(Name, address,
including zip code, and telephone number, including area code, of agent for service)
Approximate date of commencement of
proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
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, 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 post-effective amendment filed pursuant to Rule 462(d) 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. ☐
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.
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 to Section 7(a)(2)(B) of the Securities Act. ☐
The information in this preliminary
prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
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 any 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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finance our current operating expenses;
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pursue growth opportunities;
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hire and retain qualified management and key employees;
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respond to competitive pressures;
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comply with regulatory requirements; and
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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
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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
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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 6
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 9.69%
of our outstanding common stock. In addition, two stockholders own approximately 26.98% of our outstanding common stock. As such,
management and the two stockholders of the Company own approximately, in the aggregate, 36.53% 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.
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 authorizes
50,000,000 shares of common stock, of which 18,394,817 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 minimum closing bid requirements of the NASDAQ Capital Market 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.
On
September 26, 2017, we received a written notice (the “Notice”) from the NASDAQ Stock Market LLC (“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. The Notice had no immediate effect on the listing of our common stock,
and our common stock continues to trade on the NASDAQ Capital Market under the symbol “MYSZ”. 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, by effecting a reverse stock split, if necessary.
If
we fail to regain compliance 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.
Risks Related to this Offering
Management will have broad discretion
as to the use of the net proceeds from this offering, and we may not use the proceeds effectively.
Our
management will have broad discretion as to the application of the net proceeds and could use them for purposes other than those
contemplated at the time of this offering. Our stockholders may not agree with the manner in which our management chooses to allocate
and spend the net proceeds. Moreover, our management may use the net proceeds for corporate purposes that may not increase our
results of operations or the market value of our common stock. Our failure to apply these funds effectively could have a material
adverse effect on our business, delay the development of our products and cause the price of our common stock to decline.
You may incur substantial dilution as
a result of this offering and future equity issuance.
Based on our capitalization as of September
30, 2017, purchasers of our securities in this offering will incur immediate dilution. See “Dilution” on page 23 for
a more detailed discussion of the dilution you will incur in this offering.
In addition to this
offering, subject to market conditions and other factors, we may pursue additional financings in the future, as we continue to
build and expand our business. In future years, we will likely need to raise additional capital to finance our operations. Accordingly,
we may conduct future offerings of equity or debt securities. The exercise of outstanding options and warrants and future equity
issuances will result in dilution to investors. In addition, the market price of our common stock could fall as a result of resales
of any of these shares of common stock due to an increased number of shares of common stock available for sale in the market.
The common warrants and pre-funded warrants
may not have any value.
The common warrants
are exercisable at a price of $[ ] and the pre-funded warrants are exercisable at a price of $0.001. In the event that our common
stock price does not exceed the foregoing exercise prices during the period when such warrants are exercisable, such warrants may
not have any value.
There is no
public market for the common warrants or pre-funded warrants to purchase shares of our common stock being offered by us in
this offering.
There
is no established public trading market for the common warrants and the pre-funded warrants being offered in this offering, and
we do not expect a market to develop. In addition, we do not intend to apply to list the common warrants or pre-funded warrants
on any national securities exchange or other nationally recognized trading system, including The NASDAQ Capital Market. Without
an active market, the liquidity of the common warrants and pre-funded warrants will be limited.
The common
warrants and pre-funded warrants are speculative in nature.
The
common warrants and pre-funded warrants do not confer any rights of common stock ownership on their holders, such as voting rights
or the right to receive dividends, but rather merely represent the right to acquire shares of common stock at a fixed price, and
in the case of common warrants, for a limited period of time. Specifically, commencing on the date of issuance, holders of the
common warrants may exercise their right to acquire the common stock and pay an exercise price of $[ ] per share, subject to certain
adjustments, prior to five years from the date of issuance, after which date any unexercised common warrants will expire and have
no further value. Moreover, following this offering, the market value of the common warrants and pre-funded warrants, if any, is
uncertain and there can be no assurance that the market value of the common warrants or pre-funded warrants will equal or exceed
their imputed offering price. The common warrants and pre-funded warrants will not be listed or quoted for trading on any market
or exchange. There can be no assurance that the market price of the common stock will ever equal or exceed the exercise price of
the common warrants or pre-funded warrants, and consequently, whether it will ever be profitable for holders of the common warrants
or pre-funded warrants to exercise such warrants.
If we are unable to raise sufficient
capital in this offering in a timely manner, we may need to record additional debt on our balance sheet.
Part of the proceeds
of this offering will be used to repay $1,333,333 in principal amount of promissory notes that we sold to various institutional
investors in our October 2017 private placement of securities. If this offering does not close by December 31, 2017, then the
amount due under such notes shall be reflected on our 2017 year-end financial statements. Such notes become due and payable upon
the earlier of (a) the closing of this offering or (b) February 28, 2018. If this offering does not close by February 28, 2018,
we do not expect that we will have sufficient assets to repay such notes and that there will be an event of default thereunder.
If there is an event of default, the notes will accrue interest at the rate of 10% per annum. The additional debt could also reduce
funds available for working capital and other corporate purposes and make it more difficult for us to find and secure alternative
sources of capital to finance our operations.
The securities
offered pursuant to this offering will be subject to TASE approval.
New
issuances of securities by the Company must be approved by TASE prior to issuance. Accordingly, the securities offered hereby are
subject to TASE approval. In the event that the Company does not receive TASE approval for the issuance of the securities offered
hereby, the Company may not issue such securities.
Where
You Can Find More Information
We have filed a registration
statement on Form S-1 with the SEC covering the securities we are offering by this prospectus. This prospectus does not include
all of the information contained in the registration statement. You should refer to the registration statement and its exhibits
for additional information. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents,
the references are not necessarily complete and you should refer to the exhibits filed as part of the registration statement for
copies of the actual contract, agreement or another document.
We file annual, quarterly
and other periodic reports, proxy statements and other information with the Securities and Exchange Commission. You can read our
Securities and Exchange Commission filings, including this registration statement, over the Internet at the Securities and Exchange
Commission’s website at www.sec.gov. You may also read and copy any document we file with the Securities and Exchange Commission
at its public reference facilities at 100 F Street NE, Washington, D.C. 20549. You may also obtain copies of these documents at
prescribed rates by writing to the Public Reference Section of the Securities and Exchange Commission at 100 F Street NE, Washington,
D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the
public reference facilities.
Our Internet address
is www.MySizeID.com. There we make available free of charge, on or through the investor relations section of our website, annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed pursuant
to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with
the Securities and Exchange Commission. The information found on our website is not part of this prospectus and investors should
not rely on any such information in deciding whether to invest.
Incorporation
of Certain Information by Reference
The SEC allows us to
“incorporate by reference” information into this prospectus. This means that we can disclose important information
to you by referring you to another document filed separately with the SEC. The information that we incorporate by reference is
considered to be part of this prospectus. Because we are incorporating by reference our future filings with the SEC, this prospectus
is continually updated and those future filings may modify or supersede some or all of the information included or incorporated
in this prospectus. This means that you must look at all of the SEC filings that we incorporate by reference to determine if any
of the statements in this prospectus or in any document previously incorporated by reference have been modified or superseded.
This prospectus incorporates by reference the documents listed below and any future filings we will make with the SEC under Sections
13(a), 13(c) 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (i) after the date
of the initial registration statement and prior to effectiveness of the registration statement, and (ii) on or after the date of
this prospectus until the earlier of the date on which all of the securities registered hereunder have been sold or the registration
statement of which this prospectus is a part has been withdrawn:
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our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC
on April 14, 2017;
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our Quarterly Report on Form 10-Q for the three months ended March 31, 2017, June 30, 2017, and
September 30, 2017 filed with the SEC on May 16, 2017, August 18, 2017, and November 13, 2017, respectively;
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our Current Reports on Form 8-K or 8-K/A filed with the SEC 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 and October 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, which is contained in the registration statement on Form 8-A
filed with the SEC on June 14, 2016 (File No. 001-37370).
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Notwithstanding the
foregoing, information furnished under Items 2.02 and 7.01 of any Current Report on Form 8-K, including the related exhibits, is
not incorporated by reference in this prospectus.
The information about us contained in this prospectus should
be read together with the information in the documents incorporated by reference. You may request a copy of any or all of these
filings, at no cost, by writing or telephoning us at: Or Kles, Chief Financial Officer, 3 Arava St. pob 1026, Airport City, Israel
701000, telephone number 972-3-600-9030.
MY SIZE,
INC.
$8,000,000
Shares of Common Stock
Pre-funded Warrants to Purchase Shares
of Common Stock
Common Warrants to Purchase Shares of
Common Stock
PROSPECTUS
Roth
Capital Partners
, 2017
PART II-INFORMATION
NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance
And Distribution
The
following table sets forth the fees and expenses, other than placement agent fees and expenses, payable in connection with the
registration of the common stock hereunder. All amounts are estimates except the SEC registration fee and the FINRA filing fee.
Item
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Amount to be
paid
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SEC registration fee
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$
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996
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Printing expenses
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*
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Legal fees and expenses
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*
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Accounting fees and expenses
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*
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Transfer Agent fees and expenses
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*
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Miscellaneous expenses
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*
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Total
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$
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*
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* To be filed by amendment.
Item 14. Indemnification of Directors and Officers.
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.
In addition to the foregoing,
the Company maintains directors and officers liability insurance to cover risk exposure for its directors and officers
.
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
Item 15. Recent Sales of
Unregistered Securities.
The Company has sold
the securities described below within the past three years which were not registered under the Securities Act. Unless otherwise
indicated, all of the sales listed below were made pursuant to an exemption from registration afforded by Section 4(a)(2) of the
Securities Act and Regulation D thereunder.
From January to February
2016, the Company issued convertible debt in the form of notes which were convertible into an aggregate of 985,712 shares of the
Company’s common stock and warrants to purchase up to 985,712 shares of the Company’s common stock for gross proceeds
in the amount of $3,450,000. The issuance of the securities was deemed to be exempt
from
the registration requirements of the Securities Act by virtue of Regulation S as a transaction by an issuer outside of the United
States.
From
March to May 2016, the
Company issued convertible debt in the form of notes which were convertible into an aggregate of
301,427 shares of the Company’s common stock and warrants to purchase up to 301,427 shares of the Company’s common
stock for gross proceeds in the amount of $1,055,000. The issuance of the securities was deemed to be exempt
from
the registration requirements of the Securities Act by virtue of Regulation S as a transaction by an issuer outside of the United
States.
On June 10, 2016, the
Company issued 1,528,687 shares of common stock in exchange for $5,350,000 of convertible loans, in accordance with a convertible
loan agreement.
On July 14, 2016, the Company converted
$8,405,000 of the Company’s convertible debt in the form of notes into an aggregate of 2,401,523 shares of the Company’s common
stock at a price of $3.50 per share.
On September 7, 2016, the Company issued
an aggregate of 562,998 shares of common stock, and two-year options to purchase up to 562,998 shares of common stock with an exercise
price of NIS 18 per share upon the conversion of an aggregate of $1,970,500 of convertible loans. On July 14, 2016, the Company’s
board of directors resolved to act according to the provisions of the convertible loan agreements which were signed by the Company
and to carry out an automatic conversion of the loans into Company shares subject to its receipt of the consideration and the approvals
required by law. The Company issued the shares for the convertible loans the allotment of which had been approved by the stock
exchange and the consideration for which had been received. As of December 31, 2016, the Company issued 2,091,566 shares for convertible
loans received by it in the sum of $7,320.
On February 13, 2017, the Company entered
into a securities purchase agreement with an accredited investor. On February 22, 2017, the Company and the investor consummated
the transactions contemplated by the securities purchase agreement pursuant to which the investor acquired from the Company 200,000
shares of the Company’s common stock and warrants to purchase up to 250,000 shares of the Company’s common stock for
$200,000.
On August 16, 2017,
the Company entered into a securities purchase agreement with two investors pursuant to which the Company sold an aggregate of
250,000 shares of common stock at a purchase price of $1.00 per share.
On August 16, 2017,
the Company entered into a securities purchase agreement with an investor pursuant to which the investor will purchase 530,000
shares of the Company’s common stock at $1.00 per share in separate installments. The investor has issued a guarantee note
issued by Trade Bancorp in the amount of $530,000 in favor of the Company. In the event that the investor does not fulfil its obligation
to purchase 530,000 shares of the Company’s common stock pursuant to the securities purchase agreement, the Company may call
the guarantee note; provided, however, the guarantee note expires on November 13, 2017.
On October 26, 2017,
the Company entered into a securities purchase agreement to sell original issue discount non-convertible notes in the aggregate
principal amount of approximately $1.33 million and warrants to purchase up to 888,888 shares of the Company’s common stock
to certain accredited investors for gross proceeds of $1.2 million.
Item 16. Exhibits and Financial
Statement Schedules.
(a) The
exhibits listed under the caption “Exhibit Index” following the signature page are filed herewith or incorporated by
reference herein.
(b) Financial
Statement Schedules
No financial statement
schedules are provided because the information required to be set forth therein is not applicable or is shown in the consolidated
financial statements or notes thereto.
Item 17. Undertakings
.
(a) The undersigned Registrant hereby undertakes:
(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;
(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% 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) 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 Exchange Act that are incorporated by reference in the Registration Statement.
(2) that, for the purpose of determining
any liability under the Securities Act, 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.
(4) That, for the purpose of determining
liability of the registrant under the Securities Act 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, each filing of the Registrant’s annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual
report pursuant to Section 15(d) of the Exchange Act) 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.
(c) Insofar as indemnification for liabilities
arising under the Securities Act 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 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 Act and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) for purposes of determining any liability
under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.
(2) for the purpose of determining any
liability under the Securities Act, each post-effective amendment that contains a form of prospectus 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.