on the Company’s TrueSize technology. The first customer to
use the TrueSize technology is IN SITU S.A., the owner of the rights to the fashion brand-name TRUCCO. TRUCCO is a women’s
clothing brand and has over 240 points of sale in more than 20 countries all over the world including, but not limited to, Andorra,
Chile, China, Costa Rica, Czech Republic, Dominican Republic, France, Guatemala, Israel, Kuwait, Libya, Malaysia, Mexico, Panama,
Paraguay, Peru, Portugal, Qatar, Russia, Singapore, Slovakia, Spain, Taiwan and Thailand.
The
Market - Courier Services
When
an individual wishes to ship boxes from place to place, they often call a courier service and request a pick up. The individual
is then usually asked about the dimensions of the package to be shipped. Unfortunately, the response given to the courier can
be rather vague (big, medium, small, etc.). This is often the cause of much confusion between the shipper and the courier. This
confusion can lead to the courier sending out the wrong vehicle for the pick-up and/or a large price differential than what was
originally quoted by the courier causing customer dissatisfaction.
How
My Size Can be Utilized for Courier Services
My
Size operates based on the use of existing sensors in smart phones which enable, through a specific purpose application, measurement
of the dimensions of packages by moving the cellular phone along packages (length, height and width) to be sent via courier. The
measurements are then be saved on the Company’s cloud database and shared with the courier. This allows for:
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Courier
services to provide accurate pricing to their consumers with little to no confusion;
and
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Courier
services can send the proper sized vehicle to pick up package(s).
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Accordingly
to Market Realist, the courier service market in the United States alone had revenues of over $90 billion in 2014. Accordingly,
the Company views this as an excellent opportunity to create value in the courier market.
Agreement
with Katz Delivery Services, LTD
On
November 20, 2015, My Size entered into an agreement (the “Katz Agreement”) with Katz Deliveries, LTD (“Katz”),
one of the largest courier services in Israel. Katz delivers approximately five million parcels per year, the most in Israel.
Katz has more than 250 vehicles. Pursuant to the Katz Agreement, the parties have agreed to mutually work together to develop
and integrate My Size technology with the technology of Katz to accurately monitor the volume of all parcels delivered to it for
shipment by its clients. The goal is for Katz to use our technology to help with planning its distribution lines, thus reducing
operational costs by adjusting the distribution vehicles to the volume of the shipments. My Size expects to generate revenues
from this endeavor by the second half of 2018, but is still in negotiations with Katz regarding the terms of the Katz Agreement.
SizeUp
My
Size is working on additional consumer applications. One of these applications is in the category of DIY. In this application,
users will be able to visualize how an object or a piece of furniture will fit in an existing room in their home or office. As
many people have difficulty with spatial recognition, the Company hopes this will help alleviate the problem.
In
the third quarter of 2015, My Size launched the SizeUp application, a smart tape measure for the business to consumer market.
SizeUp is a project that My Size has already completed and launched. This application allows users to utilize their smartphone
as a tape measurer. The application provides measurements with an accuracy plus or minus 2 centimeters. In the first quarter of
2016, a second version of SizeUp for the iOS operating system was released. This release included the ability to measure both
horizontal and vertical measurements. In January 2017, a third version of SizeUp for the iOS operating system was released. This
release included an innovative air measurement algorithm which allows the user to measure over the air without the need to slide
the phone over the surface during the measurement. Through November 2017, there have been over 530,000 downloads of the SizeUp
app.
The
first version of the SizeUp app for Android was released in March 2016 and included vertical measurement. An update to the app
was released in June, 2017 which update includes a one-time calibration process for ensuring high accuracy. Currently both versions
of the SizeUp app (for Android and iOS) are available for free for the first 30 days, where after a user will be required to pay
a one-time fee of $1.99 to continue using the application. To date, the Company has accumulated immaterial revenues from
the mentioned fee.
Research
and Development
The
Company has incurred research and development expenses of $727,000 in 2016 and $301,000 in 2015, and $624,000 in the nine month
period ended September 30, 2017, relating to the development of its applications and technologies.
Income
Sources - Projected Income
The
Company’s business model currently contemplates five methods of producing revenue through its products:
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1.
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Fees
- The Company intends to charge sellers a fee for every garment and clothing item purchased
using its services, which fees are currently anticipated to be in the range of 1% to
3% of royalties on product sales, depending on volume, resulting from usage of the MySizeID
platform.
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2.
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Advertisements
- the Company may generate revenue by using specialized ads using its database to identify
the user’s exact needs.
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3.
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“Offline
Shopping” - the Company may offer its services for clothing and fashion stores,
for real-time use by their customers. The service may allow the store to immediately
offer the customer a fitting garment suitable for his or her size.
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4.
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Pay
Per API call – every time a user is looking onto an item in the retailers website
and clicks the “what’s my size” button to find out his size the retailer
will be charged a fixed amount based on the SDK pricing matrix.
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5.
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SizeUp
– SizeUp is the first B2C app that MySize has released in the Apple App Store and
on Google Play. The Company charges a one-time fee of $1.99 for every download of the
app from either store.
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Competition
Management
of the Company believes that its technology and applications are a win-win solution for consumers, retailers, couriers and individuals.
The Company’s technology is protected by three issued patents, one in each of Russia, Japan and the U.S., one patent-pending
submission and an additional patent application which is in process. My Size’s products are designed to allow users to measure
themselves simply by sliding a smartphone over their body, and the measurements are recorded by the My Size application.
Unlike
other products claiming similar capabilities, there is no need for additional accessories (no webcam, photos, measuring tape,
etc.). Users of the My Size apps will have their information protected and a unique identification number is provided that matches
personal sizes with retailer size charts. When consumers get the right size products, there are fewer returns of such products
involved.
My
Size’s advantage lies in its easy to use application in recording body measurements. Using special algorithmic equations,
the software is able to determine which sizes will best fit the customer. The collection of this data, and tracking shoppers’
preferences, allows for a unique shopping experience both online and in brick and mortar stores where the technology can instantly
match clothes the customer likes in sizes that will fit them.
However,
My Size does face competition in helping retailers increase conversation rate and reduce shipping costs.
Competitive
Landscape
The
following chart lists some but not all of our competitors:
Name
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Technology
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User
Action
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Product
/ Service
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True
Fit
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Algorithm
driven engine matches manufacturer specs and data points with customer profile
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Answer
questions to create profile
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Based
on statistics; doesn’t reflect real measurement
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Fits.me
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Software
solution based on a personal avatar; Algorithm driven engine matches manufacturer specs and data points with customer profile
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Answer
questions to create profile
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Virtual
fitting room size
Recommendations
based on statistics
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Virtusize
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Compares
a reference item the silhouette of the garment they are looking to buy
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Reference
items: a previous purchase or a favorite item. Measure it manually and enter results to the app
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Garment-to-garment
comparison with tape measure (manually)
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EasyMeasure
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Uses
camera and motion sensors
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User
needs to photograph according to the instructions and conditions of the app. (i.e certain lighting conditions)
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Allows
the user to measure large objects and from far away (i.e. a building). Low accuracy requires optimal lighting conditions
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Only
on iOS platform
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Very
intuitive
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AR
MeasureKit
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AR
kit and motion sensors
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Allows
the user to measure objects from a distance with the camera
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Requires
bright light, and a contrast between the object and the background
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When
measuring small objects it can be difficult to “mark” them
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Only
on iOS platform
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Smart
Measure
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Camera
and motion sensors
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Allows
the user to measure objects from a distance
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●
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Easy
to use
Requires
the user to know the height of the device
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Some
of our competitors have significantly greater financial, marketing, personnel and other resources than we do, and many of our
competitors are well established in markets in which we have existing retailers or intend to locate new retailers. We may also
need to evolve our concepts in order to compete with popular new retail formats or concepts that develop from time to time, and
we cannot offer any assurance that we will be successful in doing so or that modifications to our concepts will not reduce our
profitability.
Legal
Proceedings
On
May 3, 2017, Lightcom (Israel) Ltd., an Israeli company, alleging that it is a shareholder of the Company, filed a motion with
the Tel Aviv District Court (Financial Division) to approve an action against the Company and the Company’s officers and
directors, as a shareholders’ class action. The complaint alleges, inter alia, that the Company’s report dated April
19, 2017 regarding its engagement with the Israeli Post was false and misleading, and that as a result thereof financial damages
have been incurred by two purported classes of shareholders: (i) any shareholder who sold Company’s shares as of April 20,
2017 and until April 27, 2017, with respect to damage directly caused by such sale and (ii) any shareholder which held shares
on April 20, 2017 and subsequent to April 27, 2017 with respect to damage caused by permanent adverse effect to the shares’
value. The alleged financial damage caused to members of both classes is estimated at NIS 18.8 million. The Company reviewed the
Motion initially with its legal counsel and retained an expert to review and analyze the allegations and data upon which the motion
is based. The Company’s management, after considering the conclusions of a report issued by a third party expert and an
opinion of U.S. legal counsel, is of the opinion that the chances that the class motion will be denied exceed the risk that it
will be approved In the event that the class motion will be approved, the complaint will become a class action which will be heard
by the court on its merits. Should this occur, the Company will respond to the class motion in the time frame ordered by the court.
On November 15, 2017 the Company filed its response to the class motion and a motion to dismiss the class motion. On November
15, 2017, the Court ordered the respondent (the original plaintiff) to respond to the motion to dismiss within 30 days, which
response was filed by the respondent on November 29, 2017. On December 28, 2017, the court ordered that a hearing on the foregoing matter shall be held after the
Company’s appeal before the NASDAQ Hearings Panel with respect to the determination to delist the Company’s securities
from the NASDAQ Capital Market, which appeal is scheduled to occur on January 25, 2018. Accordingly, the hearing on the Company’s
motion to dismiss was continued, and as of the date of this filing, the motion to dismiss is still pending.
On
September 9, 2015, fourteen shareholders filed a complaint against the Company and its CEO Mr. Ronen Luzon, alleging that in accordance
with agreements signed between plaintiffs and the Company, the plaintiffs are entitled to register their shares for sale with
the stock market, while the Company allegedly breached its obligation and refrained from doing its duty to register the plaintiffs’
shares. On November 5, 2015, the Company filed its defense and a counter claim against the plaintiffs and against two additional
defendants (who are not plaintiffs) Mr. Asher Shmuelevitch and Mr. Eitan Nahum. In its counter claim, the Company alleged that
the agreements by force of which the counter defendants hold their shares are defunct, based on fraud, as the counter defendants
never paid and never intended to pay the agreed consideration for their shares. The Company further alleged that Mr. Shmuelevitch
used his position as a director and controlling stockholder of the Company to knowingly cause the Company to enter such defunct
agreements. On September 5, 2017, the court rendered a judgment pursuant to which the complaint against the Company was accepted,
the complaint against Mr. Ronen Luzon was rejected and the Company’s counter-claim was rejected. The judgment included:
(1) a declaratory remedy, under which the Company breached its contractual undertakings toward the plaintiffs, to list their shares
both on TASE and on NASDAQ; (2) an order that the Company take any and all actions required for the listing of the plaintiffs
shares, including instructing the Company’s transfer agent to remove the legend or any other restriction from the plaintiffs
stock certificate and to issue them with new stock certificates free and clear from any restriction; (3) an order that the registration
company of Bank Hapoalim electronically list all of the plaintiffs’ shares detailed in the complaint on the electronic trading
system; and (4) an order that the Company pay the plaintiffs costs in the amount of NIS 70,000. On October 3, 2017, the Company
appealed the judgment with the Supreme Court of Israel, and simultaneously, filed with the Supreme Court a Motion for Stay of
Execution of the judgement, pending the outcome of the appeal. On November 8, 2017, the Supreme Court upheld the Motion to Stay
and ordered that the execution of the judgment will be stayed pending the outcome of the appeal, provided that the Company deposit
in the Supreme Court’s treasury an autonomous Israeli CPI linked bank guarantee in an amount of NIS 1,700,000, to cover
the respondents’ potential damages should the appeal be ultimately denied. The Company did not deposit the bank guarantee
in the amount of NIS 1,700,000 and will instead register the shares held by the plaintiffs on TASE and on NASDAQ and will issue
such shares free of any restrictive legends. In the event that the Company is successful in its appeal, the Company may seek relief
from the shareholders which have sold their shares either in private or public sales in the amount of the proceeds from such sales.
Although the Company has appealed such matter, there can be no assurance that the appeal will result in a judgment favorable to
the Company. If the judgment rendered on appeal is not favorable to the Company, the Company may be ordered to pay the respondents
legal costs in connection with the appeal. On November 16, 2017, the Company deposited NIS 45,000 with the Supreme Court to cover
respondents’ potential legal costs if the appeal is ultimately denied. A hearing on the Company’s appeal is currently
scheduled to be held on December 10, 2018.
The
Company received legal advice from its counsel that the burden of proof that the judgment is wrong and should be reversed lies
with the appellant. Consequently, the Company believes that it is more likely than not that the appeal will be denied rather than
being accepted. In the event that the appeal is denied, no direct financial liability will be imposed on the Company (other than
legal costs which the court may order the losing side to pay).
It
should be noted that the plaintiffs may file a complaint against the Company seeking reimbursement of economic loss or damages
due to the fact that their shares remained restricted, in breach of the Company’s contractual undertakings. A formal demand
has not yet been filed, but in their response to the Company’s motion to stay the judgment, the plaintiffs argued, that
they suffered economic loss in the sum of NIS 12,100,000. As of the date of this filing no formal request or complaint were filed;
however, we are unable to assess the financial risk inherent in such a claim since, among other things, the estimate of alleged
damage is dependent upon the actual revenues to be received by the plaintiffs from the future sale of the shares, the method of
calculating the damage and data relating to the Company’s share price and trading volume of stock. Needless to say, that
in the event that the Company is successful in its appeal, there will be no grounds to such reimbursement.
On
December 27, 2015, a legal complaint was filed against the Company. The defendants named in the complaint are the Company, the
members of the Board of Directors of the Company, Mrs. Shoshana Zigdon, a shareholder and related party in the Company, as well
as two additional defendants who are not shareholders of the Company. The plaintiff alleges that the Company violated its obligation
to register his shares (the “Original Shares”) for trade with the TASE causing damage in total amount of NIS 2,622,500.
The plaintiff seeks relief against the defendants through financial compensation in the sum of the aforementioned alleged damage;
additional compensation in the sum of NIS 400,000 for mental anguish; and if and to the extent that until such time as the plaintiff
may be able to sell its shares on TASE (“the Exercise Date”), the price of a Company share will be in excess of NIS
20.98 (“the Base Price”), an additional amount equal to the difference between the Base Price and the highest price
of a Company share between the time the claim was submitted and the Exercise Date for each share held by the plaintiff. The plaintiff
has also requested costs of trial and attorney’s fees. Following the recommendation of the court, on March 20, 2016, the
plaintiff filed a notice of deletion of certain defendants including board and management members, excluding the chairman of the
Board and the CEO of the Company from the statement of claim. Pursuant to the Israeli court’s recommendation, the case was
referred to mediation and the Company and the plaintiff entered into a settlement agreement (the “Settlement”) dated
June 20, 2017. Pursuant to the Settlement, (i) the Company shall pay the plaintiff the sum of NIS325,000 (the “Down Payment”)
within 30 days from the date of the Settlement, (ii) the Company is obligated to register the Original Shares within a specified
time frame and (ii) the Company will issue, within 60 days, 80,358 additional shares of common stock (the “New Shares”)
to the plaintiff which shares shall be registered, deposited in escrow and sold for the benefit of the plaintiff. Such New Shares
shall be sold at a maximum aggregate price of NIS10,000 or an amount constituting no more than 2% of the average volume of trades
within the last 90 days, according to the higher amount, in one single trading day. To the extent the Company does not issue the
unrestricted New Shares within 60 days, the plaintiff has a right, at his exclusive discretion, to resume the legal proceedings
pursuant to the complaint, provided that the Down Payment is deposited by him in an escrow account, pending the court’s
final adjudication of the complaint. Additionally, the Settlement provides that to the extent the aggregate proceeds from the
sale of the Original Shares and the New Shares is less than NIS1,600,000, the Company will either complement the difference in
cash or shall issue to the plaintiff additional shares of common stock in lieu thereof, at the Company’s sole discretion.
If the Company does not comply with the terms of the Settlement, plaintiff may resume the legal proceedings which could result
in substantial costs, diversion of management’s attention and diversion of the Company’s resources.
Employees
and Independent Contractors
We
currently have 10 employees and 8 independent contractors.
Company
Information
The
Company was incorporated in the State of Delaware and commenced operations in September 1999 under the name Topspin Medical, Inc.
In December 2013, the Company changed its name to Knowledgetree Ventures Inc. Subsequently, in February 2014, the Company changed
its name to My Size, Inc. Our principal executive offices are located at 3 Arava St., pob 1026, Airport City, Israel 7010000,
and our telephone number is +972-3-600-9030. Our website address is www.MySizeID.com. The information on our website is not
part of this prospectus. We have included our website address as a factual reference and do not intend it to be an active link
to our website.
Background
The
Company (under the name Topspin Medical, Inc.) was a privately held company that was engaged, through 2012, in research and development
of a medical magnetic resonance imaging (“MRI”) technology for interventional cardiology and in the development of
MRI technology for use in the diagnosis and treatment of prostate cancer.
On
September 1, 2005, the Company issued securities to the public in Israel according to a prospectus and became publicly traded
on the Tel Aviv Stock Exchange (“TASE”). In 2007, and until August 2012, the Company registered some of its securities
with the U.S. Securities and Exchange Commission (“SEC”).
In
January 2012, after having received the approval at the general meeting of shareholders of the Company, the Company consummated
a transaction whereby it acquired Metamorefix Ltd. (“Metamorefix”). Pursuant to such transaction, Metamorefix became
wholly-owned by the Company. Metamorefix was incorporated in 2007, and was engaged in the development of innovative solutions
for the rehabilitation of tissues, particularly skin tissues.
On
August 21, 2012, the Company’s board of directors (the “Board”) approved the suspension of the Company’s
reporting obligations under Section 13(a) and 15(d) of the Securities Exchange Act of 1934 (the “De-Registration”).
The Company thereafter filed a Form 15 with the SEC on September 5, 2012 to effect the De-Registration. Upon the filing of the
Form 15, the Company’s obligation to file periodic and current reports with the SEC, including Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on form 8-K, was immediately suspended.
By
the end of 2012, in view of the Company’s cash flow, the Company ceased its above operations and shortly thereafter the
Company’s employees were laid off. In January 2013, the Company sold its entire ownership interest in Metamorefix.
Change
in Control Transaction
In
September 2013, Ronen Luzon, the Company’s current Chief Executive Officer, purchased control of the Company from Mr. Asher
Shmuelevitch (the “Transaction”). Mr. Luzon purchased 1,755,950 shares of common stock from Mr. Shmuelevitch, which
shares represented approximately 40% of the issued and outstanding capital stock of the Company at such time, and thus Mr. Luzon
became a controlling shareholder of the Company.
Within
the framework of the Transaction, Mr. Luzon reached a settlement with the Company’s creditors pursuant to which the main
creditor, Mr. Asher Shmuelevitch, was paid a total sum of New Israeli Shekel (“NIS”) 0.5 million (approximately $140,000)
in consideration for a full and final waiver of any and all his claims that he may have relating to any monetary indebtedness
of the Company to the creditors.
As a result of the various
investment rounds in the Company, Mr. Luzon’s beneficial ownership in the Company has been diluted and currently represent
approximately 8.65% of the issued and outstanding shares of common stock of the Company on a fully diluted basis.
In
December 2013, the Company changed its name to Knowledgetree Ventures Inc. Thereafter, in January, 2014, the Board approved a
transaction with Shoshana Zigdon, a related party, with respect to a technology venture through a new subsidiary, as discussed
in the Shoshana Zigdon Agreement below (see “February 2014 Purchase Agreement”). Subsequently, on February 16, 2014,
the Company changed its name to My Size, Inc.
February
2014 Purchase Agreement
In
February 2014, the Company entered into a Purchase Agreement (the “Purchase Agreement’) with Shoshana Zigdon (“Seller”),
with respect to the acquisition of certain rights in a venture for the accumulation of physical data of human beings by portable
electronic devices (including smart phones, tablets and other portable devices) for the purpose of locating, based on the accumulated
data, articles of clothing in internet apparel stores, which will fit the person whose measurements were so accumulated (the “Venture”).
Prior to entering into the Purchase Agreement, in January 2014, the Purchase Agreement was approved by shareholders of the Company
as the Seller was also a beneficial owner of over 20% of the outstanding capital of the Company.
Pursuant
to the Purchase Agreement, the Company purchased the all of Seller’s rights, title and interest in and to the Venture, including,
but not limited to, the method (the “Method”) and the certain patent application that had been filed by Seller (PCT/IL2013/050056)
(the “Patent”, and collectively with the Method, the “Assets”).
In
consideration for the sale of the Assets, the Company agreed to pay to Seller, 18% of the Company’s operating profit, directly
or indirectly connected with the Venture and/or the Method and/or the commercialization of the Patent together with value-added
tax (“VAT”) in accordance with the law (the “Consideration”) for a period of seven years from the end
of the development period of the Venture. The parties further agreed that Seller’s right to receive the Consideration will
apply even in the event the Patent is revoked/rejected/expires and/or the non-receipt of the Patent for any reason. Down payments
on account of the Consideration are to be paid to the Seller quarterly, within 14 days from the approval of the reviewed financial
reports of the Company, with the exception of the fourth quarter which will be paid after the approval of the audited financial
reports of the Company. Payment will be made against a duly issued tax invoice as prescribed by law.
The
Agreement may be terminated by either party in the event of a breach of the obligations of the other party and the failure to
cure a default within a specified period of time. The Agreement further provides that Seller is entitled to repurchase the Assets
from the Company upon the occurrence of one or more of the following events: (a) if an application for liquidation of the Company
and/or an application for appointment of a receiver for the Company and/or for a significant part of its assets has been filed,
and/or an attachment has been imposed on a significant part of the Company’s assets, and the application or attachment –
as the case may be – has not been not canceled within 60 days from the date on which they are filed; or (b) if upon the
date that is seven years from the date of execution of the Agreement, the amount of Company’s income, directly and/or indirectly
accumulated from the Venture and/or the Method and/or the commercialization of the Patent is less than NIS 3.6 million (approximately
$1 million) (a “Repurchase Event”).
If
a Repurchase Event occurs, Seller shall have a 90 day right, subject to delivery of written notice to the Company of Seller’s
intention to exercise such right, to repurchase the Assets from the Company. The repurchase price will be based upon a market
price to be determined by an external and independent valuer, who shall be chosen by agreement by the parties, and the Audit Committee
shall conduct the negotiations on behalf of the Company to determine the identity of the valuer. In the absence of agreement on
the identity of the valuer, the valuer shall be appointed by the President of the Institute of Certified Public Accountants in
Israel. If one of the parties appeals against the valuation, with the Company’s decision to appeal being made by the Audit
Committee of the Company, the parties shall approach another agreed valuer from one of the four large accounting firms in Israel
(and in the absence of agreement he shall be chosen by the President of the Institute of Certified Public Accountants) and an
average shall be taken of the two valuations which are received. The parties shall bear the valuers’ fees and all the expenses
of the valuation in equal shares. Unless Seller gives the Company written notice of the retraction of Seller’s intention
to repurchase the Assets, the Seller shall be obligated to repurchase the Assets within 60 days from the date of receipt of the
valuation. Seller shall have the right to retract its intention to repurchase the Assets, provided Seller gives written notice
to the Company within 30 days of receiving the valuation and subject to Seller refunding the Company the expenses borne by the
Company in respect of the valuation (provided that the Company gives Seller details of the expenses borne by it).
In
addition to the foregoing, the Agreement provides that all developments, improvements knowledge and know-how developed and/or
accumulated by the Company after the execution of the Agreement will be owned by the Company. Further, the Seller agreed not to
compete, directly or indirectly, with the Company in any matter relating to the Assets and/or the Venture and/or the Method for
a period of seven years from the end of the development period of the Venture.
On
July 25, 2016, the Company’s common stock began publicly trading on the NASDAQ Capital Market under the symbol “MYSZ”.
Potential
Corporate Actions to be Approved at a Meeting of Stockholders
On
December 18, 2017, the Company filed a preliminary information statement on Schedule 14C with the SEC in connection with the following
proposed contemplated corporate actions: (i) a reverse stock split of the Company’s issued and outstanding common stock
in a ratio to be determined by the Board which ratio shall not be less than 1-for-2 nor more than 1-for-10, with the exact ratio
to be set at a whole number within this range as determined by the Board; (ii) an amendment to the Company’s 2017 Consultant
Equity Incentive Plan to increase the number of shares of common stock reserved for issuance thereunder from 3,000,000 to 4,500,000
shares; and (iii) an amendment to the Certificate of Incorporation to increase the number of authorized shares of common stock
from 50,000,000 to 100,000,000 shares (which would not be affected by the aforementioned reverse stock split) (collectively, the
“Corporate Actions”). None of the contemplated Corporate Actions were related to or are required to be completed in
connection with the offering contemplated by this Prospectus. Based upon concerns regarding form eligibility in connection with
the information statement, the Company no longer intends to pursue the information statement for purposes of approving the Corporation
Actions. If and when the Company seeks approval for the Corporate Actions, the Company will file a proxy statement on Schedule
14A with the SEC in order to hold a meeting of stockholders. Accordingly, no Corporate Actions will be effected, if at all, until
such time as such actions have been approved by the required number of stockholders at a meeting duly convened for this purpose.
This prospectus is not intended to and shall not be deemed a solicitation in connection with the approval of the Corporate Actions.
The
Securities We May Offer
We
may offer shares of our common stock, various series of debt securities and warrants to purchase any of such securities, either
individually or in units, with a total value of up to $50,000,000 from time to time under this prospectus, together with any applicable
prospectus supplement and related free writing prospectus, at prices and on terms to be determined by market conditions at the
time of offering. If we issue any debt securities at a discount from their original stated principal amount, then, for purposes
of calculating the total dollar amount of all securities issued under this prospectus, we will treat the initial offering price
of the debt securities as the total original principal amount of the debt securities. Each time we offer securities under this
prospectus, we will provide offerees with a prospectus supplement that will describe the specific amounts, prices and other important
terms of the securities being offered, including, to the extent applicable:
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A
prospectus supplement and any related free writing prospectus that we may authorize to be provided to you may also add, update
or change information contained in this prospectus or in documents we have incorporated by reference. However, no prospectus supplement
or free writing prospectus will offer a security that is not registered and described in this prospectus at the time of the effectiveness
of the registration statement of which this prospectus is a part.
We
may sell the securities to or through underwriters, dealers or agents or directly to purchasers. We, as well as any agents acting
on our behalf, reserve the sole right to accept and to reject in whole or in part any proposed purchase of securities. Each prospectus
supplement will set forth the names of any underwriters, dealers or agents involved in the sale of securities described in that
prospectus supplement and any applicable fee, commission or discount arrangements with them, details regarding any over-allotment
option granted to them, and net proceeds to us. The following is a summary of the securities we may offer with this prospectus.
Common
Stock
We
currently have authorized 50,000,000 shares of common stock, par value $0.001 per share. We may offer shares of our common stock
either alone or underlying other registered securities convertible into or exercisable for our common stock. Holders of our common
stock are entitled to such dividends as our Board of Directors may declare from time to time out of legally available funds. Currently,
we do not pay any dividends on our common stock. Each holder of our common stock is entitled to one vote per share. In this prospectus,
we provide a general description of, among other things, the rights and restrictions that apply to holders of our common stock.
Debt
Securities
We
may offer general debt obligations, which may be secured or unsecured, senior or subordinated and convertible into shares of our
common stock. In this prospectus, we refer to the senior debt securities and the subordinated debt securities together as the
“debt securities.” We may issue debt securities under a note purchase agreement or under an indenture to be entered
between us and a trustee; forms of the senior and subordinated indentures are included as an exhibit to the registration statement
of which this prospectus is a part. The indentures do not limit the amount of securities that may be issued under it and provides
that debt securities may be issued in one or more series. The senior debt securities will have the same rank as all of our other
indebtedness that is not subordinated. The subordinated debt securities will be subordinated to our senior debt on terms set forth
in the applicable prospectus supplement. In addition, the subordinated debt securities will be effectively subordinated to creditors.
Our Board of Directors will determine the terms of each series of debt securities being offered. This prospectus contains only
general terms and provisions of the debt securities. The applicable prospectus supplement will describe the particular terms of
the debt securities offered thereby. You should read any prospectus supplement and any free writing prospectus that we may authorize
to be provided to you related to the series of debt securities being offered, as well as the complete note agreements and/or indentures
that contain the terms of the debt securities. Forms of indentures have been filed as exhibits to the registration statement of
which this prospectus is a part, and supplemental indentures and forms of debt securities containing the terms of debt securities
being offered will be incorporated by reference into the registration statement of which this prospectus is a part from reports
we file with the SEC.
Warrants
We
may offer warrants for the purchase of shares of our common stock or of debt securities. We may issue the warrants by themselves
or together with common stock or debt securities, and the warrants may be attached to or separate from any offered securities.
Each series of warrants will be issued under a separate warrant agreement to be entered into between us and the investors or a
warrant agent. Our Board of Directors will determine the terms of the warrants. This prospectus contains only general terms and
provisions of the warrants. The applicable prospectus supplement will describe the particular terms of the warrants being offered
thereby. You should read any prospectus supplement and any free writing prospectus that we may authorize to be provided to you
related to the series of warrants being offered, as well as the complete warrant agreements that contain the terms of the warrants.
Specific warrant agreements will contain additional important terms and provisions and will be incorporated by reference into
the registration statement of which this prospectus is a part from reports we file with the SEC.
Units
We
may offer units consisting of our common stock, debt securities and/or warrants to purchase any of these securities in one or
more series. We may evidence each series of units by unit certificates that we will issue under a separate agreement. We may enter
into unit agreements with a unit agent. Each unit agent will be a bank or trust company that we select. We will indicate the name
and address of the unit agent in the applicable prospectus supplement relating to a particular series of units. This prospectus
contains only a summary of certain general features of the units. The applicable prospectus supplement will describe the particular
features of the units being offered thereby. You should read any prospectus supplement and any free writing prospectus that we
may authorize to be provided to you related to the series of units being offered, as well as the complete unit agreements that
contain the terms of the units. Specific unit agreements will contain additional important terms and provisions and will be incorporated
by reference into the registration statement of which this prospectus is a part from reports we file with the SEC.
Corporate
Information
Our
principal executive offices are located at 3 Arava St. P.O.B. 1026, Airport City, Israel, 7010000. Our telephone number is +972
72 3331002 and our website address is www.mysizeid.com. The information on our website is not a part of, and should not be construed
as being incorporated by reference into, this prospectus supplement or the accompanying prospectus.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. This prospectus contains a discussion of the risks applicable to
an investment in our securities. Prior to making a decision about investing in our securities, you should carefully consider the
specific factors discussed under the heading “Risk Factors” in this prospectus, together with all of the other information
contained or incorporated by reference in the prospectus supplement or appearing or incorporated by reference in this prospectus.
You should also consider the risks, uncertainties and assumptions discussed under Item 1A, “Risk Factors,” in
our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and any updates described in our Quarterly Reports
on Form 10-Q, all of which are incorporated herein by reference, and may be amended, supplemented or superseded from time to time
by other reports we file with the SEC in the. The risks and uncertainties we have described are not the only ones we face. Additional
risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our operations. The occurrence
of any of these known or unknown risks might cause you to lose all or part of your investment in the offered securities.
Risks
Related to Our Company and Our Business
We
may never successfully develop any products or generate revenues.
We
are a pre-revenue stage company with research, development, marketing and general and administrative expenses. We may be unable
to successfully develop or market any of our current or proposed products or technologies, those products or technologies may
not generate any revenues, and any revenues generated may not be sufficient for us to become profitable or thereafter maintain
profitability. We have only generated very minimal revenues to date.
We
have historically incurred significant losses and there can be no assurance when, or if, we will achieve or maintain profitability.
During
the twelve months ended December 31, 2016, the Company realized a net loss of $4,334,000 compared with a net loss of $3,437,000
for the year ended December 31, 2015. Our net loss from continuing operations for the nine months ended September 30, 2017 was
$3,519,000. Because of the numerous risks and uncertainties associated with the development of the Company’s products and
business, we are unable to predict the extent of any future losses or when we will become profitable, if at all. Expected future
operating losses will have an adverse effect on our cash resources, stockholders’ equity and working capital. Our failure
to become and remain profitable could depress the value of our stock and impair our ability to raise capital, expand our business,
maintain our development efforts, diversify our portfolio of staffing companies, or continue our operations. A decline in our
value could also cause you to lose all or part of your investment in our Company.
Based
on the projected cash flows and the cash balances as of the date of
t
his prospectus, our management is of the opinion
that without further fund raising we will not have sufficient resources to enable the Company to continue its operating activities,
including the development and marketing of our products, for a period of at least 12 months from the date of filing of
t
his
prospectus. As a result, there is substantial doubt about our ability to continue as a going concern.
Management’s
plans include the continued commercialization of our products and securing sufficient financing through the sale of additional
equity securities, debt or capital inflows from strategic partnerships. There can be no assurances, however, that we will be successful
in obtaining the level of financing needed for our operations. If we are unsuccessful in commercializing our products and securing
sufficient financing, we may need cease operations.
We
will need to raise additional capital to meet our business requirements in the future, which is likely to be challenging, could
be highly dilutive and may cause the market price of our common stock to decline.
In
order to meet our business objectives, we will need to raise additional capital, which may not be available on reasonable terms
or at all. Additional capital would be used to accomplish the following:
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maintain
compliance with applicable laws.
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To
the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities
could result in substantial dilution for our current stockholders. The terms of any securities issued by us in future capital
transactions may be more favorable to new investors, and may include preferences, superior voting rights and the issuance of warrants
or other derivative securities, which may have a further dilutive effect on the holders of any of our securities then-outstanding.
We may issue additional shares of our common stock or securities convertible into or exchangeable or exercisable for our common
stock in connection with hiring or retaining personnel, option or warrant exercises, future acquisitions or future placements
of our securities for capital-raising or other business purposes. The issuance of additional securities, whether equity or debt,
by us, or the possibility of such issuance, may cause the market price of our common stock to decline and existing stockholders
may not agree with our financing plans or the terms of such financings.
In
addition, we may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees,
accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to
recognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may
adversely impact our financial condition.
Furthermore,
any additional debt or equity financing that we may need may not be available on terms favorable to us, or at all. If we are unable
to obtain such additional financing on a timely basis, we may have to curtail our development activities and growth plans and/or
be forced to sell assets, perhaps on unfavorable terms, which would have a material adverse effect on our business, financial
condition and results of operations.
The
success of our business is highly dependent on being able to predict which applications and technologies will be successful, and
on the market acceptance and timely release of those applications and technologies. If we do not accurately predict which applications
and technologies will be successful, our financial performance will be materially adversely affected.
We
expect to derive most of our revenue by charging fees in connection with the usage of our applications and technologies. We must
make product development decisions and commit significant resources well in advance of the anticipated introduction of new applications
and technologies. The release of our applications and technologies may be delayed, may not succeed or may have a shorter life
cycle than anticipated. If the applications are not released when anticipated or do not attain wide market acceptance, our revenue
growth may never materialize, we may be unable to fully recover the resources we have committed, and our financial performance
will be harmed.
We
are substantially dependent on assets we purchased from an affiliated party, and if we lose the rights to such assets or the assets
are repurchased for any reason, our ability to develop existing and new applications based upon these assets would be harmed,
and our business, financial condition and results of operations would be materially and adversely affected.
In
February 2014, we entered into the Purchase Agreement with Shoshana Zigdon pursuant to which we acquired certain rights in a venture
for the accumulation of physical data of human beings by portable electronic devices (including smart phones, tablets and other
portable devices) for the purpose of locating, based on the accumulated data, articles of clothing in internet apparel stores,
which will fit the person whose measurements were so accumulated. In addition, pursuant to the Purchase Agreement, we acquired
the right, title and interest to the method and the certain patent application that had been filed by Shoshana Zigdon (PCT/IL2013/050056).
Our business is substantially dependent upon the assets we acquired pursuant to the Purchase Agreement. Therefore, our ability
to develop and commercialize our applications depends upon the effectiveness and continuation of the Purchase Agreement. If we
lose the right to the Method or Patent application described above, our ability to develop existing and new applications would
be harmed.
In
consideration for the sale of the Method and Patent application, we agreed to pay to Shoshana Zigdon, 18% of the Company’s
operating profit, directly or indirectly connected with the Venture and/or the Method and/or the commercialization of the Patent
together with value-added tax in accordance with the law for a period of seven years from the end of the development period of
the Venture. Shoshana Zigdon’s right to receive such consideration will apply even in the event the Patent is revoked/rejected/expires
and/or the non-receipt of the Patent for any reason.
The
Purchase Agreement may be terminated by either party in the event of a breach of the obligations of the other party and the failure
to cure the default within a specified period of time. Further, Shoshana Zigdon has the right to repurchase the Method and Patent
application from us upon the occurrence of one or more of the following events: (a) if an application for liquidation of the Company
and/or an application for appointment of a receiver for the Company and/or for a significant part of its assets has been filed,
and/or an attachment has been imposed on a significant part of the Company’s assets, and the application or attachment –
as the case may be – has not been not canceled within 60 days from the date on which they are filed; or (b) if upon the
date that is seven years from the date of execution of the Purchase Agreement, the amount of Company’s income, directly
and/or indirectly accumulated from the Venture and/or the method and/or the commercialization of the Patent is less than NIS 3.6
million (approximately $1 million). If Shoshana Zigdon repurchases the Method and Patent application, our ability to develop our
proposed products would be significantly harmed. Furthermore, we may lose the ability to commercialize any products that we have
already developed.
Changes
in economic conditions could materially affect our business, financial condition and results of operations.
Because
our target customers are retailers, we, together with the rest of the retail industry, will depend upon consumer discretionary
spending once we develop our proposed products. Increases in unemployment rates, reductions in home values, increases in home
foreclosures, investment losses, personal bankruptcies and reductions in access to credit and reduced consumer confidence, may
impact consumers’ ability and willingness to spend discretionary dollars. In addition, volatile economic conditions may
repress consumer confidence and discretionary spending. Any of the foregoing may have an adverse effect on our business,
financial condition and results of operations.
Damage
to our reputation or lack of acceptance of our brand in existing and new markets could negatively impact our business, financial
condition and results of operations.
We
intend to build a strong reputation for the quality of our technology, and we must protect and grow the value of our brand to
be successful. Any incident that erodes consumer affinity for our brand could significantly reduce our brand value and damage
our business. If guests perceive or experience a reduction in quality, or in any way believe we fail to deliver a consistently
positive experience, our brand value could suffer and our business may be adversely affected.
In
addition, our ability to successfully develop new retailers in new markets may be adversely affected by a lack of awareness or
acceptance of our brand in these new markets. To the extent that we are unable to foster name recognition and affinity for our
brand in new markets, our growth may be significantly delayed or impaired.
As
a result, adverse economic conditions in any of these areas could have a material adverse effect on our overall results of operations.
In recent years, certain of these markets have been more negatively impacted by the housing decline, high unemployment rates and
the overall economic crisis than other geographic areas. In addition, given our geographic concentration, negative publicity regarding
any of our retailers in these areas could have a material adverse effect on our business and operations, as could other regional
occurrences such as local strikes, terrorist attacks, increases in energy prices, adverse weather conditions, hurricanes, droughts
or other natural or man-made disasters.
In
particular, adverse weather conditions can impact guest traffic at our retailers, and, in more severe cases, cause temporary retail
closures, sometimes for prolonged periods. Our business is subject to seasonal fluctuations, with retail sales typically higher
during certain months, such as December. Adverse weather conditions during our most favorable months or periods may exacerbate
the effect of adverse weather on guest traffic and may cause fluctuations in our operating results from quarter-to-quarter within
a fiscal year.
Technology
changes rapidly in our business, and if we fail to anticipate new technologies, the quality, timeliness and competitiveness of
our products will suffer.
Rapid
technology changes require us to anticipate which technologies and/or distribution platforms our products must take advantage
of in order to make them competitive in the market at the time they are released. Therefore, we usually start our product development
with a range of technical development goals that we hope to be able to achieve. We may not be able to achieve these goals, or
our competition may be able to achieve them more quickly than we can. In either case, our products may be technologically inferior
to competitive products, or less appealing to consumers, or both. If we cannot achieve our technology goals within the original
development schedule of our products, then we may delay products until these technology goals can be achieved, which may delay
or reduce revenue and increase our development expenses.
We
rely upon third parties to provide distribution for our applications, and disruption in these services could harm our business.
We
currently utilize, and plan on continuing to utilize over the current fiscal year, third-party networking providers and distribution
through companies including, but not limited to, Apple and Google to distribute our technologies. If disruptions or capacity constraints
occur, the Company may have no means of replacing these services, on a timely basis or at all. This could cause a material adverse
condition for our operations and financial earnings.
We
rely on third-party hosting and cloud computing providers to operate certain aspects of our business. Any failure, disruption
or significant interruption in our network or hosting and cloud services could adversely impact our operations and harm our business.
Our
technology infrastructure is critical to the performance of our mobile applications and customer satisfaction. Our mobile applications
run on a complex distributed system, or what is commonly known as cloud computing. We own, operate and maintain elements of this
system, but significant elements of this system are operated by third-parties that we do not control and which would require significant
time to replace. We expect this dependence on third-parties to continue. In particular, a significant portion, if not almost all
data storage, data processing and other computing services and systems is hosted by cloud computing providers. Any disruptions,
outages and other performance problems relating to such services, including infrastructure changes, human or software errors and
capacity constraints, could adversely impact our business, financial condition or results of operations.
We
could be harmed by improper disclosure or loss of sensitive or confidential company, employee, associate or customer data, including
personal data.
In
connection with the operation of our business, we plan to store, process and transmit data, including personal and payment information,
about our employees, customers, associates and candidates, a portion of which is confidential and/or personally sensitive. Unauthorized
disclosure or loss of sensitive or confidential data may occur through a variety of methods. These include, but are not limited
to, systems failure, employee negligence, fraud or misappropriation, or unauthorized access to or through our information systems,
whether by our employees or third parties, including a cyberattack by computer programmers, hackers, members of organized crime
and/or state-sponsored organizations, who may develop and deploy viruses, worms or other malicious software programs.
Such
disclosure, loss or breach could harm our reputation and subject us to government sanctions and liability under our contracts
and laws that protect sensitive or personal data and confidential information, resulting in increased costs or loss of revenues.
It is possible that security controls over sensitive or confidential data and other practices we and our third-party vendors follow
may not prevent the improper access to, disclosure of, or loss of such information. The potential risk of security breaches and
cyberattacks may increase as we introduce new services and offerings, such as mobile technology. Further, data privacy is subject
to frequently changing rules and regulations, which sometimes conflict among the various jurisdictions in which we provide services.
Any failure or perceived failure to successfully manage the collection, use, disclosure, or security of personal information or
other privacy related matters, or any failure to comply with changing regulatory requirements in this area, could result in legal
liability or impairment to our reputation in the marketplace.
We
might not be able to successfully market our products.
We
expend significant resources in our marketing efforts, using a variety of media, including social media venues such as Facebook
and LinkedIn. In addition, we use targeted marketing on certain websites and have engaged two sales people in Europe and three
sales people in the U.S. to market our products. We expect to continue to conduct brand awareness programs and guest initiatives
to attract potential users. These initiatives may not be successful, resulting in expenses incurred without the benefit of substantial
revenues. Additionally, some of our competitors have greater financial resources, which enable them to purchase significantly
more advertising than we are able to purchase. Should our competitors increase spending on advertising and promotions or our advertising
funds decrease for any reason, or should our advertising and promotions be less effective than our competitors, there could be
a material adverse effect on our results of operations and financial condition.
Our
business operations and future development could be significantly disrupted if we lose key members of our management team.
The
success of our business continues to depend to a significant degree upon the continued contributions of our senior officers and
key employees, both individually and as a group. Our future performance will be substantially dependent in particular on our ability
to retain and motivate our Chief Executive Officer, and certain of our other senior executive officers. We currently do not have
an employment agreement in place with these officers. The loss of the services of our Chief Executive Officer, senior officers
or other key employees could have a material adverse effect on our business and plans for future development. We have no reason
to believe that we will lose the services of any of these individuals in the foreseeable future; however, we currently have no
effective replacement for any of these individuals due to their experience, reputation in the industry and special role in our
operations. We also do not maintain any key man life insurance policies for any of our employees.
Our
growth may strain our infrastructure and resources, which could slow our development of new retailers and adversely affect our
ability to manage our existing retailers.
Our
future growth may strain our retail management systems and resources, financial controls and information systems. Those demands
on our infrastructure and resources may also adversely affect our ability to manage our existing retailers. If we fail to continue
to improve our infrastructure or to manage other factors necessary for us to meet our expansion objectives, our operating results
could be materially and adversely affected. Likewise, if sales decline, we may be unable to reduce our infrastructure quickly
enough to prevent sales deleveraging, which would adversely affect our profitability.
Our
business operations are conducted in multiple languages and could be disrupted due to miscommunications or translation errors.
The
success of our business continues to depend on our marketing efforts in the United States, Europe and Israel, each of which is
conducted in the local language. Miscommunications or inaccurate foreign language translations could have a material adverse effect
on our business operations and financial conditions. Additionally, contracts, communications and complex technical information
must be accurately translated into foreign languages.
We
do not maintain theft or casualty insurance and only maintain modest liability and property insurance coverage and therefore could
incur losses as a result of an uninsured loss.
We
do not maintain theft or casualty insurance and only maintain modest liability and property insurance coverage. We cannot provide
any assurance that we will not incur uninsured liabilities and losses as a result of the conduct of our business. Any such uninsured
loss or liability could have a material adverse effect on our results of operations.
We
may not be able to adequately protect our intellectual property, which, in turn, could harm the value of our brands and adversely
affect our business.
Our
ability to implement our business plan successfully depends in part on our ability to build brand recognition using our trademarks,
service marks and other proprietary intellectual property, including our names and logos. We plan to register a number of our
trademarks; however, no assurance can be given that our trademark applications will be approved. We have been issued three patents,
one of each in of Russia, Japan and the U.S., have one patent-pending submission and an additional patent application which is
in process. No assurance can be given that our patent-pending submission or the additional patent application which is in process
will be approved. If our patent-pending submission or the additional patent application which is in process are not approved,
our ability to expand or develop our business may be negatively affected.
Third
parties may also oppose our trademark or patent applications, or otherwise challenge our use of the trademarks or patents. In
the event that our trademarks or patents are successfully challenged, we could be forced to rebrand our goods and services or
redesign our technology, which could result in loss of brand recognition, and could require us to devote resources to advertising
and marketing new brands and products.
If
our efforts to register, maintain and protect our intellectual property are inadequate, or if any third party misappropriates,
dilutes or infringes on our intellectual property, the value of our brands may be harmed, which could have a material adverse
effect on our business and might prevent our brands from achieving or maintaining market acceptance. We may also face the risk
of claims that we have infringed third parties’ intellectual property rights. If third parties claim that we infringe upon
their intellectual property rights, our operating profits could be adversely affected. Any claims of intellectual property infringement,
even those without merit, could be expensive and time consuming to defend, require us to rebrand our services, if feasible, divert
management’s attention and resources or require us to enter into royalty or licensing agreements in order to obtain the
right to use a third party’s intellectual property.
Any
royalty or licensing agreements, if required, may not be available to us on acceptable terms or at all. A successful claim of
infringement against us could result in our being required to pay significant damages, enter into costly license or royalty agreements,
or stop the sale of certain products or services, any of which could have a negative impact on our operating profits and harm
our future prospects.
Information
technology system failures or breaches of our network security could interrupt our operations and adversely affect our business.
We
will rely on our computer systems and network infrastructure across our operations. Our operations depend upon our ability to
protect our computer equipment and systems against damage from physical theft, fire, power loss, telecommunications failure or
other catastrophic events, as well as from internal and external security breaches, viruses, worms and other disruptive problems.
Any damage or failure of our computer systems or network infrastructure that causes an interruption in our operations could have
a material adverse effect on our business and subject us to litigation or actions by regulatory authorities. Although we employ
both internal resources and external consultants to conduct auditing and testing for weaknesses in our systems, controls, firewalls
and encryption and intend to maintain and upgrade our security technology and operational procedures to prevent such damage, breaches
or other disruptive problems, there can be no assurance that these security measures will be successful.
We
will continue to incur costs and be subject to various obligations as a result of being a public company, listed in the United
States and in Israel.
We
will continue to incur significant legal, accounting and other expenses as a result of being a public company, listed in the United
States and in Israel. Although we will incur costs each year associated with being a publicly-traded company, it is possible that
our actual costs of being a publicly-traded company will vary from year to year and may be different than our estimates. In estimating
these costs, we take into account expenses related to insurance, legal, accounting and compliance activities.
Furthermore,
the need to maintain the corporate infrastructure demanded of a public company may divert management’s attention from implementing
our growth strategy, which could prevent us from improving our business, results of operations and financial condition. We have
made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems
to meet our reporting obligations as a U.S. publicly traded company. However, the measures we take may not be sufficient to satisfy
our obligations as a publicly traded company.
We
may require additional capital to finance our operations in the future, but that capital may not be available when it is needed
and could be dilutive to existing stockholders.
We
may require additional capital for future operations. We plan to finance anticipated ongoing expenses and capital requirements
with funds generated from the following sources:
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cash
provided by operating activities;
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available
cash and cash investments; and
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capital
raised through debt and equity offerings.
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Current
conditions in the capital markets are such that traditional sources of capital may not be available to us when needed or may be
available only on unfavorable terms. Our ability to raise additional capital, if needed, will depend on conditions in the capital
markets, economic conditions and a number of other factors, many of which are outside our control, and on our financial performance.
Accordingly, we cannot assure you that we will be able to successfully raise additional capital at all or on terms that are acceptable
to us. If we cannot raise additional capital when needed, it may have a material adverse effect on our liquidity, financial condition,
results of operations and prospects. Further, if we raise capital by issuing stock, the holdings of our existing stockholders
will be diluted.
If
we raise capital by issuing debt securities, such debt securities would rank senior to our common stock upon our bankruptcy or
liquidation. In addition, we may raise capital by issuing equity securities that may be senior to our common stock for the purposes
of dividend and liquidating distributions, which may adversely affect the market price of our common stock. Finally, upon bankruptcy
or liquidation, holders of our debt securities and lenders with respect to other borrowings will receive a distribution of our
available assets prior to the holders of our common stock. Additional equity offerings may dilute the holdings of our existing
stockholders or reduce the market price of our common stock, or both.
Our
business is dependent upon continued market acceptance by consumers.
We
are substantially dependent on continued market acceptance of our products by customers, and such customers are dependent upon
regulatory and legislative forces. We cannot predict the future growth rate and size of this market. If we do not gain market
acceptance of our applications, our business may be materially affected.
If
we are able to expand our operations, we may be unable to successfully manage our future growth.
Since
inception, we have been planning for the expansion of our brand. Any such growth could place increased strain on our management,
operational, financial and other resources, and we will need to train, motivate, and manage employees, as well as attract management,
sales, finance and accounting, international, technical, and other professionals. Any failure to expand these areas and implement
appropriate procedures and controls in an efficient manner and at a pace consistent with our business objectives could have a
material adverse effect on our business and results of operations.
Any
future or current litigation could have a material adverse impact on our results of operations, financial condition and liquidity.
From
time to time we may be subject to litigation, including, among others, potential stockholder derivative actions. Risks associated
with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant
periods of time. To date we have obtained directors and officers liability (“D&O”) insurance to cover some of
the risk exposure for our directors and officers
.
Such insurance generally pays the expenses (including amounts paid
to plaintiffs, fines, and expenses including attorneys’ fees) of officers and directors who are the subject of a lawsuit
as a result of their service to the Company. There can be no assurance that we will be able to continue to maintain this insurance
at reasonable rates or at all, or in amounts adequate to cover such expenses should such a lawsuit occur. While neither Delaware
law nor our Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) or Amended and Restated
Bylaws (“Bylaws”) require us to indemnify or advance expenses to our officers and directors involved in such a legal
action, we expect that we would do so to the extent permitted by Delaware law. Without D&O insurance, the amounts we would
pay to indemnify our officers and directors should they be subject to legal action based on their service to the Company could
have a material adverse effect on our financial condition, results of operations and liquidity. Such lawsuits, and any related
publicity, may result in substantial costs and, among other things, divert the attention of management and our employees. An unfavorable
outcome in any claim or proceeding against us could have a material adverse impact on our financial position and results of operations
for the period in which the unfavorable outcome occurs, and potentially in future periods. Further, any settlement announced by
us may expose us to further claims against us by third parties seeking monetary or other damages which, even if unsuccessful,
would divert management attention from the business and cause us to incur costs, possibly material, to defend such matters, which
could have a material adverse impact on our financial position. See “Legal Proceedings” on page 7 for more information
regarding the Company’s involvement in ongoing litigation matters.
Our
prior operating results may not be indicative of our future results.
You
should not consider prior operating results to be indicative of our future operating results. The timing and amount of future
revenues will depend almost entirely on our ability to engage new retailers while maintaining a relationship with our existing
retailers. Our future operating results will depend upon many other factors, including, but not limited to:
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the
level of product and price competition;
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our
success in expanding our business network and managing our growth;
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the
ability to hire qualified employees; and
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the
timing of such hiring and our ability to control costs.
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Federal,
state and local or Israeli tax rules may adversely impact our results of operations and financial position.
We
are subject to federal, state and local taxes in the U.S., as well as local taxes in Israel in respect to our operations
in Israel. Although we believe our tax estimates are reasonable, if the Internal Revenue Service or other taxing authority
disagrees with the positions we have taken on our tax returns, we could face additional tax liability, including interest
and penalties. If material, payment of such additional amounts upon final adjudication of any disputes could have a material impact
on our results of operations and financial position. In addition, complying with new tax rules, laws or regulations could
impact our financial condition, and increases to federal or state statutory tax rates and other changes in tax laws, rules
or regulations may increase our effective tax rate. Any increase in our effective tax rate could have a material impact
on our financial results.
Our
management controls a large block of our common stock that will allow them to control us.
As
of the date of this prospectus, members of our management team beneficially own approximately 9.90% of our outstanding common stock.
In addition, two stockholders own approximately 21.04% of our outstanding common stock. As such, management and the two stockholders
of the Company own approximately, in the aggregate, 30.94% of our voting power. As a result, management and the two stockholders
may have the ability to control substantially all matters submitted to our stockholders for approval including:
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election
of our board of directors;
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removal
of any of our directors;
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amendment
of our Certificate of Incorporation or Bylaws; and
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adoption
of measures that could delay or prevent a change in control or impede a merger, takeover
or other business combination involving us.
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In
addition, management’s and the two stockholders’ stock ownership may discourage a potential acquirer from making a
tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders
from realizing a premium over our stock price. Any additional investors will own a minority percentage of our common stock and
will have minority voting rights.
The
auditors of our 2015 financial statements may discontinue their business.
We
have been advised by the auditors for our 2015 financial statements that they plan to discontinue their business of providing
financial and accounting services. Following any such discontinuance of their practice, it may be difficult, if not impossible,
to obtain consents for the inclusion of their financial statements in our filings. Should we not be able to obtain their consents,
there could be a delay in our ability to enter into future financing transactions prior to the filing of our 2017 financial statements
in our Annual Report on Form 10-K in 2018 unless our 2015 financial statements have been re-audited by another independent accounting
firm in accordance with the applicable rules and regulations of the Securities and Exchange Commission. We intend to work with
the auditors for our 2016 financial statements for the audit of our 2017 financial statements, and we believe that we will be
able to timely complete and file such financial statements and remain current in our financial and other reporting obligations
with the Securities and Exchange Commission.
Tax reform may affect the Company and
its stockholders.
On
December 22, 2017, President Trump signed into law the “Tax Cuts and Jobs Act” (TCJA) that significantly
reforms the Internal Revenue Code of 1986, as amended (the “Code”). The TCJA, among other things, includes
changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and restricts
the use of net operating loss carryforwards arising after December 31, 2017, allows for the expensing of capital expenditures,
and puts into effect the migration from a “worldwide” system of taxation to a territorial system. We do not
expect tax reform to have a material impact to our net operating losses. We continue to examine the impact this tax
reform legislation may have on our business. The impact of this tax reform on holders of our securities is uncertain.
This prospectus does not discuss any such tax legislation or the manner in which it might affect purchasers of our
securities. We urge our stockholders, including purchasers of securities in this offering, to consult with their legal and
tax advisors with respect to such legislation and the potential tax consequences of investing.
Risks
Related to our Operations in Israel
The
Company has facilities located in Israel, and therefore, political conditions in Israel may affect the Company’s operations
and results.
The
Company has facilities located in Israel. Accordingly, political, economic and military conditions in Israel will directly or
indirectly affect the Company’s operations and results. Since the establishment of the State of Israel, a number of armed
conflicts have taken place between Israel and its Arab neighbors. An ongoing state of hostility, varying in degree and intensity
has led to security and economic problems for Israel. For a number of years there have been continuing hostilities between Israel
and the Palestinians. This includes hostilities with the Islamic movement Hamas in the Gaza Strip, which have adversely affected
the peace process and at times resulted in armed conflicts. Such hostilities have negatively influenced Israel’s economy
as well as impaired Israel’s relationships with several other countries. Israel also faces threats from Hezbollah militants
in Lebanon, from ISIS and rebel forces in Syria, from the government of Iran and other potential threats from additional countries
in the region. Moreover, some of Israel’s neighboring countries have recently undergone or are undergoing significant political
changes. These political, economic and military conditions in Israel could have a material adverse effect on the Company’s
business, financial condition, results of operations and future growth.
Israel’s
economy may become unstable.
From
time to time, Israel’s economy may experience inflation or deflation, low foreign exchange reserves, fluctuations in world
commodity prices, military conflicts and civil unrest. For these and other reasons, the government of Israel has intervened in
the economy employing fiscal and monetary policies, import duties, foreign currency restrictions, controls of wages, prices and
foreign currency exchange rates and regulations regarding the lending limits of Israeli banks to companies considered to be in
an affiliated group. The Israeli government has periodically changed its policies in these areas. Reoccurrence of previous destabilizing
factors could make it more difficult for the Company to operate its business and could adversely affect its business.
Some
of the Company’s employees and officers are obligated to perform military reserve duty in Israel.
Generally,
Israeli adult male citizens and permanent residents are obligated to perform annual military reserve duty up to a specified age.
They also may be called to active duty at any time under emergency circumstances, which could have a disruptive impact on the
Company’s workforce
.
It
may be difficult to enforce a non-Israeli judgment against the Company or its officers and directors.
The
operating subsidiary of the Company is incorporated in Israel. All of the Company’s executive officers and directors are
not residents of the United States, and a substantial portion of the Company’s assets and the assets of its executive officers
and directors are located outside the United States. Therefore, a judgment obtained against the Company, or any of these persons,
including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the
United States and may not necessarily be enforced by an Israeli court. It also may be difficult to affect service of process on
these persons in the United States or to assert U.S. securities law claims in original actions instituted in Israel. Additionally,
it may be difficult for an investor, or any other person or entity, to initiate an action with respect to U.S. securities laws
in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel
is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim,
it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content
of applicable U.S. law often involves the testimony of expert witnesses, which can be a time consuming and costly process. Certain
matters of procedure will also be governed by Israeli law. There is little binding case law in Israel that addresses the matters
described above. As a result of the difficulty associated with enforcing a judgment against the Company in Israel, it may be impossible
to collect any damages awarded by either a U.S. or foreign court.
Our
international operations could expose us to additional risks, including exchange rate fluctuations, legal regulations and political
or economic instability that could harm our business and operating results.
Our
international operations expose us to the following risks which may have a material adverse effect on our business and operating
results:
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devaluations
and fluctuations in currency exchange rates including fluctuations between the U.S. dollar
and the NIS;
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costs
of compliance with local laws, including labor laws and intellectual property laws;
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compliance
with domestic and foreign government policies, including compliance with Israeli
securities laws and TASE;
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changes
in trade regulations and procedures affecting approval, production, pricing, marketing,
reimbursement for and access to, our products;
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compliance
with applicable foreign anti-corruption laws, anti-trust/competition laws, anti-Boycott
Israel law and anti-money laundering laws; and
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economic
and geopolitical developments and conditions, including ongoing instability in global
economies and financial markets, international hostilities, acts of terrorism and governmental
reactions, inflation, and military and political alliances.
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Risks
Related to the Common Stock
A
more active, liquid trading market for our common stock may not develop, and the price of our common stock may fluctuate significantly.
Although
our common stock is listed on the NASDAQ Capital Market, it has only been traded on the NASDAQ Capital Market since July 25, 2016.
There has been relatively limited trading volume in the market for our common stock, and a more active, liquid public trading
market may not develop or may not be sustained. Limited liquidity in the trading market for our common stock may adversely affect
a stockholder’s ability to sell its shares of common stock at the time it wishes to sell them or at a price that it considers
acceptable. If a more active, liquid public trading market does not develop, we may be limited in our ability to raise capital
by selling shares of common stock and our ability to acquire other companies or assets by using shares of our common stock as
consideration. In addition, if there is a thin trading market or “float” for our stock, the market price for our common
stock may fluctuate significantly more than the stock market as a whole. Without a large float, our common stock would be less
liquid than the stock of companies with broader public ownership and, as a result, the trading prices of our common stock may
be more volatile and it would be harder for you to liquidate any investment in our common stock. Furthermore, the stock market
is subject to significant price and volume fluctuations, and the price of our common stock could fluctuate widely in response
to several factors, including:
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our
quarterly or annual operating results;
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changes
in our earnings estimates;
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investment
recommendations by securities analysts following our business or our industry;
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additions
or departures of key personnel;
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changes
in the business, earnings estimates or market perceptions of our competitors;
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our
failure to achieve operating results consistent with securities analysts’ projections;
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changes
in industry, general market or economic conditions; and
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announcements
of legislative or regulatory changes.
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The
stock market has experienced extreme price and volume fluctuations in recent years that have significantly affected the quoted
prices of the securities of many companies, including companies in the staffing industry. The changes often appear to occur without
regard to specific operating performance. The price of our common stock could fluctuate based upon factors that have little or
nothing to do with us and these fluctuations could materially reduce our stock price.
Sales
by our stockholders of a substantial number of shares of our common stock in the public market could adversely affect the market
price of our common stock.
A
substantial portion of our total outstanding shares of common stock may be sold into the market at any time. Most of these shares
are held by three stockholders, one of which is also an executive officer of the Company. Although we believe that such executive
officer has no current intention to sell a significant number of shares of our stock, we cannot provide any such assurance. In
addition, we cannot provide assurance that the other two large stockholders of the Company have no current intention to sell a
significant number of shares of our stock. If any of the three stockholders which hold most of our shares were to decide to sell
large amounts of stock over a short period of time (presuming such sales were permitted) such sales could cause the market price
of our common stock to drop significantly, even if our business is doing well.
Further,
the market price of our common stock could decline as a result of the perception that such sales could occur. These sales, or
the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at
a time and price that we deem appropriate.
Our
securities are traded on more than one market which may result in price variations
.
Our
securities have been trading on the NASDAQ Capital Market since July 2016 and on TASE since September 2005. Trading in our securities
on such exchanges occurs in different currencies (U.S. dollars on NASDAQ and NIS on the TASE), and at different times (due to
different time zones, trading days and public holidays in the United States and Israel). The trading prices of our securities
on the two exchanges may differ due to the foregoing and other factors. Any decrease in the price of our shares on the TASE could
cause a decrease in the trading price of our shares on NASDAQ and vice versa.
We
are a smaller reporting company and, as a result of the reduced disclosure and governance requirements applicable to such companies,
our common stock may be less attractive to investors.
We
are a smaller reporting company, (i.e. a company with “public float” held by non-affiliates with a market value of
less than $75 million) and we are eligible to take advantage of certain exemptions from various reporting requirements applicable
to other public companies. We have elected to adopt these reduced disclosure requirements. We cannot predict if investors will
find our common stock less attractive as a result of our taking advantage of these exemptions. If some investors find our common
stock less attractive as a result of our choices, there may be a less active trading market for our common stock and our stock
price may be more volatile.
We
do not expect to pay any cash dividends in the foreseeable future.
We
have never declared or paid cash dividends on our common stock. We intend to retain our future earnings, if any, in order to reinvest
in the development and growth of our business and, therefore, do not intend to pay dividends on our common stock for the foreseeable
future. Any future determination to pay dividends will be at the discretion of our Board and will depend on our financial condition,
results of operations, capital requirements, and such other factors as our Board deems relevant. Accordingly, you may need to
sell your shares of our common stock to realize a return on your investment, and you may not be able to sell your shares at or
above the price you paid for them.
We
can sell additional shares of common stock without consulting stockholders and without offering shares to existing stockholders,
which would result in dilution of stockholders’ interests in the Company and could depress our stock price.
Our
Certificate of Incorporation currently authorizes 50,000,000 shares of common stock, of which 23,464,447 are currently outstanding, and
our Board is authorized to issue additional shares of our common stock.
Although
our Board intends to utilize its reasonable business judgment to fulfill its fiduciary obligations to our then existing stockholders
in connection with any future issuance of our capital stock, the future issuance of additional shares of our capital stock would
cause immediate, and potentially substantial, dilution to our existing stockholders, which could also have a material effect on
the market value of the shares.
Further,
our shares do not have preemptive rights, which means we can sell shares of our capital stock to other persons without offering
purchasers in this offering the right to purchase their proportionate share of such offered shares. Therefore, any additional
sales of stock by us could dilute your ownership interest in our Company.
Our
quarterly operating results may fluctuate significantly.
We
expect our operating results to be subject to quarterly fluctuations. Our net loss and other operating results will be affected
by numerous factors, including:
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variations
in the level of expenses related to our development programs;
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any
intellectual property infringement lawsuit in which we may become involved;
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regulatory
developments affecting our products; and
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our
execution of any collaborative, licensing or similar arrangements, and the timing of
payments under these arrangements.
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If
our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock
could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of
our common stock to fluctuate substantially.
If
we fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to accounting controls and procedures, or if
we discover material weaknesses and deficiencies in our internal control and accounting procedures, our stock price could decline
significantly and raising capital could be more difficult.
If
we fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or,
if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could
decline significantly and raising capital could be more difficult. Section 404 of the Sarbanes-Oxley Act requires annual
management assessments of the effectiveness of our internal control over financial reporting and a report by our independent auditors
addressing these assessments. If material weaknesses or significant deficiencies are discovered or if we otherwise fail to achieve
and maintain the adequacy of our internal control, we may not be able to ensure that we can conclude on an ongoing basis that
we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover,
effective internal controls are necessary for us to produce reliable financial reports and are important to helping prevent financial
fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors
could lose confidence in our reported financial information, and the trading price of our common stock could drop significantly.
Our
Certificate of Incorporation, Bylaws and Delaware law may have anti-takeover effects that could discourage, delay or prevent a
change in control, which may cause our stock price to decline.
Our
Certificate of Incorporation, Bylaws and Delaware law could make it more difficult for a third party to acquire us, even if closing
such a transaction would be beneficial to our stockholders. Provisions of our Certificate of Incorporation, Bylaws and Delaware
law also could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing
a change in control, including changes a stockholder might consider favorable. Such provisions may also prevent or frustrate attempts
by our stockholders to replace or remove our management. In particular, the Certificate of Incorporation, Bylaws and Delaware
law, as applicable, among other things:
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provide
the Board with the ability to alter the Bylaws without stockholder approval;
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place
limitations on the removal of directors; and
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provide
that vacancies on the board of directors may be filled by a majority of directors in
office,
although
less than a quorum.
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We
are subject to Section 203 of the Delaware General Corporation Law which, subject to certain exceptions, prohibits “business
combinations” between a publicly-held Delaware corporation and an “interested stockholder,” which is generally
defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware corporation’s voting stock for a three-year
period following the date that such stockholder became an interested stockholder. These provisions are expected to discourage
certain types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control
of us to first negotiate with our Board. These provisions may delay or prevent someone from acquiring or merging with us, which
may cause the market price of our common stock and the value of our securities to decline. In addition, rules applicable to TASE
listed companies also limit the terms permitted with respect to a new class of shares and prohibit any such new class of shares
from having superior voting rights to the rights of the class of shares listed on TASE.
If
we fail to comply with the continued listing requirements of the NASDAQ Capital Market, our common stock may be delisted and the
price of our common stock and our ability to access the capital markets could be negatively impacted.
On
June 5, 2017, we received a written notice (the “June Notice”) from the NASDAQ Stock Market LLC (“NASDAQ”)
that we were not in compliance with NASDAQ Listing Rule 5550(b)(2), as we did not maintain a minimum market value of listed
securities of $35 million for the preceding 30 consecutive business days. In accordance with NASDAQ Listing Rule 5810(c)(3)(C),
we had a period of 180 calendar days, or until December 4, 2017 to regain compliance with the market value of listed
securities requirement. On December 5, 2017, we received a second written notice from NASDAQ which indicated that because we did
not regain compliance with the market value of listed securities requirement by December 4, 2017, our securities would
be delisted from NASDAQ on December 14, 2017 unless we request an appeal of such determination on or prior to such date. In accordance
with NASDAQ Rules and procedures, on December 12, 2017, we requested an appeal before the NASDAQ Hearings Panel of the determination
to delist our securities from The NASDAQ Capital Market. A hearing on this matter is currently scheduled to be held on January
25, 2018. The appeal has the effect of staying the delisting of our securities pending a final written decisions by the NASDAQ
Hearings Panel. Although we have requested an appeal before the Nasdaq Hearings Panel, no assurance can be given that we
will be successful in our appeal.
In
addition, on September 26, 2017, we received a written notice (the “September Notice”) from NASDAQ that we were not
in compliance with NASDAQ Listing Rule 5550(a)(2), as the minimum bid price of our common stock has been below $1.00 per
share for 30 consecutive business days. In accordance with NASDAQ Listing Rule 5810(c)(3)(A), we have a period of 180 calendar
days, or until March 26, 2018, to regain compliance with the minimum bid price requirement. To regain compliance, the closing
bid price of our common stock must meet or exceed $1.00 per share for at least 10 consecutive business days during this 180 calendar
day period. In the event we do not regain compliance by March 26, 2018, we may be eligible for an additional 180 calendar
day grace period if we meet the continued listing standards, with the exception of bid price, for the NASDAQ Capital Market, and
we provide written notice to NASDAQ of our intention to cure the deficiency during the second compliance period. Although we may
effect a reverse stock split of our issued and outstanding common stock in the future, there can be no assurance that such reverse
stock split will enable the Company to regain compliance with NASDAQ minimum bid price requirement.
If
our appeal with respect to our compliance with the market value of listed securities is not successful and/or we fail to regain
compliance with the minimum bid price within the allotted compliance period(s), including any extensions that may be granted
by NASDAQ or fail to comply with or other requirements for continued listing, our common stock may be delisted and the price of
our common stock and our ability to access the capital markets could be negatively impacted. A delisting of our common stock from
the NASDAQ Capital Market could materially reduce the liquidity of our common stock and result in a corresponding material reduction
in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing
sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and fewer
business development opportunities.
The
exercise of outstanding warrants and stock options will have a dilutive effect on the percentage ownership of our capital stock
by existing stockholders.
As
of September 30, 2017, we had outstanding warrants to acquire 2,480,605 shares of our common stock and stock options to purchase
3,115,500 shares of our common stock (not including options to purchase an aggregate of 1,380,000 shares of common stock which
are subject to approval by TASE and an increase in the common stock reserve pursuant to the Company’s 2017 Consultant Equity
Incentive Plan), in addition to the common warrants and pre-funded warrants that we are offering hereunder. The expiration of
the term of such options and warrants range from December 2017 to July 2022. If a significant number of such warrants and stock
options are exercised by the holders, the percentage of our common stock owned by our existing stockholders will be diluted.
FORWARD-LOOKING
STATEMENTS
This
prospectus, including the documents that we incorporate by reference, contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Any statements in this prospectus and any accompanying
prospectus supplement about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not
historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words
or phrases such as “believe,” “will,” “expect,” “anticipate,” “estimate,”
“intend,” “plan” and “would.” For example, statements concerning financial condition, possible
or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management, markets for
our common stock and future management and organizational structure are all forward-looking statements. Forward-looking statements
are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results,
levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements
expressed or implied by any forward-looking statement.
Any
forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout this prospectus
and any accompanying prospectus supplement. Some of the risks, uncertainties and assumptions that could cause actual results to
differ materially from estimates or projections contained in the forward-looking statements include but are not limited to:
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our business strategies;
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our competitive position;
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our industry environment;
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our anticipated financial and operating
results, including anticipated sources of revenues;
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when we expect to begin to receive
revenues with respect to services we provide or anticipate providing;
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anticipated future sources of revenues;
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management’s expectation with
respect to future acquisitions;
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statements regarding our goals,
intensions, plans and expectations, including the introduction of new products and markets; and
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our cash needs and financing plans
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The
foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any
forward-looking statements. You should read this prospectus and the documents that we reference herein and have filed as exhibits
to the registration statement, of which this prospectus is part, completely and with the understanding that our actual future
results may be materially different from what we expect. You should assume that the information appearing in this prospectus
is accurate as of the date on the front cover of this prospectus. Because the risk factors referred to on page 12 of this
prospectus and incorporated herein by reference, could cause actual results or outcomes to differ materially from those expressed
in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. Further,
any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In
addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of
the information presented in this prospectus and any accompanying prospectus supplement, and particularly our forward-looking
statements, by these cautionary statements.
USE
OF PROCEEDS
Except
as described in any prospectus supplement and any free writing prospectus in connection with a specific offering, we currently
intend to use the net proceeds from the sale of the securities offered under this prospectus for working capital, repayment of
trade payables and general corporate purposes. We have not determined the amount of net proceeds to be used specifically
for the foregoing purposes. As a result, our management will have broad discretion in the allocation of the net proceeds and investors
will be relying on the judgment of our management regarding the application of the proceeds of any sale of the securities.
Each
time we offer securities under this prospectus, we will describe the intended use of the net proceeds from that offering in the
applicable prospectus supplement. The actual amount of net proceeds we spend on a particular use will depend on many factors,
including, our future capital expenditures, the amount of cash required by our operations, and our future revenue growth, if any.
Therefore, we will retain broad discretion in the use of the net proceeds.
THE SECURITIES WE
MAY OFFER
We may offer shares
of common stock, debt securities or warrants to purchase common stock, debt securities, or any combination of the foregoing, either
individually or as units comprised of one or more of the other securities. We may offer up to $50,000,000 of securities under
this prospectus. If securities are offered as units, we will describe the terms of the units in a prospectus supplement.
DESCRIPTION OF CAPITAL
STOCK
General
The following description
of our capital stock, together with any additional information we include in any applicable prospectus supplement or any related
free writing prospectus, summarizes the material terms and provisions of our common stock that we may offer under this prospectus.
While the terms we have summarized below will apply generally to any future common stock that we may offer, we will describe the
particular terms of any class or series of these securities in more detail in the applicable prospectus supplement. For the complete
terms of our common stock, please refer to our Certificate of Incorporation and our Bylaws that are incorporated by reference
into the registration statement of which this prospectus is a part or may be incorporated by reference in this prospectus or any
applicable prospectus supplement. The terms of these securities may also be affected by Delaware General Corporation Law. The
summary below and that contained in any applicable prospectus supplement or any related free writing prospectus are qualified
in their entirety by reference to our Certificate of Incorporation and Bylaws.
As of the date of
this prospectus, our authorized capital stock consisted of 50,000,000 shares of common stock, $0.001 par value per share.
As of January 9, 2018, there were 23,464,447 shares of our common stock issued and outstanding.
Common Stock
Holders of our common
stock are entitled to one vote per share. Our Certificate of Incorporation does not provide for cumulative voting. Holders of
our common stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors (the “Board”
or “Board of Directors”) out of legally available funds. However, the current policy of our Board is to retain earnings,
if any, for the operation and expansion of our company. Upon liquidation, dissolution or winding-up, the holders of our common
stock are entitled to share ratably in all of our assets which are legally available for distribution, after payment of or provision
for all liabilities. The holders of our common stock have no preemptive, subscription, redemption or conversion rights.
Anti-Takeover Effects of Certain Provisions
of our Certificate of Incorporation, Bylaws and the DGCL
Certain provisions
of our Certificate of Incorporation and Bylaws, which are summarized in the following paragraphs, may have the effect of discouraging
potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder
might consider favorable. Such provisions may also prevent or frustrate attempts by our stockholders to replace or remove our
management. In particular, the Certificate of Incorporation and Bylaws and Delaware law, as applicable, among other things:
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provide
the Board with the ability to alter the bylaws without stockholder approval;
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place limitations
on the removal of directors; and
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provide
that vacancies on the board of directors may be filled by a majority of directors in
office, although less than a quorum.
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These provisions are
expected to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking
to acquire control of us to first negotiate with its board. These provisions may delay or prevent someone from acquiring or merging
with us, which may cause our market price of our common stock to decline.
Advance
Notice Bylaws.
Our Bylaws contain an advance notice procedure for stockholder proposals to be brought before any
meeting of stockholders, including proposed nominations of persons for election to our Board of Directors. Stockholders at any
meeting will only be able to consider proposals or nominations specified in the notice of meeting or brought before the meeting
by or at the direction of our Board of Directors or by a stockholder who was a stockholder of record on the record date for the
meeting, who is entitled to vote at the meeting and who has given our corporate secretary timely written notice, in proper form,
of the stockholder's intention to bring that business before the meeting. Although the Bylaws do not give our Board of Directors
the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted
at a special or annual meeting, the Bylaws may have the effect of precluding the conduct of certain business at a meeting if the
proper procedures are not followed or may discourage or deter a potential acquirer from conducting a solicitation of proxies to
elect its own slate of directors or otherwise attempting to obtain control of us.
Interested
Stockholder Transactions.
We are subject to Section 203 of the Delaware General Corporation Law
(“DGCL”) which, subject to certain exceptions, prohibits "business combinations" between a publicly-held
Delaware corporation and an "interested stockholder," which is generally defined as a stockholder who becomes a beneficial
owner of 15% or more of a Delaware corporation's voting stock for a three-year period following the date that such stockholder
became an interested stockholder.
Limitations
on Liability, Indemnification of Officers and Directors and Insurance
The
DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders
for monetary damages for breaches of directors' fiduciary duties as directors and Certificate of Incorporation will include such
an exculpation provision. Our Certificate of Incorporation and Bylaws will include provisions that indemnify, to the fullest extent
allowable under the DGCL, the personal liability of directors or officers for monetary damages for actions taken as a director
or officer of us, or for serving at our request as a director or officer or another position at another corporation or enterprise,
as the case may be. Our Certificate of Incorporation and Bylaws will also provide that we must indemnify and advance reasonable
expenses to our directors and officers, subject to our receipt of an undertaking from the indemnified party as may be required
under the DGCL. Our Certificate of Incorporation will expressly authorize us to carry directors' and officers' insurance to protect
us, our directors, officers and certain employees for some liabilities. The limitation of liability and indemnification provisions
in our Certificate of Incorporation and Bylaws may discourage stockholders from bringing a lawsuit against directors for breach
of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against
our directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. However,
these provisions do not limit or eliminate our rights, or those of any stockholder, to seek non-monetary relief such as injunction
or rescission in the event of a breach of a director's duty of care. The provisions will not alter the liability of directors
under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in a class action
or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification
provisions. There is currently no pending material litigation or proceeding against any of our directors, officers or employees
for which indemnification is sought.
Authorized
but Unissued Shares
Our
authorized but unissued shares of common stock will be available for future issuance without your approval. We may use additional
shares for a variety of purposes, including future public offerings to raise additional capital, to fund acquisitions and as employee
compensation. The existence of authorized but unissued shares of common stock could render more difficult or discourage an attempt
to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Transfer Agent and Registrar
The Transfer Agent and Registrar for our
common stock is VStock Transfer, LLC.
DESCRIPTION OF DEBT
SECURITIES
The following description,
together with the additional information we include in any applicable prospectus supplements or free writing prospectuses, summarizes
the material terms and provisions of the debt securities that we may offer under this prospectus. We may issue debt securities,
in one or more series, as either senior or subordinated debt or as senior or subordinated convertible debt. While the terms we
have summarized below will apply generally to any future debt securities we may offer under this prospectus, we will describe
the particular terms of any debt securities that we may offer in more detail in the applicable prospectus supplement or free writing
prospectus. The terms of any debt securities we offer under a prospectus supplement may differ from the terms we describe below.
However, no prospectus supplement shall fundamentally change the terms that are set forth in this prospectus or offer a security
that is not registered and described in this prospectus at the time of its effectiveness. As of the date of this prospectus, we
have no outstanding registered debt securities. Unless the context requires otherwise, whenever we refer to the “indentures,”
we also are referring to any supplemental indentures that specify the terms of a particular series of debt securities.
We will issue any
senior debt securities under the senior indenture that we will enter into with the trustee named in the senior indenture. We will
issue any subordinated debt securities under the subordinated indenture and any supplemental indentures that we will enter into
with the trustee named in the subordinated indenture. We have filed forms of these documents as exhibits to the registration statement,
of which this prospectus is a part, and supplemental indentures and forms of debt securities containing the terms of the debt
securities being offered will be filed as exhibits to the registration statement of which this prospectus is a part or will be
incorporated by reference from reports that we file with the SEC.
The indentures will
be qualified under the Trust Indenture Act of 1939, as amended, or the Trust Indenture Act. We use the term “trustee”
to refer to either the trustee under the senior indenture or the trustee under the subordinated indenture, as applicable.
The following summaries
of material provisions of the senior debt securities, the subordinated debt securities and the indentures are subject to, and
qualified in their entirety by reference to, all of the provisions of the indenture and any supplemental indentures applicable
to a particular series of debt securities. We urge you to read the applicable prospectus supplements and any related free writing
prospectuses related to the debt securities that we may offer under this prospectus, as well as the complete indentures that contains
the terms of the debt securities. Except as we may otherwise indicate, the terms of the senior indenture and the subordinated
indenture are identical.
General
The terms of each
series of debt securities will be established by or pursuant to a resolution of our Board of Directors and set forth or determined
in the manner provided in an officers’ certificate or by a supplemental indenture. Debt securities may be issued in separate
series without limitation as to aggregate principal amount. We may specify a maximum aggregate principal amount for the debt securities
of any series. We will describe in the applicable prospectus supplement the terms of the series of debt securities being offered,
including:
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the principal
amount being offered, and if a series, the total amount authorized and the total amount
outstanding;
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any limit
on the amount that may be issued;
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whether
or not we will issue the series of debt securities in global form, and, if so, the terms
and who the depositary will be;
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whether
and under what circumstances, if any, we will pay additional amounts on any debt securities
held by a person who is not a United States person for tax purposes, and whether we can
redeem the debt securities if we have to pay such additional amounts;
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the annual
interest rate, which may be fixed or variable, or the method for determining the rate
and the date interest will begin to accrue, the dates interest will be payable and the
regular record dates for interest payment dates or the method for determining such dates;
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whether
or not the debt securities will be secured or unsecured, and the terms of any secured
debt;
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the terms
of the subordination of any series of subordinated debt;
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the place
where payments will be made;
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restrictions
on transfer, sale or other assignment, if any;
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our right,
if any, to defer payment of interest and the maximum length of any such deferral period;
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the date,
if any, after which, and the price at which, we may, at our option, redeem the series
of debt securities pursuant to any optional or provisional redemption provisions and
the terms of those redemption provisions;
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provisions
for a sinking fund purchase or other analogous fund, if any, including the date, if any,
on which, and the price at which we are obligated, pursuant thereto or otherwise, to
redeem, or at the holder’s option, to purchase, the series of debt securities and
the currency or currency unit in which the debt securities are payable;
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whether
the indenture will restrict our ability or the ability of our subsidiaries to:
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incur additional
indebtedness;
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issue additional
securities;
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pay dividends
or make distributions in respect of our capital stock or the capital stock of our subsidiaries;
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place restrictions
on our subsidiaries’ ability to pay dividends, make distributions or transfer assets;
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make investments
or other restricted payments;
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sell or
otherwise dispose of assets;
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enter into
sale-leaseback transactions;
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engage in
transactions with stockholders or affiliates;
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issue or
sell stock of our subsidiaries; or
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effect a
consolidation or merger;
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whether
the indenture will require us to maintain any interest coverage, fixed charge, cash flow-based,
asset-based or other financial ratios;
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a discussion
of certain material or special United States federal income tax considerations applicable
to the debt securities;
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information
describing any book-entry features;
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the applicability
of the provisions in the indenture on discharge;
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whether
the debt securities are to be offered at a price such that they will be deemed to be
offered at an “original issue discount” as defined in paragraph (a) of
Section 1273 of the Internal Revenue Code of 1986, as amended;
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the denominations
in which we will issue the series of debt securities, if other than denominations of
$1,000 and any integral multiple thereof;
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the currency
of payment of debt securities if other than U.S. dollars and the manner of determining
the equivalent amount in U.S. dollars; and
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any other
specific terms, preferences, rights or limitations of, or restrictions on, the debt securities,
including any additional events of default or covenants provided with respect to the
debt securities, and any terms that may be required by us or advisable under applicable
laws or regulations.
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Conversion or Exchange Rights
We will set forth
in the applicable prospectus supplement the terms under which a series of debt securities may be convertible into or exchangeable
for our common stock or other securities (including securities of a third party). We will include provisions as to whether conversion
or exchange is mandatory, at the option of the holder or at our option. We may include provisions pursuant to which the number
of shares of our common stock or other securities (including securities of a third party) that the holders of the series of debt
securities receive would be subject to adjustment.
Consolidation, Merger or Sale
Unless we provide
otherwise in the prospectus supplement applicable to a particular series of debt securities, the indentures will not contain any
covenant that restricts our ability to merge or consolidate, or sell, convey, transfer or otherwise dispose of all or substantially
all of our assets. However, any successor to or acquirer of such assets must assume all of our obligations under the indentures
or the debt securities, as appropriate. If the debt securities are convertible into or exchangeable for our other securities or
securities of other entities, the person with whom we consolidate or merge or to whom we sell all of our property must make provisions
for the conversion of the debt securities into securities that the holders of the debt securities would have received if they
had converted the debt securities before the consolidation, merger or sale.
Events of Default under the Indenture
Unless we provide
otherwise in the prospectus supplement applicable to a particular series of debt securities, the following are events of default
under the indentures with respect to any series of debt securities that we may issue:
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if we fail
to pay interest when due and payable and our failure continues for 90 days and the time
for payment has not been extended;
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if we fail
to pay the principal, premium or sinking fund payment, if any, when due and payable at
maturity, upon redemption or repurchase or otherwise, and the time for payment has not
been extended;
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if we fail
to observe or perform any other covenant contained in the debt securities or the indentures,
other than a covenant specifically relating to another series of debt securities, and
our failure continues for 90 days after we receive notice from the trustee or we and
the trustee receive notice from the holders of at least 25% in aggregate principal amount
of the outstanding debt securities of the applicable series; and
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if specified
events of bankruptcy, insolvency or reorganization occur.
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We will describe in
each applicable prospectus supplement any additional events of default relating to the relevant series of debt securities.
If an event of default
with respect to debt securities of any series occurs and is continuing, other than an event of default specified in the last bullet
point above, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that
series, by notice to us in writing, and to the trustee if notice is given by such holders, may declare the unpaid principal, premium,
if any, and accrued interest, if any, due and payable immediately. If an event of default arises due to the occurrence of certain
specified bankruptcy, insolvency or reorganization events, the unpaid principal, premium, if any, and accrued interest, if any,
of each issue of debt securities then outstanding shall be due and payable without any notice or other action on the part of the
trustee or any holder.
The holders of a majority
in principal amount of the outstanding debt securities of an affected series may waive any default or event of default with respect
to the series and its consequences, except defaults or events of default regarding payment of principal, premium, if any, or interest,
unless we have cured the default or event of default in accordance with the indenture. Any waiver shall cure the default or event
of default.
Subject to the terms
of the indentures, if an event of default under an indenture shall occur and be continuing, the trustee will be under no obligation
to exercise any of its rights or powers under such indenture at the request or direction of any of the holders of the applicable
series of debt securities, unless such holders have offered the trustee reasonable indemnity or security satisfactory to it against
any loss, liability or expense. The holders of a majority in principal amount of the outstanding debt securities of any series
will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee,
or exercising any trust or power conferred on the trustee, with respect to the debt securities of that series, provided that:
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the direction
so given by the holder is not in conflict with any law or the applicable indenture; and
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subject
to its duties under the Trust Indenture Act, the trustee need not take any action that
might involve it in personal liability or might be unduly prejudicial to the holders
not involved in the proceeding.
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The indentures provide
that if an event of default has occurred and is continuing, the trustee will be required in the exercise of its powers to use
the degree of care that a prudent person would use in the conduct of its own affairs. The trustee, however, may refuse to follow
any direction that conflicts with law or the indenture, or that the trustee determines is unduly prejudicial to the rights of
any other holder of the relevant series of debt securities, or that would involve the trustee in personal liability. Prior to
taking any action under the indentures, the trustee will be entitled to indemnification against all costs, expenses and liabilities
that would be incurred by taking or not taking such action.
A holder of the debt
securities of any series will have the right to institute a proceeding under the indentures or to appoint a receiver or trustee,
or to seek other remedies only if:
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the holder
has given written notice to the trustee of a continuing event of default with respect
to that series;
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the holders
of at least 25% in aggregate principal amount of the outstanding debt securities of that
series have made a written request and such holders have offered reasonable indemnity
to the trustee or security satisfactory to it against any loss, liability or expense
or to be incurred in compliance with instituting the proceeding as trustee; and
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the trustee
does not institute the proceeding, and does not receive from the holders of a majority
in aggregate principal amount of the outstanding debt securities of that series other
conflicting directions within 90 days after the notice, request and offer.
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These limitations
do not apply to a suit instituted by a holder of debt securities if we default in the payment of the principal, premium, if any,
or interest on, the debt securities, or other defaults that may be specified in the applicable prospectus supplement.
We will periodically
file statements with the trustee regarding our compliance with specified covenants in the indentures.
The indentures provide
that if a default occurs and is continuing and is actually known to a responsible officer of the trustee, the trustee must mail
to each holder notice of the default within the earlier of 90 days after it occurs and 30 days after it is known by a responsible
officer of the trustee or written notice of it is received by the trustee, unless such default has been cured or waived. Except
in the case of a default in the payment of principal or premium of, or interest on, any debt security or certain other defaults
specified in an indenture, the trustee shall be protected in withholding such notice if and so long as the Board of Directors,
the executive committee or a trust committee of directors, or responsible officers of the trustee, in good faith determine that
withholding notice is in the best interests of holders of the relevant series of debt securities.
Modification of Indenture; Waiver
Subject to the terms
of the indenture for any series of debt securities that we may issue, we and the trustee may change an indenture without the consent
of any holders with respect to the following specific matters:
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to fix any
ambiguity, defect or inconsistency in the indenture;
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to comply
with the provisions described above under “Description of Debt Securities —
Consolidation, Merger or Sale;”
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to comply
with any requirements of the SEC in connection with the qualification of any indenture
under the Trust Indenture Act;
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to add to,
delete from or revise the conditions, limitations and restrictions on the authorized
amount, terms or purposes of issue, authentication and delivery of debt securities, as
set forth in the indenture;
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to provide
for the issuance of, and establish the form and terms and conditions of, the debt securities
of any series as provided under “Description of Debt Securities — General,”
to establish the form of any certifications required to be furnished pursuant to the
terms of the indenture or any series of debt securities, or to add to the rights of the
holders of any series of debt securities;
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to evidence
and provide for the acceptance of appointment hereunder by a successor trustee;
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to provide
for uncertificated debt securities and to make all appropriate changes for such purpose;
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to add such
new covenants, restrictions, conditions or provisions for the benefit of the holders,
to make the occurrence, or the occurrence and the continuance, of a default in any such
additional covenants, restrictions, conditions or provisions an event of default or to
surrender any right or power conferred to us in the indenture; or
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to change
anything that does not adversely affect the interests of any holder of debt securities
of any series in any material respect.
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In addition, under
the indentures, the rights of holders of a series of debt securities may be changed by us and the trustee with the written consent
of the holders of at least a majority in aggregate principal amount of the outstanding debt securities of each series that is
affected. However, subject to the terms of the indenture for any series of debt securities that we may issue or otherwise provided
in the prospectus supplement applicable to a particular series of debt securities, we and the trustee may only make the following
changes: with the consent of each holder of any outstanding debt securities affected:
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extending
the stated maturity of the series of debt securities;
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reducing
the principal amount, reducing the rate of or extending the time of payment of interest,
or reducing any premium payable upon the redemption or repurchase of any debt securities;
or
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reducing
the percentage of debt securities, the holders of which are required to consent to any
amendment, supplement, modification or waiver.
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Discharge
Each indenture provides
that, subject to the terms of the indenture and any limitation otherwise provided in the prospectus supplement applicable to a
particular series of debt securities, we may elect to be discharged from our obligations with respect to one or more series of
debt securities, except for specified obligations, including obligations to:
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register
the transfer or exchange of debt securities of the series;
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replace
stolen, lost or mutilated debt securities of the series;
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maintain
paying agencies;
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hold monies
for payment in trust;
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recover
excess money held by the trustee;
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compensate
and indemnify the trustee; and
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appoint
any successor trustee.
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In order to exercise
our rights to be discharged, we must deposit with the trustee money or government obligations sufficient to pay all the principal
of, and any premium and interest on, the debt securities of the series on the dates payments are due.
Form, Exchange and Transfer
We will issue the
debt securities of each series only in fully registered form without coupons and, unless we otherwise specify in the applicable
prospectus supplement, in denominations of $1,000 and any integral multiple thereof. The indentures provide that we may issue
debt securities of a series in temporary or permanent global form and as book-entry securities that will be deposited with, or
on behalf of, The Depository Trust Company or another depositary named by us and identified in a prospectus supplement with respect
to that series. See “Legal Ownership of Securities” below for a further description of the terms relating to any book-entry
securities.
At the option of the
holder, subject to the terms of the indentures and the limitations applicable to global securities described in the applicable
prospectus supplement, the holder of the debt securities of any series can exchange the debt securities for other debt securities
of the same series, in any authorized denomination and of like tenor and aggregate principal amount.
Subject to the terms
of the indentures and the limitations applicable to global securities set forth in the applicable prospectus supplement, holders
of the debt securities may present the debt securities for exchange or for registration of transfer, duly endorsed or with the
form of transfer endorsed thereon duly executed if so required by us or the security registrar, at the office of the security
registrar or at the office of any transfer agent designated by us for this purpose. Unless otherwise provided in the debt securities
that the holder presents for transfer or exchange, we will make no service charge for any registration of transfer or exchange,
but we may require payment of any taxes or other governmental charges.
We will name in the
applicable prospectus supplement the security registrar, and any transfer agent in addition to the security registrar, that we
initially designate for any debt securities. We may at any time designate additional transfer agents or rescind the designation
of any transfer agent or approve a change in the office through which any transfer agent acts, except that we will be required
to maintain a transfer agent in each place of payment for the debt securities of each series.
If we elect to redeem the debt securities
of any series, we will not be required to:
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issue, register
the transfer of, or exchange any debt securities of that series during a period beginning
at the opening of business 15 days before the day of mailing of a notice of redemption
of any debt securities that may be selected for redemption and ending at the close of
business on the day of the mailing; or
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register
the transfer of or exchange any debt securities so selected for redemption, in whole
or in part, except the unredeemed portion of any debt securities we are redeeming in
part.
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Information Concerning the Trustee
The trustee, other
than during the occurrence and continuance of an event of default under an indenture, undertakes to perform only those duties
as are specifically set forth in the applicable indenture and is under no obligation to exercise any of the powers given it by
the indentures at the request of any holder of debt securities unless it is offered reasonable security and indemnity against
the costs, expenses and liabilities that it might incur. However, upon an event of default under an indenture, the trustee must
use the same degree of care as a prudent person would exercise or use in the conduct of his or her own affairs.
Payment and Paying Agents
Unless we otherwise
indicate in the applicable prospectus supplement, we will make payment of the interest on any debt securities on any interest
payment date to the person in whose name the debt securities, or one or more predecessor securities, are registered at the close
of business on the regular record date for the interest payment.
We will pay principal
of and any premium and interest on the debt securities of a particular series at the office of the paying agents designated by
us, except that unless we otherwise indicate in the applicable prospectus supplement, we will make interest payments by check
that we will mail to the holder or by wire transfer to certain holders. Unless we otherwise indicate in the applicable prospectus
supplement, we will designate the corporate trust office of the trustee as our sole paying agent for payments with respect to
debt securities of each series. We will name in the applicable prospectus supplement any other paying agents that we initially
designate for the debt securities of a particular series. We will maintain a paying agent in each place of payment for the debt
securities of a particular series.
All money we pay to
a paying agent or the trustee for the payment of the principal of or any premium or interest on any debt securities that remains
unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid to us, and
the holder of the debt security thereafter may look only to us for payment thereof.
Governing Law
The indentures and
the debt securities will be governed by and construed in accordance with the laws of the State of New York, except to the extent
that the Trust Indenture Act is applicable.
Ranking Debt Securities
The subordinated debt
securities will be unsecured and will be subordinate and junior in priority of payment to certain other indebtedness to the extent
described in a prospectus supplement. The subordinated indenture does not limit the amount of subordinated debt securities that
we may issue. It also does not limit us from issuing any other secured or unsecured debt.
The senior debt securities
will be unsecured and will rank equally in right of payment to all our other senior unsecured debt. The senior indenture does
not limit the amount of senior debt securities that we may issue. It also does not limit us from issuing any other secured or
unsecured debt.
DESCRIPTION OF WARRANTS
The following description,
together with the additional information we may include in any applicable prospectus supplements and free writing prospectuses,
summarizes the material terms and provisions of the warrants that we may offer under this prospectus, which may consist of warrants
to purchase common stock or debt securities and may be issued in one or more series. Warrants may be offered independently or
together with common stock or debt securities offered by any prospectus supplement, and may be attached to or separate from those
securities. While the terms we have summarized below will apply generally to any warrants that we may offer under this prospectus,
we will describe the particular terms of any series of warrants that we may offer in more detail in the applicable prospectus
supplement and any applicable free writing prospectus. The terms of any warrants offered under a prospectus supplement may differ
from the terms described below. However, no prospectus supplement will fundamentally change the terms that are set forth in this
prospectus or offer a security that is not registered and described in this prospectus at the time of its effectiveness.
We will issue the
warrants under a warrant agreement that we will enter into with a warrant agent to be selected by us. The warrant agent will act
solely as an agent of ours in connection with the warrants and will not act as an agent for the holders or beneficial owners of
the warrants. We will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by
reference from a current report on Form 8-K that we file with the SEC, the form of warrant agreement, including a form of warrant
certificate, that describes the terms of the particular series of warrants we are offering before the issuance of the related
series of warrants. The following summaries of material provisions of the warrants and the warrant agreements are subject to,
and qualified in their entirety by reference to, all the provisions of the warrant agreement and warrant certificate applicable
to a particular series of warrants. We urge you to read the applicable prospectus supplement and any applicable free writing prospectus
related to the particular series of warrants that we sell under this prospectus, as well as the complete warrant agreements and
warrant certificates that contain the terms of the warrants.
General
We
will describe in the applicable prospectus supplement the terms relating to a series of warrants, including:
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the offering
price and aggregate number of warrants offered;
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the currency
for which the warrants may be purchased;
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if applicable,
the designation and terms of the securities with which the warrants are issued and the
number of warrants issued with each such security or each principal amount of such security;
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if applicable,
the date on and after which the warrants and the related securities will be separately
transferable;
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in the case
of warrants to purchase debt securities, the principal amount of debt securities purchasable
upon exercise of one warrant and the price at, and currency in which, this principal
amount of debt securities may be purchased upon such exercise;
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in the case
of warrants to purchase common stock, the number of shares of common stock purchasable
upon the exercise of one warrant and the price at which these shares may be purchased
upon such exercise;
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the effect
of any merger, consolidation, sale or other disposition of our business on the warrant
agreements and the warrants;
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the terms
of any rights to redeem or call the warrants;
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any provisions
for changes to or adjustments in the exercise price or number of securities issuable
upon exercise of the warrants;
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the dates
on which the right to exercise the warrants will commence and expire;
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the manner
in which the warrant agreements and warrants may be modified;
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United States
federal income tax consequences of holding or exercising the warrants;
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the terms
of the securities issuable upon exercise of the warrants; and
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any other
specific terms, preferences, rights or limitations of or restrictions on the warrants.
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Before exercising
their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such exercise,
including:
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in the case
of warrants to purchase debt securities, the right to receive payments of principal of,
or premium, if any, or interest on, the debt securities purchasable upon exercise or
to enforce covenants in the applicable indenture; or
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in the case
of warrants to purchase common stock, the right to receive dividends, if any, or, payments
upon our liquidation, dissolution or winding up or to exercise voting rights, if any.
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Exercise of Warrants
Each warrant will
entitle the holder to purchase the securities that we specify in the applicable prospectus supplement at the exercise price that
we describe in the applicable prospectus supplement. Unless we otherwise specify in the applicable prospectus supplement, holders
of the warrants may exercise the warrants at any time up to the specified time on the expiration date that we set forth in the
applicable prospectus supplement. After the close of business on the expiration date, unexercised warrants will become void.
Holders of the warrants
may exercise the warrants by delivering the warrant certificate representing the warrants to be exercised together with specified
information, and paying the required amount to the warrant agent in immediately available funds, as provided in the applicable
prospectus supplement. We will set forth on the reverse side of the warrant certificate and in the applicable prospectus supplement
the information that the holder of the warrant will be required to deliver to the warrant agent.
Upon receipt of the
required payment and the warrant certificate properly completed and duly executed at the corporate trust office of the warrant
agent or any other office indicated in the applicable prospectus supplement, we will issue and deliver the securities purchasable
upon such exercise. If fewer than all of the warrants represented by the warrant certificate are exercised, then we will issue
a new warrant certificate for the remaining amount of warrants. If we so indicate in the applicable prospectus supplement, holders
of the warrants may surrender securities as all or part of the exercise price for warrants.
Enforceability of Rights by Holders of Warrants
Each warrant agent
will act solely as our agent under the applicable warrant agreement and will not assume any obligation or relationship of agency
or trust with any holder of any warrant. A single bank or trust company may act as warrant agent for more than one issue of warrants.
A warrant agent will have no duty or responsibility in case of any default by us under the applicable warrant agreement or warrant,
including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder
of a warrant may, without the consent of the related warrant agent or the holder of any other warrant, enforce by appropriate
legal action its right to exercise, and receive the securities purchasable upon exercise of, its warrants.
DESCRIPTION OF UNITS
The following description,
together with the additional information we may include in any applicable prospectus supplements and free writing prospectuses,
summarizes the material terms and provisions of the units that we may offer under this prospectus. While the terms we have summarized
below will apply generally to any units that we may offer under this prospectus, we will describe the particular terms of any
series of units in more detail in the applicable prospectus supplement. The terms of any units offered under a prospectus supplement
may differ from the terms described below. However, no prospectus supplement will fundamentally change the terms that are set
forth in this prospectus or offer a security that is not registered and described in this prospectus at the time of its effectiveness.
We will file as exhibits
to the registration statement of which this prospectus is a part, or will incorporate by reference from a current report on Form
8-K that we file with the SEC, the form of unit agreement that describes the terms of the series of units we are offering, and
any supplemental agreements, before the issuance of the related series of units. The following summaries of material terms and
provisions of the units are subject to, and qualified in their entirety by reference to, all the provisions of the unit agreement
and any supplemental agreements applicable to a particular series of units. We urge you to read the applicable prospectus supplements
related to the particular series of units that we sell under this prospectus, as well as the complete unit agreement and any supplemental
agreements that contain the terms of the units.
General
We may issue units
comprised of one or more debt securities, shares of common stock and warrants in any combination. Each unit will be issued so
that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the
rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that
the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
We will describe in the applicable prospectus
supplement the terms of the series of units, including:
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the designation
and terms of the units and of the securities comprising the units, including whether
and under what circumstances those securities may be held or transferred separately;
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any provisions
of the governing unit agreement that differ from those described below; and
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any provisions
for the issuance, payment, settlement, transfer or exchange of the units or of the securities
comprising the units.
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The provisions described
in this section, as well as those described under “Description of Capital Stock,” “Description of Debt Securities”
and “Description of Warrants” will apply to each unit and to any common stock, debt security or warrant included in
each unit, respectively.
Issuance in Series
We may issue units in such amounts and
in numerous distinct series as we determine.
Enforceability of Rights by Holders of Units
Each unit agent will
act solely as our agent under the applicable unit agreement and will not assume any obligation or relationship of agency or trust
with any holder of any unit. A single bank or trust company may act as unit agent for more than one series of units. A unit agent
will have no duty or responsibility in case of any default by us under the applicable unit agreement or unit, including any duty
or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder of a unit may, without
the consent of the related unit agent or the holder of any other unit, enforce by appropriate legal action its rights as holder
under any security included in the unit.
We, the unit agents
and any of their agents may treat the registered holder of any unit certificate as an absolute owner of the units evidenced by
that certificate for any purpose and as the person entitled to exercise the rights attaching to the units so requested, despite
any notice to the contrary. See “Legal Ownership of Securities.”
LEGAL OWNERSHIP
OF SECURITIES
We can issue securities
in registered form or in the form of one or more global securities. We describe global securities in greater detail below. We
refer to those persons who have securities registered in their own names on the books that we or any applicable trustee or depositary
or warrant agent maintain for this purpose as the “holders” of those securities. These persons are the legal holders
of the securities. We refer to those persons who, indirectly through others, own beneficial interests in securities that are not
registered in their own names, as “indirect holders” of those securities. As we discuss below, indirect holders are
not legal holders, and investors in securities issued in book-entry form or in street name will be indirect holders.
Book-Entry Holders
We may issue securities
in book-entry form only, as we will specify in the applicable prospectus supplement. This means securities may be represented
by one or more global securities registered in the name of a financial institution that holds them as depositary on behalf of
other financial institutions that participate in the depositary’s book-entry system. These participating institutions, which
are referred to as participants, in turn, hold beneficial interests in the securities on behalf of themselves or their customers.
Only the person in
whose name a security is registered is recognized as the holder of that security. Global securities will be registered in the
name of the depositary or its participants. Consequently, for global securities, we will recognize only the depositary as the
holder of the securities, and we will make all payments on the securities to the depositary. The depositary passes along the payments
it receives to its participants, which in turn pass the payments along to their customers who are the beneficial owners. The depositary
and its participants do so under agreements they have made with one another or with their customers; they are not obligated to
do so under the terms of the securities.
As a result, investors
in a global security will not own securities directly. Instead, they will own beneficial interests in a global security, through
a bank, broker or other financial institution that participates in the depositary’s book-entry system or holds an interest
through a participant. As long as the securities are issued in global form, investors will be indirect holders, and not legal
holders, of the securities.
Street Name Holders
We may terminate a
global security or issue securities that are not issued in global form. In these cases, investors may choose to hold their securities
in their own names or in “street name.” Securities held by an investor in street name would be registered in the name
of a bank, broker or other financial institution that the investor chooses, and the investor would hold only a beneficial interest
in those securities through an account he or she maintains at that institution.
For securities held
in street name, we or any applicable trustee or depositary will recognize only the intermediary banks, brokers and other financial
institutions in whose names the securities are registered as the holders of those securities, and we or any such trustee or depositary
will make all payments on those securities to them. These institutions pass along the payments they receive to their customers
who are the beneficial owners, but only because they agree to do so in their customer agreements or because they are legally required
to do so. Investors who hold securities in street name will be indirect holders, not legal holders, of those securities.
Legal Holders
Our obligations, as
well as the obligations of any applicable trustee or third party employed by us or a trustee, run only to the legal holders of
the securities. We do not have obligations to investors who hold beneficial interests in global securities, in street name or
by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a security or has no
choice because we are issuing the securities only in global form.
For example, once
we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that holder
is required, under agreements with its participants or customers or by law, to pass it along to the indirect holders but does
not do so. Similarly, we may want to obtain the approval of the holders to amend an indenture, to relieve us of the consequences
of a default or of our obligation to comply with a particular provision of an indenture, or for other purposes. In such an event,
we would seek approval only from the legal holders, and not the indirect holders, of the securities. Whether and how the legal
holders contact the indirect holders is up to the legal holders.
Special Considerations for Indirect Holders
If you hold securities
through a bank, broker or other financial institution, either in book-entry form because the securities are represented by one
or more global securities or in street name, you should check with your own institution to find out:
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how it handles
securities payments and notices;
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whether
it imposes fees or charges;
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how it would
handle a request for the holders’ consent, if ever required;
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whether
and how you can instruct it to send you securities registered in your own name so you
can be a legal holder, if that is permitted in the future;
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how it would
exercise rights under the securities if there were a default or other event triggering
the need for holders to act to protect their interests; and
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if the securities
are in book-entry form, how the depositary’s rules and procedures will affect these
matters.
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Global Securities
A global security
is a security that represents one or any other number of individual securities held by a depositary. Generally, all securities
represented by the same global securities will have the same terms.
Each security issued
in book-entry form will be represented by a global security that we issue to, deposit with and register in the name of a financial
institution or its nominee that we select. The financial institution that we select for this purpose is called the depositary.
Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as
DTC, will be the depositary for all securities issued in book-entry form.
A global security
may not be transferred to or registered in the name of anyone other than the depositary, its nominee or a successor depositary,
unless special termination situations arise. We describe those situations below under “— Special Situations When A
Global Security Will Be Terminated.” As a result of these arrangements, the depositary, or its nominee, will be the sole
registered owner and legal holder of all securities represented by a global security, and investors will be permitted to own only
beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other
financial institution that in turn has an account with the depositary or with another institution that does. Thus, an investor
whose security is represented by a global security will not be a legal holder of the security, but only an indirect holder of
a beneficial interest in the global security.
If the prospectus
supplement for a particular security indicates that the security will be issued as a global security, then the security will be
represented by a global security at all times unless and until the global security is terminated. If termination occurs, we may
issue the securities through another book-entry clearing system or decide that the securities may no longer be held through any
book-entry clearing system.
Special Considerations For Global Securities
As an indirect holder,
an investor’s rights relating to a global security will be governed by the account rules of the investor’s financial
institution and of the depositary, as well as general laws relating to securities transfers. We do not recognize an indirect holder
as a holder of securities and instead deal only with the depositary that holds the global security.
If securities are
issued only as global securities, an investor should be aware of the following:
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an investor
cannot cause the securities to be registered in his or her name, and cannot obtain non-global
certificates for his or her interest in the securities, except in the special situations
we describe below;
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an investor
will be an indirect holder and must look to his or her own bank or broker for payments
on the securities and protection of his or her legal rights relating to the securities,
as we describe above;
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an investor
may not be able to sell interests in the securities to some insurance companies and to
other institutions that are required by law to own their securities in non-book-entry
form;
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an investor
may not be able to pledge his or her interest in the global security in circumstances
where certificates representing the securities must be delivered to the lender or other
beneficiary of the pledge in order for the pledge to be effective;
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the depositary’s
policies, which may change from time to time, will govern payments, transfers, exchanges
and other matters relating to an investor’s interest in the global security. We
and any applicable trustee have no responsibility for any aspect of the depositary’s
actions or for its records of ownership interests in the global security. We and the
trustee also do not supervise the depositary in any way;
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the depositary
may, and we understand that DTC will, require that those who purchase and sell interests
in the global security within its book-entry system use immediately available funds,
and your broker or bank may require you to do so as well; and
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financial
institutions that participate in the depositary’s book-entry system, and through
which an investor holds its interest in the global security, may also have their own
policies affecting payments, notices and other matters relating to the securities. There
may be more than one financial intermediary in the chain of ownership for an investor.
We do not monitor and are not responsible for the actions of any of those intermediaries
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Special Situations When A Global Security Will Be Terminated
In a few special situations
described below, a global security will terminate and interests in it will be exchanged for physical certificates representing
those interests. After that exchange, the choice of whether to hold securities directly or in street name will be up to the investor.
Investors must consult their own banks or brokers to find out how to have their interests in securities transferred to their own
names, so that they will be direct holders. We have described the rights of holders and street name investors above.
A global security
will terminate when the following special situations occur:
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if the depositary
notifies us that it is unwilling, unable or no longer qualified to continue as depositary
for that global security and we do not appoint another institution to act as depositary
within 90 days;
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if we notify
any applicable trustee that we wish to terminate that global security; or
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if an event
of default has occurred with regard to securities represented by that global security
and has not been cured or waived.
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The applicable prospectus
supplement may also list additional situations for terminating a global security that would apply only to the particular series
of securities covered by the prospectus supplement. When a global security terminates, the depositary, and neither we, nor any
applicable trustee, is responsible for deciding the names of the institutions that will be the initial direct holders.
PLAN OF DISTRIBUTION
We may sell the securities being offered
hereby in one or more of the following ways from time to time:
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through
agents to the public or to investors;
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to underwriters
for resale to the public or to investors;
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negotiated
transactions;
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directly
to investors; or
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through
a combination of any of these methods of sale.
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As
set forth in more detail below, the securities may be distributed from time to time in one or more transactions:
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at a fixed
price or prices, which may be changed;
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at market
prices prevailing at the time of sale;
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at prices
related to such prevailing market prices; or
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We
will set forth in a prospectus supplement the terms of that particular offering of securities, including:
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the name
or names of any agents or underwriters;
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the purchase
price of the securities being offered and the proceeds we will receive from the sale;
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any over-allotment
options under which underwriters may purchase additional securities from us;
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any agency
fees or underwriting discounts and other items constituting agents’ or underwriters’
compensation;
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any initial
public offering price;
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any discounts
or concessions allowed or re-allowed or paid to dealers; and
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any securities
exchanges or markets on which such securities may be listed.
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Only underwriters
named in the prospectus supplement are underwriters of the securities offered by the prospectus supplement.
If underwriters are
used in an offering, we will execute an underwriting agreement with such underwriters and will specify the name of each underwriter
and the terms of the transaction (including any underwriting discounts and other terms constituting compensation of the underwriters
and any dealers) in a prospectus supplement. The securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or directly by one or more investment banking firms or others, as designated. If an underwriting
syndicate is used, the managing underwriter(s) will be specified on the cover of the prospectus supplement. If underwriters
are used in the sale, the offered securities will be acquired by the underwriters for their own accounts and may be resold from
time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. Any public offering price and any discounts or concessions allowed or re-allowed or paid to dealers
may be changed from time to time. Unless otherwise set forth in the prospectus supplement, the obligations of the underwriters
to purchase the offered securities will be subject to conditions precedent and the underwriters will be obligated to purchase
all of the offered securities if any are purchased.
We may grant to the
underwriters options to purchase additional securities to cover over-allotments, if any, at the public offering price, with additional
underwriting commissions or discounts, as may be set forth in a related prospectus supplement. The terms of any over-allotment
option will be set forth in the prospectus supplement for those securities.
If we use a dealer
in the sale of the securities being offered pursuant to this prospectus or any prospectus supplement, we will sell the securities
to the dealer, as principal. The dealer may then resell the securities to the public at varying prices to be determined
by the dealer at the time of resale. The names of the dealers and the terms of the transaction will be specified in a prospectus
supplement.
We may sell the securities
directly or through agents we designate from time to time. We will name any agent involved in the offering and sale of securities
and we will describe any commissions we will pay the agent in the prospectus supplement. Unless the prospectus supplement states
otherwise, any agent will act on a best-efforts basis for the period of its appointment.
We may authorize agents
or underwriters to solicit offers by institutional investors to purchase securities from us at the public offering price set forth
in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in
the future. We will describe the conditions to these contracts and the commissions we must pay for solicitation of these contracts
in the prospectus supplement.
In connection with
the sale of the securities, underwriters, dealers or agents may receive compensation from us or from purchasers of the common
stock for whom they act as agents in the form of discounts, concessions or commissions. Underwriters may sell the securities to
or through dealers, and those dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters
or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution
of the securities, and any institutional investors or others that purchase common stock directly and then resell the securities,
may be deemed to be underwriters, and any discounts or commissions received by them from us and any profit on the resale of the
common stock by them may be deemed to be underwriting discounts and commissions under the Securities Act.
We may provide agents
and underwriters with indemnification against particular civil liabilities, including liabilities under the Securities Act, or
contribution with respect to payments that the agents or underwriters may make with respect to such liabilities. Agents and underwriters
may engage in transactions with, or perform services for, us in the ordinary course of business.
In addition, we may
enter into derivative transactions with third parties (including the writing of options), or sell securities not covered by this
prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection
with such a transaction, the third parties may, pursuant to this prospectus and the applicable prospectus supplement, sell securities
covered by this prospectus and the applicable prospectus supplement. If so, the third party may use securities borrowed from us
or others to settle such sales and may use securities received from us to close out any related short positions. We may also loan
or pledge securities covered by this prospectus and the applicable prospectus supplement to third parties, who may sell the loaned
securities or, in an event of default in the case of a pledge, sell the pledged securities pursuant to this prospectus and the
applicable prospectus supplement. The third party in such sale transactions will be an underwriter and will be identified in the
applicable prospectus supplement or in a post-effective amendment.
To facilitate an offering
of a series of securities, persons participating in the offering may engage in transactions that stabilize, maintain, or otherwise
affect the market price of the securities. This may include over-allotments or short sales of the securities, which involves the
sale by persons participating in the offering of more securities than have been sold to them by us. In those circumstances, such
persons would cover such over-allotments or short positions by purchasing in the open market or by exercising the over-allotment
option granted to those persons. In addition, those persons may stabilize or maintain the price of the securities by bidding for
or purchasing securities in the open market or by imposing penalty bids, whereby selling concessions allowed to underwriters or
dealers participating in any such offering may be reclaimed if securities sold by them are repurchased in connection with stabilization
transactions. The effect of these transactions may be to stabilize or maintain the market price of the securities at a level above
that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time. We make
no representation or prediction as to the direction or magnitude of any effect that the transactions described above, if implemented,
may have on the price of our securities.
Unless otherwise specified
in the applicable prospectus supplement, each class or series of securities will be a new issue with no established trading market,
other than our common stock, which is listed on The NASDAQ Capital Market. We may elect to list any other class or series of securities
on any exchange or market, but we are not obligated to do so. It is possible that one or more underwriters may make a market in
a class or series of securities, but the underwriters will not be obligated to do so and may discontinue any market making at
any time without notice. We cannot give any assurance as to the liquidity of the trading market for any of the securities.
In order to comply
with the securities laws of some states, if applicable, the securities offered pursuant to this prospectus will be sold in those
states only through registered or licensed brokers or dealers. In addition, in some states securities may not be sold unless they
have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement
is available and complied with.
Any underwriter may
engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance with Regulation
M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Overallotment involves sales in excess of the offering
size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing
bids do not exceed a specified maximum. Short covering transactions involve purchases of the securities in the open market after
the distribution is completed to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from
a dealer when the securities originally sold by the dealer are purchased in a covering transaction to cover short positions. Those
activities may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue
any of these activities at any time.
Any underwriters who
are qualified market makers on the The NASDAQ Capital Market may engage in passive market making transactions in the securities
on the The NASDAQ apital Market in accordance with Rule 103 of Regulation M, during the business day prior to the pricing of the
offering, before the commencement of offers or sales of the securities. Passive market makers must comply with applicable volume
and price limitations and must be identified as passive market makers. In general, a passive market maker must display its bid
at a price not in excess of the highest independent bid for such security. If all independent bids are lowered below the passive
market maker’s bid, however, the passive market maker’s bid must then be lowered when certain purchase limits are
exceeded.
LEGAL MATTERS
The validity of the
issuance of the securities offered hereby will be passed upon for us by Sheppard, Mullin, Richter & Hampton LLP, New York,
New York. Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel that we will name
in the applicable prospectus supplement.
EXPERTS
The consolidated financial
statements of My Size, Inc. for the year ended December 31, 2016 have been incorporated by reference herein and in the registration
statement in reliance upon the report of Somekh Chaikin, independent registered public accounting firm, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and auditing.
The consolidated financial
statements of My Size, Inc. as of and for the year ended December 31, 2015 have been incorporated by reference herein and in the
registration statement in reliance upon the report of Weinberg & Baer LLC, independent registered public accounting firm,
incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND
MORE INFORMATION
This prospectus constitutes
a part of a registration statement on Form S-3 filed under the Securities Act. As permitted by the SEC’s rules,
this prospectus and any prospectus supplement, which form a part of the registration statement, do not contain all the information
that is included in the registration statement. You will find additional information about us in the registration statement.
Any statements made in this prospectus or any prospectus supplement concerning legal documents are not necessarily complete and
you should read the documents that are filed as exhibits to the registration statement or otherwise filed with the SEC for a more
complete understanding of the document or matter.
We file annual, quarterly
and current reports, proxy statements and other information with the SEC. You may read, without charge, and copy the documents
we file at the SEC’s public reference rooms in Washington, D.C. at 100 F Street, NE, Room 1580, Washington, DC 20549,
or in New York, New York and Chicago, Illinois. You can request copies of these documents by writing to the SEC and
paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public at no cost from the SEC’s website at http://www.sec.gov. In
addition, we make available on or through our Internet site copies of these reports as soon as reasonably practicable after we
electronically file or furnish them to the SEC. Our Internet site can be found at http://www.mysizeid.com.
INCORPORATION OF
DOCUMENTS BY REFERENCE
We have filed a registration
statement on Form S-3 with the Securities and Exchange Commission under the Securities Act. This prospectus is part of the
registration statement but the registration statement includes and incorporates by reference additional information and exhibits.
The Securities and Exchange Commission permits us to “incorporate by reference” the information contained in documents
we file with the Securities and Exchange Commission, which means that we can disclose important information to you by referring
you to those documents rather than by including them in this prospectus. Information that is incorporated by reference is considered
to be part of this prospectus and you should read it with the same care that you read this prospectus. Information that we file
later with the Securities and Exchange Commission will automatically update and supersede the information that is either contained,
or incorporated by reference, in this prospectus, and will be considered to be a part of this prospectus from the date those documents
are filed. We have filed with the Securities and Exchange Commission, and incorporate by reference in this prospectus:
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Annual Report
on Form 10-K for the year ended December 31, 2016 filed on April 14, 2017;
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Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2017, June 30, 2017
and September 30, 2017 filed on May 16, 2017, August 18, 2017 and November 13, 2017,
respectively;
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Current
Reports on Form 8-K or Form 8-K/A (excluding any reports or portions thereof that
are deemed to be furnished and not filed) filed on January 4, 2017, February 10, 2017,
February 17, 2017, February 22, 2017, February 24, 2017, February 28, 2017, March 23,
2017, April 21, 2017, May 4, 2017, May 11, 2017, May 16, 2017, June 9, 2017, June 23,
2017, June 30, 2017, August 22, 2017, August 31, 2017, September 11, 2017, September
27, 2017, October 2, 2017, October 27, 2017, December 6, 2017, December 11, 2017, December
12, 2017, December 20, 2017 and December 27, 2017;
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our definitive
proxy statement on Schedule 14A relating to our 2017 annual meeting of stockholders filed
on March 2, 2017; and
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the description
of our common stock contained in the Registrant’s Registration Statement on Form 8-A12B/A
filed with the Commission on June 14, 2016
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We also incorporate
by reference all additional documents that we file with the Securities and Exchange Commission under the terms of Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act that are made after the date of the initial registration statement but prior to effectiveness
of the registration statement and after the date of this prospectus but prior to the termination of the offering of the securities
covered by this prospectus. We are not, however, incorporating, in each case, any documents or information that we are deemed
to furnish and not file in accordance with Securities and Exchange Commission rules.
You may request, and
we will provide you with, a copy of these filings, at no cost, by calling us at +972-3-600-9030 or by writing to us at the following
address:
My Size Inc.
3 Arava St., pob 1026
Airport City, Israel, 7010000
Attn.: Or Kles
Chief Financial Officer
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table
sets forth an estimate of the fees and expenses relating to the issuance and distribution of the securities being registered hereby,
other than underwriting discounts and commissions, all of which shall be borne by the Registrant. All of such fees and expenses,
except for the SEC registration fee are estimated:
SEC registration fee
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$
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6,225
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Transfer agent’s fees and expenses
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$
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5,000
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Legal fees and expenses
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$
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25,000
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Printing fees and expenses
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$
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5,000
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Accounting fees and expenses
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$
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5,000
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Miscellaneous fees and expenses
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$
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3,775
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Total
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$
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50,000
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Item 15. Indemnification
of Officers and Directors.
Section 145 (“Section 145”)
of the DGCL permits indemnification of directors, officers, agents and controlling persons of a corporation under certain conditions
and subject to certain limitations. Section 145 empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative
or investigative, by reason of the fact that he or she is or was a director, officer or agent of the corporation or another enterprise
if serving at the request of the corporation. Depending on the character of the proceeding, a corporation may indemnify against
expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit or proceeding if the person indemnified acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his or her conduct was unlawful. In the case of an action by or in the right of the corporation,
no indemnification may be made with respect to any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit
was brought shall determine that despite the adjudication of liability such person is fairly and reasonably entitled to indemnity
for such expenses which the court shall deem proper. Section 145 further provides that to the extent a present or former
director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or
in the defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’
fees) actually and reasonably incurred by such person in connection therewith. The foregoing is only a summary of the described
sections of the Delaware General Corporation Law and is qualified in its entirety by reference to such sections.
The Company’s
Certificate of Incorporation and Bylaws provide that it shall indemnify each of its officers and directors to the fullest extent
permitted by Section 145.
The Company’s
Certificate of Incorporation provides that no current or former director of the Company shall be personally liable to it or its
stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability
or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to My Size’s directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, My Size has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
Item 16. Exhibits.
a) Exhibits.
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To the extent applicable, to be filed by an amendment or as an exhibit to a document
filed under the Securities Exchange Act of 1934, as amended, and incorporated by reference herein.
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Item
17. Undertakings.
(a)
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The undersigned registrant hereby undertakes:
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(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided
,
however
,
that paragraphs (a)(1)(i), (a)(1)(ii), and (a)(1)(iii) above do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration
statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is a part of the registration statement.
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
(5)
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(A)
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as
of the date the filed prospectus was deemed part of and included in the registration statement; and
(B)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance
on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement
as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale
of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and
any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Provided
,
however
, that no
statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated
or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration statement or made in any such document immediately
prior to such effective date.
(6)
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities:
The
undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b)
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial
bona fide
offering thereof.
(h)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(j)
The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee
to act under subsection (a) of Section 310 of the Trust Indenture Act (the “Act”) in accordance with the
rules and regulations prescribed by the SEC under section 305(b)(2) of the Act.
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements
for fling on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Airport City, State of Israel, on January 12, 2018.
|
MY SIZE, INC.
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By:
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/s/ Ronen Luzon
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Ronen Luzon
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Chi
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Chief Executive Officer
(Principal Executive Officer)
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By:
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/s/ Or Kles
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Or Kles
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Chief Financial Officer
(Principal Financing and Accounting Officer)
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Each person whose
signature appears below constitutes and appoints Ronen Luzon and Or Kles, and each of them severally, as his true and lawful attorney
in fact and agent, with full powers of substitution and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post effective amendments) to the Registration Statement, and to sign any
registration statement for the same offering covered by this Registration Statement that is to be effective upon filing pursuant
to Rule 462(b) under the Securities Act of 1933, as amended, and all post effective amendments thereto, and to file the same,
with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, each acting alone, full power and authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements
of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and
on the dates indicated.
/s/ Ronen Luzon
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January 12, 2018
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Ronen Luzon
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Chief Executive Officer and Director
(Principal Executive Officer)
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/s/ Or Kles
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January 12, 2018
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Or Kles
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Chief Financial Officer
(Principal Financial and Accounting Officer)
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/s/ Eli Walles
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January 12, 2018
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Eli Walles
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Chairman
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/s/ Arik Kaufman
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January 12, 2018
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Arik Kaufman
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Director
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/s/ Oren Elmaliah
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January 12, 2018
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Oren Elmaliah
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Director
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/s/ Oron Branitzky
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January 12, 2018
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Oron Branitzky
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Director
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