(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:
|
●
|
finance our current operating expenses;
|
|
|
|
|
●
|
pursue growth opportunities;
|
|
|
|
|
●
|
hire and retain qualified management and key employees;
|
|
|
|
|
●
|
respond to competitive pressures;
|
|
|
|
|
●
|
comply with regulatory requirements; and
|
|
|
|
|
●
|
maintain compliance with applicable laws.
|
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:
|
●
|
cash provided by operating activities;
|
|
●
|
available cash and cash investments; and
|
|
●
|
capital raised through debt and equity offerings.
|
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 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:
|
●
|
the level of product and price competition;
|
|
●
|
our success in expanding our business network and managing our
growth;
|
|
●
|
the ability to hire qualified employees; and
|
|
●
|
the timing of such hiring and our ability to control costs.
|
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 12.53% of our outstanding common stock. In addition,
two stockholders own approximately 26.83% of our outstanding common stock. As such, management and the two stockholders of the
Company own approximately, in the aggregate, 39.36% 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:
|
●
|
election of our board of directors;
|
|
●
|
removal of any of our directors;
|
|
●
|
amendment of our Certificate of Incorporation or Bylaws; and
|
|
●
|
adoption of measures that could delay or prevent a change in
control or impede a merger, takeover or other business combination involving us.
|
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.
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:
|
●
|
devaluations
and fluctuations in currency exchange rates including fluctuations between the U.S. dollar
and the NIS;
|
|
●
|
costs
of compliance with local laws, including labor laws and intellectual property laws;
|
|
●
|
compliance
with domestic and foreign government policies, including compliance with Israeli
securities laws and TASE;
|
|
●
|
changes
in trade regulations and procedures affecting approval, production, pricing, marketing,
reimbursement for and access to, our products;
|
|
●
|
compliance
with applicable foreign anti-corruption laws, anti-trust/competition laws, anti-Boycott
Israel law and anti-money laundering laws; and
|
|
●
|
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.
|
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:
|
●
|
our quarterly or annual operating results;
|
|
|
|
|
●
|
changes in our earnings estimates;
|
|
|
|
|
●
|
investment recommendations by securities analysts following
our business or our industry;
|
|
|
|
|
●
|
additions or departures of key personnel;
|
|
|
|
|
●
|
changes in the business, earnings estimates or market perceptions
of our competitors;
|
|
|
|
|
●
|
our failure to achieve operating results consistent with securities
analysts’ projections;
|
|
|
|
|
●
|
changes in industry, general market or economic conditions;
and
|
|
|
|
|
●
|
announcements of legislative or regulatory changes.
|
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 18,406,245 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:
|
●
|
variations in the level of expenses related to our development
programs;
|
|
●
|
any intellectual property infringement lawsuit in which we may
become involved;
|
|
●
|
regulatory developments affecting our products; and
|
|
●
|
our execution of any collaborative, licensing or similar arrangements,
and the timing of payments under these arrangements.
|
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:
|
●
|
provide the Board with the ability to alter the Bylaws without
stockholder approval;
|
|
●
|
place limitations on the removal of directors; and
|
|
●
|
provide that vacancies on the board of directors may be filled
by a majority of directors in office, although less than a quorum.
|
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.
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 25 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 $0.851 and the pre-funded warrants are exercisable at a price of $0.64925. 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 the remaining unpaid exercise price of $0.85 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.
We will need to record additional debt
on our balance sheet.
Part of the proceeds
of this offering will be used to repay $666,666 in principal amount of promissory notes that we sold to various institutional
investors in our October 2017 private placement of securities. After such repayment, the aggregate outstanding principal amounts
of the promissory notes sold in our October 2017 private placement of securities will be $666,667 which will be reflected on our
2017 year-end financial statements. The promissory notes were initially due and payable upon the earlier of (a) the closing of
this offering or (b) February 28, 2018. We have received a waiver from all of the holders of the promissory notes such that
the remaining aggregate outstanding principal amounts of the promissory notes, or $666,667 shall be due upon the earlier of (x)
the closing of our next offering or (y) March 31, 2018. If our next offering does not close by March 31, 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.
In making your
investment decision, you should not rely on press releases issued by the Company. You should rely only on statements made in this
prospectus in determining whether to purchase our securities.
On November 30, 2017
and December 8, 2017, the Company issued press releases regarding its upcoming participation in the international CES tradeshow
in Las Vegas in January 2018, and its intended release of new technology developments at such tradeshow. The Company issued such
communication to provide information to customers and interested parties that may be attending the international CES tradeshow
regarding a new business development in reliance upon existing securities laws and guidance governing such communications.
The Company has in
the past, and may continue to issue press releases in the ordinary course, such as the press release described above, or receive,
media coverage, including coverage that is not directly attributable to statements made by our officers and employees. The information
in such press releases or coverage should not be considered by prospective investors in making an investment decisions relating
to purchasing securities in this offering. Rather, prospective investors should carefully evaluate all of the information in this
prospectus, and are cautioned to consider the risks and uncertainties disclosed in this Risk Factors section and elsewhere in
this prospectus.