SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No.)
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
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Preliminary Proxy Statement
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Confidential, for the use of the Commission
only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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MY
SIZE, INC.
(Name
of Registrant as Specified In Its Charter)
________________________________________________________
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction
applies:
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(2)
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Aggregate number of securities to which transaction
applies:
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(3)
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state
how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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☐
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Fee paid previously with preliminary
materials.
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Check box if any part of the fee
is offset as provided by Exchange Act Rule 0-1l (a)(2) and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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MY
SIZE, INC.
NOTICE
OF SPECIAL MEETING
AND
PROXY
STATEMENT
Meeting
to be held on January [ ], 2018, at 4:00 p.m. local time
At the offices of Barnea & CoLaw Offices,
58
HaRakevet St., Tel Aviv 6777016, Israel
MY
SIZE, INC.
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
TO
BE HELD ON JANUARY [ ], 2018
A
special meeting (the “Special Meeting”) of stockholders of My Size, Inc. (the “Company”) will be held on
January [ ], 2018, at the offices of Barnea & CoLaw Offices, 58 HaRakevet St., Tel Aviv 6777016, Israel
,
at 4:00 p.m. local time, to consider the following proposals:
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1.
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Approve
an amendment to the Company’s 2017 Consultant Equity Incentive Plan to increase the reservation of common stock, par value
$0.001 per share (“Common Stock”) for issuance thereunder to 4,500,000 shares from 3,000,000 shares;
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2.
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Approve
an amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”)
to increase the authorized number of shares of the Company’s Common Stock from 50,000,000 shares to 100,000,000 shares;
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3.
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Grant
discretionary authority to the Company’s Board of Directors to (A) amend the Certificate of Incorporation of the Company
to effect one or more consolidations of the issued and outstanding shares of Common Stock, pursuant to which the shares of Common
Stock would be combined and reclassified into one (1) share of Common Stock at a ratio within the range from 1-for-2 up to 1-for-10
(the “Reverse Stock Split”) and (B) determine whether to arrange for the disposition of fractional interests by stockholders
entitled thereto, to pay in cash the fair value of fractions of a share of Common Stock as of the time when those entitled to
receive such fractions are determined, or to entitle stockholders to receive from the Company's transfer agent, in lieu of any
fractional share, the number of shares of Common Stock rounded up to the next whole number, provided that, (X) that the Company
shall not effect Reverse Stock Splits that, in the aggregate, exceeds 1-for-10, and (Y) any Reverse Stock Split is completed no
later than January [ ], 2019;
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4.
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To
approve the issuance of securities in one or more non-public offerings where the maximum
discount at which securities will be offered will be equivalent to a discount of 20%
below the market price of our Common Stock, as required by and in accordance with Nasdaq
Marketplace Rule 5635(d); and
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5.
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To
approve the issuance of securities in one or more non-public offerings where the maximum
discount at which securities will be offered will be equivalent to a discount of 15%
below the market price of our Common Stock, as required by and in accordance with Nasdaq
Marketplace Rule 5635(d);
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BECAUSE
OF THE SIGNIFICANCE OF THESE PROPOSALS TO THE COMPANY AND ITS STOCKHOLDERS, IT IS VITAL THAT EVERY STOCKHOLDER VOTES AT THE SPECIAL
MEETING IN PERSON OR BY PROXY.
These
proposals are fully set forth in the accompanying Proxy Statement, which you are urged to read thoroughly. For the reasons set
forth in the Proxy Statement, your Board of Directors recommends a vote “FOR” Proposals 1, 2, 3, 4 and 5. The Company
intends to mail the Proxy Statement and Proxy Card enclosed with this notice on or about *,2018 to all stockholders entitled to
vote at the Special Meeting. Only stockholders of record at the close of business on December 18, 2017 (the “Record Date”)
will be entitled to attend and vote at the meeting. A list of all stockholders entitled to vote at the Special Meeting will be
available at the principal office of the Company during usual business hours, for examination by any stockholder for any purpose
germane to the Special Meeting for 10 days prior to the date thereof. Stockholders are cordially invited to attend the Special
Meeting. However, whether or not you plan to attend the meeting in person, your shares should be represented and voted. After
reading the enclosed Proxy Statement, please sign, date, and return promptly the enclosed Proxy in the accompanying postpaid envelope
we have provided for your convenience to ensure that your shares will be represented. If you do attend the meeting and wish to
vote your shares personally, you may revoke your Proxy.
Important
Notice Regarding the Availability of Proxy Materials for the Special Meeting of Stockholders to be held on January [ ], 2018.
The Proxy Statement is available at: http://www.vstocktransfer.com/proxy.
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By Order of the Board of Directors
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/s/
Eliyahu Walles
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Eliyahu Walles
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Chairman of the Board of Directors
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WHETHER
OR NOT YOU PLAN ON ATTENDING THE MEETING IN PERSON, PLEASE VOTE AS PROMPTLY AS POSSIBLE TO ENSURE THAT YOUR VOTE IS COUNTED.
My
Size, Inc.
3
Arava St., pob 1026
Airport
City, Israel, 701000
PROXY
STATEMENT
This
Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of My Size, Inc. (“My
Size”, the “Company”, “we”, “us”, or “our”) to be voted at the special meeting
of stockholders (“Special Meeting”) which will be held the offices of Barnea & CoLaw Offices, 58 HaRakevet St.,
Tel Aviv 6777016, Israel
, at 4:00 p.m. local time,
and at any postponements or adjournments thereof. The proxy materials will be mailed to stockholders on or about *, 2018.
REVOCABILITY
OF PROXY AND SOLICITATION
Any
stockholder executing a proxy that is solicited hereby has the power to revoke it prior to the voting of the proxy. Revocation
may be made by attending the Special Meeting and voting the shares of stock in person, or by delivering to the Secretary of the
Company at the principal office of the Company prior to the Special Meeting a written notice of revocation or a later-dated, properly
executed proxy. Solicitation of proxies may be made by directors, officers and other employees of the Company by personal interview,
telephone, facsimile transmittal or electronic communications. No additional compensation will be paid for any such services.
This solicitation of proxies is being made by the Company which will bear all costs associated with the mailing of this proxy
statement and the solicitation of proxies.
RECORD
DATE
Stockholders
of record at the close of business on December 18, 2017 (the “Record Date”) will be entitled to receive notice of,
attend and vote at the meeting.
INFORMATION
ABOUT THE SPECIAL MEETING AND VOTING
Why
am I receiving these materials?
The
Company has delivered printed versions of these materials to you by mail, in connection with the Company’s solicitation
of proxies for use at the Special Meeting. These materials describe the proposals on which the Company would like you to vote
and also give you information on these proposals so that you can make an informed decision.
What
is included in these materials?
These
materials include:
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this
Proxy Statement for the Special Meeting; and
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the
Proxy Card or vote instruction form for the Special Meeting.
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What
is the Proxy Card?
The
Proxy Card enables you to appoint Ronen Luzon, our Chief Executive Officer, as your representative at the Special Meeting. By
completing and returning a Proxy Card, you are authorizing Mr. Luzon to vote your shares at the Special Meeting in accordance
with your instructions on the Proxy Card. This way, your shares will be voted whether or not you attend the Special Meeting.
What
is the purpose of the Special Meeting?
At
our Special Meeting, stockholders will act upon the matters outlined in the Notice of Special Meeting on the cover page of
this Proxy Statement, including (i) approval of an amendment to the Company’s 2017 Consultant Equity Incentive Plan to
increase the reservation of common stock, par value $0.001 per share (the “Common Stock”) for issuance thereunder
to 4,500,000 shares from 3,000,000 shares; (ii) approval of an amendment to the Company’s Amended and Restated
Certificate of Incorporation (the “Certificate of Incorporation”) to increase the authorized number of shares of
the Company’s Common Stock from 50,000,000 shares to 100,000,000 shares; (ii) granting discretionary authority to the
Company’s Board of Directors to (A) amend the Certificate of Incorporation of the Company to effect one or more
consolidations of the issued and outstanding shares of Common Stock, pursuant to which the shares of Common Stock would be
combined and reclassified into one (1) share of Common Stock at a ratio within the range from 1-for-2 up to 1-for-10 (the
“Reverse Stock Split”) and (B) determine whether to arrange for the disposition of fractional interests by
stockholders entitled thereto, to pay in cash the fair value of fractions of a share of Common Stock as of the time when
those entitled to receive such fractions are determined, or to entitle stockholders to receive from the Company's transfer
agent, in lieu of any fractional share, the number of shares of Common Stock rounded up to the next whole number, provided
that, (X) that the Company shall not effect Reverse Stock Splits that, in the aggregate, exceeds 1-for-10, and (Y) any
Reverse Stock Split is completed no later than January [ ], 2019; (iv)
approval
the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be
offered will be equivalent to a discount of 20% below the market price of our Common Stock, as required by and in
accordance with Nasdaq Marketplace Rule 5635(d); and (v) approval the issuance of securities in one or more non-public
offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 15% below the
market price of our Common Stock, as required by and in accordance with Nasdaq Marketplace Rule 5635(d).
What
constitutes a quorum?
The
presence at the meeting, in person or by proxy, of the holders of one third of the number of shares of common stock issued and
outstanding on the record date will constitute a quorum permitting the meeting to conduct its business. As of the Record Date
there were 18,406,245 shares of the Company’s Common Stock issued and outstanding, each share entitled to one vote at the
meeting (the “Voting Stock”). Thus, the presence of the holders of 6,135,415 shares of Common Stock will be required
to establish a quorum.
What
is the difference between a stockholder of record and a beneficial owner of shares held in street name?
Most
of our stockholders hold their shares in an account at a brokerage firm, bank or other nominee holder, rather than holding share
certificates in their own name. As summarized below, there are some distinctions between shares held of record and those owned
beneficially in street name.
Stockholder
of Record
If
on December 18, 2017, your shares were registered directly in your name with our transfer agent, VStock Transfer, LLC, you are
considered a stockholder of record with respect to those shares, and the Notice of Special Meeting and Proxy Statement was sent
directly to you by the Company. As the stockholder of record, you have the right to direct the voting of your shares by returning
the Proxy Card to us. Whether or not you plan to attend the Special Meeting, please complete, date, sign and return a Proxy Card
to ensure that your vote is counted.
Beneficial
Owner of Shares Held in Street Name
(non-Israeli brokerage firm, bank, broker-dealer, or other nominee holders)
If
on December 18, 2017, your shares were held in an account at a brokerage firm, bank, broker-dealer, or other nominee holder, then
you are considered the beneficial owner of shares held in “street name,” and the Notice of Special Meeting and Proxy
Statement was forwarded to you by that organization. The organization holding your account is considered the stockholder of record
for purposes of voting at the Special Meeting. As the beneficial owner, you have the right to direct that organization on how
to vote the shares held in your account. However, since you are not the stockholder of record, you may not vote these shares in
person at the Special Meeting unless you receive a valid proxy from the organization.
How
do I vote?
Stockholders
of Record.
If you are a stockholder of record, you may vote by any of the following methods:
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By
Mail.
You may vote by completing, signing, dating and returning your proxy card in the pre-addressed, postage-paid envelope
provided.
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In
Person.
You may attend and vote at the Special Meeting. The Company will give you a ballot when you arrive.
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Beneficial
Owners of Shares Held in Street Name.
If you are a beneficial owner of shares held in street name, you may vote by any
of the following methods:
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By
Mail.
You may vote by proxy by filling out the vote instruction form and returning it in the pre-addressed, postage-paid
envelope provided.
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In
Person.
If you are a beneficial owner of shares held in street name and you wish to vote in person at the Special Meeting,
you must obtain a legal proxy from the organization that holds your shares.
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How are Votes Counted?
Votes will be counted
by the inspector of election appointed for the Special Meeting, who will separately count, for the election of directors, “For,”
“Withhold” and broker non-votes; and, with respect to the other proposals, votes “For” and “Against,”
abstentions and broker non-votes. Broker non-votes will not be included in the tabulation of the voting results of any of the proposals
and, therefore, will have no effect on such proposals.
What is a Broker Non-Vote?
If your shares are held
in street name, you must instruct the organization who holds your shares how to vote your shares. If you sign your proxy
card but do not provide instructions on how your broker should vote on “routine” proposals, your broker will vote your
shares as recommended by the Board. If you do not provide voting instructions, your shares will not be voted on any “non-routine”
proposals. This vote is called a “broker non-vote.” Because broker non-votes are not considered under Delaware
law to be entitled to vote at the Special Meeting, broker non-votes will not be included in the tabulation of the voting results
of any of the proposals and, therefore, will have no effect on these proposals.
What is an Abstention?
An abstention is a stockholder’s
affirmative choice to decline to vote on a proposal. Under Delaware law, abstentions are counted as shares present and entitled
to vote at the Special Meeting. Therefore, abstentions will have the same effect as a vote “against” each of the Proposals
to be presented at the Special Meeting.
What
happens if I do not give specific voting instructions?
Shareholders
of Record.
If you are a stockholder of record and you:
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sign
and return a proxy card without giving specific voting instructions, then the proxy holders will vote your shares in the manner
recommended by the Board of Directors on all matters presented in this Proxy Statement and as the proxy holders may determine
in their discretion with respect to any other matters properly presented for a vote at the Special Meeting.
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Beneficial
Owners of Shares Held in Street Name.
If you are a beneficial owner of shares held in street name and do not provide
the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities
exchanges, the organization that holds your shares may generally vote on routine matters, but cannot vote on non-routine matters.
What
are the Board’s recommendations?
The
Board’s recommendation is set forth together with the description of each item in this Proxy Statement. In summary, the
Board recommends a vote:
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for
the
approval of an amendment to the Company’s 2017 Consultant Equity Incentive Plan to increase the reservation of Common Stock
for issuance thereunder to 4,500,000 shares from 3,000,000 shares;
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for
the
approval of an amendment to the Company’s Certificate of Incorporation to increase the authorized number of shares of the
Company’s Common Stock from 50,000,000 shares to 100,000,000 shares;
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for
granting
discretionary authority to the Company’s Board of Directors to (A) amend the Certificate of Incorporation of the
Company to effect one or more consolidations of the issued and outstanding shares of Common Stock, pursuant to which the
shares of Common Stock would be combined and reclassified into one (1) share of Common Stock at a ratio within the range from
1-for-2 up to 1-for-10 and (B) determine whether to arrange for the disposition of fractional interests by stockholders
entitled thereto, to pay in cash the fair value of fractions of a share of Common Stock as of the time when those entitled to
receive such fractions are determined, or to entitle stockholders to receive from the Company's transfer agent, in lieu of
any fractional share, the number of shares of Common Stock rounded up to the next whole number, provided that, (X) that the
Company shall not effect Reverse Stock Splits that, in the aggregate, exceeds 1-for-10, and (Y) any Reverse Stock Split is
completed no later than January [ ], 2019.
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for
the approval of
the issuance of securities
in one or more non-public offerings where the maximum discount at which securities will
be offered will be equivalent to a discount of 20% below the market price of the Company’s
Common Stock; and
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for
the approval of
the issuance of securities
in one or more non-public offerings where the maximum discount at which securities will
be offered will be equivalent to a discount of 15% below the market price of the Company’s
Common Stock.
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With
respect to any other matter that properly comes before the meeting, the proxy holder will vote as recommended by the Board of
Directors or, if no recommendation is given, in his own discretion.
Dissenters’
Right of Appraisal
Holders
of shares of our Common Stock do not have appraisal rights under Delaware law or under the governing documents of the Company
in connection with this solicitation.
How
are Proxy materials delivered to households?
Only
one copy of this Proxy Statement will be delivered to an address where two or more stockholders reside with the same last name
or who otherwise reasonably appear to be members of the same family based on the stockholders’ prior express or implied
consent.
We
will deliver promptly upon written or oral request a separate copy of this Proxy Statement upon such request. If you share an
address with at least one other stockholder, currently receive one copy of our Proxy Statement at your residence, and would like
to receive a separate copy of our Proxy Statement for future stockholder meetings of the Company, please specify such request
in writing and send such written request to My Size, Inc., 3 Arava St., pob 1026, Airport City, Israel, 701000, Attention: Corporate
Secretary.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding beneficial ownership of shares of our common stock as of December 18,
2017 by (i) each person known to beneficially own more than 5% of our outstanding common stock, (ii) each of our
directors, (iii) each of our named executive officers and (iv) all of our directors and executive officers as a group.
Except as otherwise indicated, the persons named in the table below have sole voting and investment power with respect to all
shares beneficially owned, subject to community property laws, where applicable.
Beneficial Owner(1)
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Shares of Common
Stock Beneficially
Owned
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Percentage(2)
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Shoshana Zigdon
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3,500,000
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19.02
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%
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Israel Levi
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1,437,850
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7.81
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%
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Named executive officers and directors:
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Eliyahu Walles
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300,000
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(3)
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1.60
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%
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Ronen Luzon
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2,055,950
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(4)
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10.99
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%
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Or Kles
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28,333
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(5)
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*
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Billy Pardo
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2,055,950
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(6)
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10.99
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%
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Arik Kaufman
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0
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(7)
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0
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Oren Elmaliah
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0
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(8)
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0
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Oron Branitzky
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0
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(9)
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0
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All Executive Officers and Directors as a Group ( persons)
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2,384,283
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12.53
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%
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* less than 1%
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(1)
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The address of each
person is c/o My Size, Inc., 3 Arava St., pob 1026, Airport City, Israel 7010000 unless otherwise indicated herein.
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(2)
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The
calculation in this column is based upon 18,406,245 shares of common stock outstanding on December 18, 2017. Beneficial
ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect
to the subject securities. Shares of common stock that are currently exercisable or exercisable within 60 days of
December 18, 2017 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the
percentage beneficial ownership of such person, but are not treated as outstanding for the purpose of computing the percentage
beneficial ownership of any other person.
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(3)
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Includes
options to purchase up to 300,000 shares of the Company’s common stock which vest in full on January 24, 2018.
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(4)
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Includes (i) 1,755,950
shares of common stock, (ii) options to purchase up to 150,000 shares of the Company’s common stock which vest in full
on January 24, 2018 and (iii) options to purchase up to 150,000 shares of the Company’s common stock which vest in full
on January 24, 2018 which are held by Billy Pardo, Ronen Luzon’s spouse. Mr. Luzon may be deemed to beneficially hold
the securities of the Company held by Mrs. Pardo.
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(5)
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Includes an option
to purchase 28,333 shares of the Company’s common stock. Excludes (i) an option to purchase up to 28,333 shares of the
Company’s common stock which vest in full on May 1, 2018 and (ii) an option to purchase up to 28,334 shares of the Company’s
common stock which vest in full on May 1, 2019.
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(6)
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Includes (i) options
to purchase up to 150,000 shares of the Company’s common stock which vest in full on January 24, 2018, (ii) 1,755,950
shares of common stock which are held by Ronen Luzon, Billy Pardo’s spouse and (iii) options to purchase up to 150,000
shares of the Company’s common stock which vest in full on January 24, 2018 which are held by Ronen Luzon, Billy Pardo’s
spouse. Mrs. Pardo may be deemed to beneficially hold the securities of the Company held by Mr. Luzon.
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(7)
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Excludes
options to purchase up to 10,000 shares of the Company’s common stock which vest in full on July 24, 2018.
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(8)
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Excludes options
to purchase up to 10,000 shares of the Company’s common stock which vest in full on July 24, 2018.
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(9)
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Excludes options
to purchase up to 10,000 shares of the Company’s common stock which vest in full on July 24, 2018.
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ACTIONS
TO BE TAKEN AT THE MEETING
PROPOSAL
NO. 1
APPROVAL
OF AN AMENDMENT TO THE COMPANY’S 2017 CONSULTANT EQUITY INCENTIVE
PLAN TO INCREASE THE RESERVATION OF COMMON STOCK FOR ISSUANCE
THEREUNDER
TO 4,500,000 SHARES FROM 3,000,000 SHARES
The
Company’s 2017 Consultant Equity Incentive Plan (the “2017 Consultant Plan”) was approved by our Board and by
our Stockholders and went into effect as of March 21, 2017. The Board deems it advisable and in the best interest of the Company
to increase the number of shares available for issuance under the 2017 Consultant Plan to 4,500,000 from 3,000,000 in support
of the Company’s growth and desire to attract qualified consultants and advisors. In determining the amount of the
increase contemplated by the Plan Amendment to the 2017 Consultant Plan, the Board took into consideration the desire to continue
to retain the flexibility to offer incentives to its current and future consultants and advisors.
Reasons
for the Proposed Plan Amendment
The
purpose of this increase is to continue to be able to attract qualified consultants and advisors, and the additional shares of
Common Stock to be reserved for issuance under the 2017 Consultant Plan will enable us to continue to grant equity awards to our
current and future consultants and advisors at levels determined by the Board that the Board deems are necessary to attract and
motivate such consultants and advisors who are or will be critical to our success in achieving our business objectives and thereby
creating greater value for all our stockholders. Furthermore, we believe that equity compensation aligns the interests of our
advisors and consultants with the interests of our other stockholders. Equity awards are a key component of our incentive compensation
program. We believe that option grants and other forms of equity awards such as restricted stock awards have been critical in
attracting and retaining qualified consultants and advisors and aligning their interests with those of our stockholders, and focusing
such consultants and advisors on our long-term growth. Approval of the amendment to the 2017 Consultant Plan will permit us to
continue to use stock-based compensation to align consultant and advisors interests with those of our stockholders.
Description
of Our 2017 Consultant Plan
Set
forth below is a summary of the 2017 Consultant Plan, but this summary is qualified in its entirety by reference to the full text
of the 2017 Consultant Plan, a copy of which can be found as
Exhibit C
to our Definitive Proxy Statement
for the Annual Meeting of Stockholders held March 21, 2017, filed with the SEC on March 2, 2017.
Shares
Available
The 2017 Consultant Plan currently authorizes the issuance of 3,000,000 shares of Common Stock. As of the
Record Date, awards covering an aggregate of 2,560,000
1
shares were granted under the 2017 Consultant Plan and
440,000
2
shares were available for future awards under the 2017 Consultant Plan.
1
Includes awards covering an aggregate of 202,500 shares which are subject to vesting conditions.
Excludes options to purchase an aggregate of 150,000 shares issued pursuant to the 2017 Consultant Plan which are subject to approval
by TASE and an increase in the Common Stock reserve pursuant to the 2017 Consultant Plan (see Proposal 1). Also
excludes options to purchase 1,230,000 shares issued pursuant to the Company’s 2017 Consultant Plan to S&J Capital
Corp. (“S&J”). The Company has notified S&J that it believes the consultant failed to render the agreed
upon services under its agreement with the Company and that such options are subject to dispute.
2
Excludes options to
purchase an aggregate of 150,000 shares issued pursuant to the 2017 Consultant Plan which are subject to approval by TASE and
an increase in the Common Stock reserve pursuant to the 2017 Consultant Plan (see Proposal 1). Also excludes options to
purchase 1,230,000 shares issued pursuant to the Company’s 2017 Consultant Plan to S&J. The Company has notified
S&J that it believes the consultant failed to render the agreed upon services under its agreement with the Company and
that such options are subject to dispute.
If
an award is forfeited, canceled, or if any option terminates, expires or lapses without being exercised, the Common Stock subject
to such award will again be made available for future grant. However, shares that are used to pay the exercise price of an option
or that are withheld to satisfy a participant’s tax withholding obligation will not be available for re-grant under the
2017 Consultant Plan.
If
there is any change in the Company’s corporate capitalization or structure, the Committee (as defined below) in its sole
discretion may make substitutions or adjustments to the number of shares of Common Stock reserved for issuance under the 2017
Consultant Plan, the number of shares covered by awards then outstanding under the 2017 Consultant Plan, the limitations on awards
under the 2017 Consultant Plan, the exercise price of outstanding options and such other equitable substitution or adjustments
as it may determine appropriate.
The
2017 Consultant Plan will have a term of ten years and no further awards may be granted under the 2017 Consultant Plan after that
date.
Administration
The
Company’s Compensation Committee (the “Committee”) administers the 2017 Consultant Plan. The Committee has the
authority, without limitation to (i) to designate participants to receive awards, (ii) determine the types of awards to be granted
to participants, (iii) determine the number of shares of Common Stock to be covered by awards, (iv) determine the terms and conditions
of any awards granted under the 2017 Consultant Plan, (v) determine to what extent and under what circumstances awards may be
settled in cash, shares of Common Stock, other securities, other awards or other property, or canceled, forfeited or suspended,
(vi) determine whether, to what extent, and under what circumstances the delivery of cash, Common Stock, other securities, other
awards or other property and other amounts payable with respect to an award shall be made; (vii) interpret, administer, reconcile
any inconsistency in, settle any controversy regarding, correct any defect in and/or complete any omission in the 2017 Consultant
Plan and any instrument or agreement relating to, or award granted under, the 2017 Consultant Plan; (viii) establish, amend, suspend,
or waive any rules and regulations and appoint such agents as the Committee shall deem appropriate for the proper administration
of the 2017 Consultant Plan; (ix) accelerate the vesting or exercisability of, payment for or lapse of restrictions on, awards;
(x) reprice existing awards or to grant awards in connection with or in consideration of the cancellation of an outstanding award
with a higher price; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable
for the administration of the 2017 Consultant Plan. The Committee has full discretion to administer and interpret the 2017 Consultant
Plan and to adopt such rules, regulations and procedures as it deems necessary or advisable and to determine, among other things,
the time or times at which the awards may be exercised and whether and under what circumstances an award may be exercised.
Eligibility
Advisors
and consultants of the Company or their affiliates are eligible to participate in the 2017 Consultant Plan. The Committee has
the sole and complete authority to determine who will be granted an award under the 2017 Consultant Plan; however, the Committee
may delegate such authority to one or more officers of the Company pursuant to the terms of the 2017 Consultant Plan.
Awards
Available for Grant
The
Committee may grant awards of non-qualified stock options, incentive stock options, stock appreciation rights (“SARs”),
restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards (including cash bonus awards)
or any combination of the foregoing. Notwithstanding, the Committee may not grant to any one person in any one calendar year awards
(i) for more than 50% of the available shares in the aggregate or (ii) payable in cash in an amount exceeding $10,000,000 in the
aggregate.
U.S.
Federal Income Tax Consequences
The
following is a general summary of the material U.S. federal income tax consequences of the grant and exercise and vesting of awards
under the 2017 Consultant Plan and the disposition of shares acquired pursuant to the exercise of such awards. This summary is
intended to reflect the current provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations
thereunder. However, this summary is not intended to be a complete statement of applicable law, nor does it address foreign, state,
local and payroll tax considerations. Moreover, the U.S. federal income tax consequences to any particular participant may differ
from those described herein by reason of, among other things, the particular circumstances of such participant.
Pursuant
to Section 15(e) of the 2017 Consultant Plan, the Committee may, in its sole discretion, amend the terms of the 2017 Consultant
Plan or outstanding awards (or establish a sub-plan) with respect to such participants in order to conform such terms with the
requirements of local law or to obtain more favorable tax or other treatment for such participants or the Company. The Company
operates in Israel, and the applicable tax consequences for participants may be Israeli tax consequences.
Options
Options
issued to consultants and advisors under the 2017 Consultant Plan shall be non-qualified stock options. No income will be realized
by a participant upon grant of a non-qualified stock option. Upon the exercise of a non-qualified stock option, the participant
will recognize ordinary compensation income in an amount equal to the excess, if any, of the fair market value of the underlying
exercised shares over the option exercise price paid at the time of exercise. Such income will be subject to income tax withholdings,
and the participant will be required to pay to the Company the amount of any required withholding taxes in respect to such income.
The Company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under
Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Restricted
Stock
A
participant will not be subject to tax upon the grant of an award of restricted stock unless the participant otherwise elects
to be taxed at the time of grant pursuant to Section 83(b) of the Code. On the date an award of restricted stock becomes transferable
or is no longer subject to a substantial risk of forfeiture, the participant will recognize ordinary compensation income equal
to the difference between the fair market value of the shares on that date over the amount the participant paid for such shares,
if any. Such income will be subject to income tax withholdings, and the participant will be required to pay to the Company the
amount of any required withholding taxes in respect to such income. If the participant made an election under Section 83(b) of
the Code, the participant will recognize ordinary compensation income at the time of grant equal to the difference between the
fair market value of the shares on the date of grant over the amount the participant paid for such shares, if any, and any subsequent
appreciation in the value of the shares will be treated as a capital gain upon sale of the shares. Special rules apply to the
receipt and disposition of restricted shares received by officers and directors who are subject to Section 16(b) of the Exchange
Act. The Company will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable compensation
to the participant for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the
Code for compensation paid to certain executives designated in those Sections.
Restricted
Stock Units
A
participant will not be subject to tax upon the grant of a restricted stock unit award. Rather, upon the delivery of shares or
cash pursuant to a restricted stock unit award, the participant will recognize ordinary compensation income equal to the fair
market value of the number of shares (or the amount of cash) the participant actually receives with respect to the award. Such
income will be subject to income tax withholdings, and the participant will be required to pay to the Company the amount of any
required withholding taxes in respect to such income. The Company will be able to deduct the amount of taxable compensation recognized
by the participant for U.S. federal income tax purposes, but the deduction may be limited under Sections 280G and 162(m) of the
Code for compensation paid to certain executives designated in those Sections.
SARs
No
income will be realized by a participant upon grant of an SAR. Upon the exercise of an SAR, the participant will recognize ordinary
compensation income in an amount equal to the fair market value of the payment received in respect of the SAR. Such income will
be subject to income tax withholdings, and the participant will be required to pay to the Company the amount of any required withholding
taxes in respect to such income. The Company will be able to deduct this same amount for U.S. federal income tax purposes, but
such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated
in those Sections.
Stock
Bonus Awards
A
participant will recognize ordinary compensation income equal to the difference between the fair market value of the shares on
the date the shares of Common Stock subject to the award are transferred to the participant over the amount the participant paid
for such shares, if any, and any subsequent appreciation in the value of the shares will be treated as a capital gain upon sale
of the shares. The Company will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable
compensation to the Participant for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and
162(m) of the Code for compensation paid to certain executives designated in those Sections.
Section
162(m) of the Code
In
general, Section 162(m) of the Code denies a publicly held corporation a deduction for U.S. federal income tax purposes for compensation
in excess of $1,000,000 per year per person paid to its principal executive officer and the three other officers (other than the
principal executive officer and principal financial officer) whose compensation is disclosed in its proxy statement/prospectus
as a result of their total compensation, subject to certain exceptions. The 2017 Consultant Plan is intended to satisfy an exception
with respect to grants of options to covered employees. In addition, the 2017 Consultant Plan is designed to permit certain awards
of restricted stock, restricted stock units, cash bonus awards and other awards to be awarded as performance compensation awards
intended to qualify under the “performance-based compensation” exception to Section 162(m) of the Code.
New
Plan Benefits
SEC
rules require us to disclose any amounts that we currently are able to determine will be allocated to our named executive officers,
directors and other employees following approval of the amendment to the 2017 Consultant Plan. Set forth below is information
on grants under the 1,500,000 shares to be added to the 2017 Consultant Plan pursuant to the amendment to consultants and advisors
of the Company.
Name
|
|
Number
of
Shares
|
|
|
Number
of
Options
|
|
S&J Capital Corp.
|
|
|
|
|
|
|
1,230,000
|
(1)
|
Beverly Camhe
|
|
|
|
|
|
|
50,000
|
|
Emme Aronson
|
|
|
|
|
|
|
50,000
|
|
Susan Moses
|
|
|
|
|
|
|
50,000
|
|
Laurel Moody
|
|
|
99,000
|
|
|
|
|
|
(1) The Company has notified the consultant
that it believes the consultant failed to render the agreed upon services under its agreement with the Company and that such options
are subject to dispute.
Required
Vote
The affirmative vote of a majority of the votes
cast by holders of Voting Stock present in person or represented by proxy and entitled to vote thereon at the Special Meeting is
required to approve the increase in reserve under the 2017 Consultant Plan.
RECOMMENDATION
OF THE BOARD FOR PROPOSAL NO. 1:
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2017 CONSULTANT EQUITY INCENTIVE
PLAN TO INCREASE THE RESERVATION OF COMMON STOCK FOR ISSUANCE THEREUNDER TO 4,500,000 SHARES FROM 3,000,000 SHARES
PROPOSAL
2:
APPROVAL
OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF THE COMPANY’S
COMMON STOCK
FROM 50,000,000 SHARES TO 100,000,000 SHARES
The
Board deems it advisable and in the best interest of the Company to file an amendment to the Company’s Certificate of Incorporation
to increase the authorized number of shares of the Company’s Common Stock from 50,000,000 shares to 100,000,000 shares (the
“Amendment”).
The
form of Amendment to be filed with the Delaware Secretary of State is set forth in
Appendix A
to this
Proxy Statement (subject to any changes required by applicable law and provided that, since Proposals 2 and 3 will result in changes
to the Certificate of Incorporation, the Company may file one or more amendments with the Delaware Secretary of State to effect
multiple approved proposals).
The
terms of the additional shares of Common Stock will be identical to those of the currently outstanding shares of Common Stock.
However, because holders of Common Stock have no preemptive rights to purchase or subscribe for any unissued stock of the Company,
the issuance of additional shares of Common Stock will reduce the current stockholders' percentage ownership interest in the total
outstanding shares of Common Stock. This Common Stock increase and the creation of additional shares of authorized Common Stock
will not alter the current number of issued shares. (A separate proposal, however, for the Reverse Stock Split, may, if approved,
reduce the number of issued shares. See Proposal No. 3.) The relative rights and limitations of the shares of Common Stock will
remain unchanged under this Amendment.
Reasons
for the Amendment
The
Board believes that the availability of additional authorized shares of Common Stock will provide the Company with additional
flexibility to issue Common Stock for a variety of general corporate purposes as the Board may determine to be desirable including,
without limitation, stock splits (including splits effected through the declaration of stock dividends), raising capital, future
financings, investment opportunities, licensing agreements, acquisitions, or other distributions. The Board has not authorized
the Company to take any action with respect to the shares that would be authorized under this proposal, and the Company currently
does not have any definitive plans, arrangements or understandings with respect to the issuance of the additional shares of Common
Stock authorized by the Amendment.
Effects
of the Amendment
Following
the filing of the Amendment with the Delaware Secretary of State, we will have the authority to issue 50,000,000 additional shares
of Common Stock. Subject to limitations imposed by the
Nasdaq
Stock Market, these shares may be issued without stockholder approval at any time, in the
sole discretion of our Board of Directors. The authorized and unissued shares may be issued for cash, to acquire property or for
any other purpose that is deemed in the best interests of the Company.
In
addition, the Amendment could have a number of effects on the Company's stockholders depending upon the exact nature and circumstances
of any actual issuances of authorized but unissued shares. The increase could have an anti-takeover effect, in that additional
shares could be issued (within the limits imposed by applicable law) in one or more transactions that could make a change in control
or takeover of the Company more difficult. For example, additional shares could be issued by the Company so as to dilute the stock
ownership or voting rights of persons seeking to obtain control of the Company, even if the persons seeking to obtain control
of the Company offer an above-market premium that is favored by a majority of the independent stockholders. Similarly, the issuance
of additional shares to certain persons allied with the Company's management could have the effect of making it more difficult
to remove the Company's current management by diluting the stock ownership or voting rights of persons seeking to cause such removal.
The Board of Directors is not aware of any attempt, or contemplated attempt, to acquire control of the Company, and this proposal
is not being presented with the intent that it be utilized as a type of anti-takeover device. The Amendment has been prompted
by business and financial considerations.
The
Amendment will not change the number of shares of Common Stock outstanding, nor will it have any immediate dilutive effect or
change the rights of current holders of the Company’s Common Stock. However, the issuance of additional shares of Common
Stock authorized by the Amendment may occur at times or under circumstances as to have a dilutive effect on earnings per share,
book value per share or the percentage voting or ownership interest of the present holders of the Company’s Common Stock.
Procedure
for Implementing the Amendment
The
increase in authorized Common Stock will become effective upon the filing or such later time as specified in the filing of the
Amendment with the Delaware Secretary of State. The form of the Amendment is attached hereto as
Appendix A
.
The exact timing of the filing of the Amendment will be determined by our Board of Directors based on its evaluation as to when
such action will be the most advantageous to the Company and our stockholders.
Required
Vote
Approval of the amendment to the Certificate of Incorporation to increase the authorized number of shares
of Common Stock requires the receipt of the affirmative vote of a majority of the Voting Stock as of the Record Date.
RECOMMENDATION
OF THE BOARD FOR PROPOSAL NO. 2:
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF THE COMPANY’S COMMON STOCK FROM 50,000,000 SHARES TO 100,000,000 SHARES
PROPOSAL 3:
GRANT
OF AUTHORITY FOR A REVERSE SPLIT OF
THE
COMPANY’S COMMON STOCK
The
Board deems it advisable and in the best interest of the Company that the Board be granted the discretionary authority to amend
the Company’s Certificate of Incorporation to
effect
the Reverse Stock Split of the Company’s issued and outstanding Common Stock as described below
(the
“Reverse Stock Split Amendment”).
The
form of Reverse Stock Split Amendment to be filed with the Delaware Secretary of State is set forth in
Appendix B
(subject
to any changes required by applicable law and provided that, since Proposals 2 and 3 will result in changes to the Certificate
of Incorporation, the Company may file one or more amendments with the Delaware Secretary of State to effect multiple approved
proposals).
Approval
of the proposal would permit (but not require) our Board of Directors to effect one or more reverse stock splits of our issued
and outstanding common stock by a ratio of not less than one-for-two and not more than one-for-ten, with the exact ratio to be
set at a number within this range as determined by our Board of Directors in its sole discretion, provided that the Board of Directors
determines to effect the Reverse Stock Split and such amendment is filed with the appropriate authorities in the State of Delaware
no later than January [ ], 2019. The Company shall not effect Reverse Stock Splits that, in the aggregate, exceeds
one-for-ten. We believe that enabling our Board of Directors to set the ratio within the stated range will provide us with the
flexibility to implement the Reverse Stock Split in a manner designed to maximize the anticipated benefits for our Stockholders. In
determining a ratio, if any, our Board of Directors may consider, among other things, factors such as:
|
●
|
the
initial or continuing listing requirements of various stock exchanges, including the Nasdaq Capital Market;
|
|
●
|
the
historical trading price and trading volume of our Common Stock;
|
|
●
|
the
number of shares of our Common Stock outstanding;
|
|
●
|
the
then-prevailing trading price and trading volume of our Common Stock and the anticipated impact of the Reverse Stock Split
on the trading market for our Common Stock;
|
|
●
|
the
anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs; and
|
|
●
|
prevailing
general market and economic conditions.
|
Our
Board of Directors reserves the right to elect to abandon the Reverse Stock Split, including any or all proposed reverse stock
split ratios, if it determines, in its sole discretion, that the Reverse Stock Split is no longer in the best interests of the
Company and its stockholders.
Depending
on the ratio for the Reverse Stock Split determined by our Board of Directors, no less than two and no more than ten shares of
existing Common Stock, as determined by our Board of Directors, will be combined into one share of Common Stock. The Company shall
not effect Reverse Stock Splits that, in the aggregate, exceed one-for-ten. Our Board of Directors will have the discretionary
authority to determine whether to arrange for the disposition of fractional interests by holder entitled thereto, to pay in cash
the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or to entitle
holders to receive from the Company transfer agent, in lieu of any fractional share, the number of shares rounded up to the next
whole number. The amendment to our Certificate of Incorporation to effect a Reverse Stock Split, if any, will include only
the reverse split ratio determined by our Board of Directors to be in the best interests of our Stockholders and all of the other
proposed amendments at different ratios will be abandoned.
Reasons
for the Reverse Stock Split; Potential Consequences of the Reverse Stock Split
The
Company’s primary reasons for approving and recommending the Reverse Stock Split are to make the Common Stock more attractive
to certain institutional investors, which would provide for a stronger investor base and to increase the per share price and bid
price of our Common Stock to regain compliance with the continued listing requirements of Nasdaq.
On
September 26, 2017, the Company received a written notice from Nasdaq that it is not in compliance with Nasdaq Listing Rule 5550(a)(2),
as the minimum bid price of the Company’s Common Stock had been below $1.00 per share for 30 consecutive business days.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has 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 the Company’s
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.
Reducing
the number of outstanding shares of Common Stock should, absent other factors, generally increase the per share market price of
the Common Stock. Although the intent of the Reverse Stock Split is to increase the price of the Common Stock, there can be no
assurance, however, that even if the Reverse Stock Split is effected, that the Company’s bid price of the Company’s
Common Stock will be sufficient for the Company to regain compliance with the Nasdaq minimum bid price requirement.
In
addition, the Company believes the Reverse Stock Split will make its Common Stock more attractive to a broader range of investors,
as it believes that the current market price of the Common Stock may prevent certain institutional investors, professional investors
and other members of the investing public from purchasing stock. Many brokerage houses and institutional investors
have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual
brokers from recommending low-priced stocks to their customers. Furthermore, some of those policies and practices may
function to make the processing of trades in low-priced stocks economically unattractive to brokers. Moreover, because brokers’
commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced
stocks, the current average price per share of Common Stock can result in individual stockholders paying transaction costs representing
a higher percentage of their total share value than would be the case if the share price were higher. The Company believes
that the Reverse Stock Split will make the Common Stock a more attractive and cost effective investment for many investors, which
in turn would enhance the liquidity of the holders of Common Stock.
Reducing
the number of outstanding shares of our Common Stock through the Reverse Stock Split is intended, absent other factors, to increase
the per share market price of our Common Stock. However, other factors, such as our financial results, market conditions
and the market perception of our business may adversely affect the market price of our Common Stock. As a result, there
can be no assurance that the Reverse Stock Splits, if completed, will result in the intended benefits described above, that the
market price of our Common Stock will increase following the Reverse Stock Splits, that as a result of the Reverse Stock Split
we will be able to meet or maintain a bid price over the minimum bid price requirement of Nasdaq or that the market price of our
Common Stock will not decrease in the future. Additionally, we cannot assure you that the market price per share of
our Common Stock after the Reverse Stock Split will increase in proportion to the reduction in the number of shares of our Common
Stock outstanding before the Reverse Stock Split. Accordingly, the total market capitalization of our Common Stock
after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split.
Procedure
for Implementing the Reverse Stock Split
The
Reverse Stock Split will become effective upon the filing or such later time as specified in the filing (the “Effective
Time”) of the Reverse Stock Split Amendment with the Delaware Secretary of State. The form of the Reverse Stock Split Amendment
is attached hereto as
Appendix B
. The exact timing of the filing of the Reverse Stock Split Amendment and the
ratio of the Reverse Stock Split (within the approved range) will be determined by our Board of Directors based on its evaluation
as to when such action and at what ratio will be the most advantageous to the Company and our stockholders. In addition,
our Board of Directors reserves the right, notwithstanding stockholder approval and without further action by the stockholders,
to elect not to proceed with the Reverse Stock Split if, at any time prior to filing the Reverse Stock Split Amendment, our Board
of Directors, in its sole discretion, determines that it is no longer in our best interest and the best interests of our stockholders
to proceed with the Reverse Stock Split. If the Reverse Stock Split Amendment has not been filed with the Delaware
Secretary of State by January [ ], 2019, our Board of Directors will abandon the Reverse Stock Split.
Effect
of the Reverse Stock Split on Holders of Outstanding Common Stock
Depending
on the ratio for the Reverse Stock Split determined by our Board of Directors, a minimum of two and a maximum of ten shares in
aggregate of existing Common Stock will be combined into one new share of Common Stock. Based on
18,406,245
shares of Common Stock issued and outstanding as of the Record Date, immediately following the reverse split the Company
would have approximately 9,203,123 shares of Common Stock issued and outstanding (without giving effect to rounding for fractional
shares) if the ratio for the reverse split is 1-for-2, approximately 3,681,249 shares of Common Stock issued and outstanding (without
giving effect to rounding for fractional shares) if the ratio for the reverse split is 1-for-5, and approximately 1,840,625 shares
of Common Stock issued and outstanding (without giving effect to rounding for fractional shares) if the ratio for the reverse
split is 1-for-10, which is the aggregate ratio allowed under this proposal. Any other ratios selected within such range would
result in a number of shares of Common Stock issued and outstanding following the transaction between 9,203,123 and 1,840,625
shares. The foregoing does not give effect to (i) 3,115,500
3
shares of Common Stock issuable upon exercise of
outstanding options as of the Record Date and (ii) 2,480,605
4
shares of Common Stock issuable upon exercise
of outstanding warrants as of the Record Date.
3
Includes options to purchase 925,500 shares issued pursuant to the Company’s 2017 Equity Incentive Plan, which options
are subject to approval by the Tel Aviv Stock Exchange (“TASE”). Excludes (i) options to purchase 1,230,000 shares
issued pursuant to the Company’s 2017 Consultant Plan of which 390,000 are subject to TASE approval and 840,000 are subject
to TASE approval and an increase in the common stock reserve pursuant to the 2017 Consultant Plan (see Proposal 1) and (ii) options
to purchase an aggregate of 150,000 shares issued pursuant to the 2017 Consultant Plan which are subject to approval by TASE and
an increase in the common stock reserve pursuant to the 2017 Consultant Plan (see Proposal 1).
4
Warrants to purchase 888,888 shares are subject to approval by TASE.
The
actual number of shares issued after giving effect to the Reverse Stock Split, if implemented, will depend on the Reverse Stock
Split ratio and the number of Reverse Stock Splits, if any, that are ultimately determined by our Board of Directors.
The
Reverse Stock Split will affect all holders of our Common Stock uniformly and will not affect any stockholder’s percentage
ownership interest in the Company, except that as described below in “— Fractional Shares,” record holders of
Common Stock otherwise entitled to a fractional share as a result of the Reverse Stock Split will be rounded up to the next whole
number. In addition, the Reverse Stock Split will not affect any stockholder’s proportionate voting power (subject
to the treatment of fractional shares).
The
Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of Common Stock. Odd
lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally
somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares.
After
the Effective Time, our Common Stock will have new Committee on Uniform Securities Identification Procedures (“CUSIP”)
numbers, which is a number used to identify our equity securities, and stock certificates with the older CUSIP numbers will need
to be exchanged for stock certificates with the new CUSIP numbers by following the procedures described below. After the Effective
Time, we will continue to be subject to the periodic reporting and other requirements of the Securities Exchange Act of 1934 and
our Common Stock will continue to be quoted on the Nasdaq Capital Market under the symbol “MYSZ”. The Reverse Stock
Split is not intended as, and will not have the effect of, a “going private transaction” as described by Rule 13e-3
under the Exchange Act.
After
the Effective Time of the Reverse Stock Split, the post-split market price of our Common Stock may be less than the pre-split
price multiplied by the Reverse Stock Split ratio. In addition, a reduction in number of shares outstanding may impair the liquidity
for our Common Stock, which may reduce the value of our Common Stock.
Authorized
Shares of Common Stock
The
Reverse Stock Split will not change the number of authorized shares of the Company’s Common Stock under the Company’s
Certificate of Incorporation. (A separate proposal, however, may, if approved, increase our authorized shares of common stock
from 50,000,000 to 100,000,000. See Proposal 2.) Because the number of issued and outstanding shares of Common Stock will decrease,
the number of shares of Common Stock remaining available for issuance will increase. Currently, under our Certificate of Incorporation,
our authorized capital stock consists of 50,000,000 shares of Common Stock.
Subject
to limitations imposed by
Nasdaq
,
the additional shares available for issuance may be issued without stockholder approval at any time, in the sole discretion of
our Board of Directors. The authorized and unissued shares may be issued for cash, for acquisitions or for any other purpose that
is deemed in the best interests of the Company.
By
increasing the number of authorized but unissued shares of Common Stock, the Reverse Stock Split could, under certain circumstances,
have an anti-takeover effect, although this is not the intent of the Board of Directors. For example, it may be possible for the
Board of Directors to delay or impede a takeover or transfer of control of the Company by causing such additional authorized but
unissued shares to be issued to holders who might side with the Board of Directors in opposing a takeover bid that the Board of
Directors determines is not in the best interests of the Company or its stockholders. The Reverse Stock Split therefore may have
the effect of discouraging unsolicited takeover attempts. By potentially discouraging initiation of any such unsolicited takeover
attempts the Reverse Stock Split may limit the opportunity for the Company’s stockholders to dispose of their shares at
the higher price generally available in takeover attempts or that may be available under a merger proposal. The Reverse Stock
Split may have the effect of permitting the Company’s current management, including the current Board of Directors, to retain
its position, and place it in a better position to resist changes that stockholders may wish to make if they are dissatisfied
with the conduct of the Company’s business. However, the Board of Directors is not aware of any attempt to take control
of the Company and the Board of Directors has not approved the Reverse Stock Split with the intent that it be utilized as a type
of anti-takeover device.
Beneficial
Holders of Common Stock (i.e. stockholders who hold in street name)
Upon
the implementation of the Reverse Stock Split, we intend to treat shares held by stockholders through a bank, broker, custodian
or other nominee in the same manner as registered stockholders whose shares are registered in their names. Banks, brokers,
custodians or other nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding our Common
Stock in street name. However, these banks, brokers, custodians or other nominees may have different procedures than
registered stockholders for processing the Reverse Stock Split. Stockholders who hold shares of our Common Stock with
a bank, broker, custodian or other nominee and who have any questions in this regard are encouraged to contact their banks, brokers,
custodians or other nominees.
Registered
“Book-Entry” Holders of Common Stock (i.e. stockholders that are registered on the transfer agent’s books and
records but do not hold stock certificates)
Certain
of our registered holders of Common Stock may hold some or all of their shares electronically in book-entry form with the transfer
agent. These stockholders do not have stock certificates evidencing their ownership of the Common Stock. They
are, however, provided with a statement reflecting the number of shares registered in their accounts.
Stockholders
who hold shares electronically in book-entry form with the transfer agent will not need to take action (the exchange will be automatic)
to receive whole shares of post-Reverse Stock Split Common Stock, subject to adjustment for treatment of fractional shares.
Holders
of Certificated Shares of Common Stock
Stockholders
holding shares of our Common Stock in certificated form will be sent a transmittal letter by our transfer agent after the
Effective Time. The letter of transmittal will contain instructions on how a stockholder should surrender his, her or its
certificate(s) representing shares of our Common Stock (the “Old Certificates”) to the transfer agent in
exchange for certificates representing the appropriate number of whole shares of post-Reverse Stock Split Common Stock (the
“New Certificates”). No New Certificates will be issued to a stockholder until such stockholder has
surrendered all Old Certificates, together with a properly completed and executed letter of transmittal, to the transfer
agent. No stockholder will be required to pay a transfer or other fee to exchange his, her or its Old
Certificates. Stockholders will then receive a New Certificate(s) representing the number of whole shares of
Common Stock that they are entitled as a result of the Reverse Stock Split, subject to the treatment of fractional shares
described below. Until surrendered, we will deem outstanding Old Certificates held by stockholders to be cancelled
and only to represent the number of whole shares of post-Reverse Stock Split Common Stock to which these stockholders are
entitled, subject to the treatment of fractional shares. Any Old Certificates submitted for exchange, whether
because of a sale, transfer or other disposition of stock, will automatically be exchanged for New
Certificates. If an Old Certificate has a restrictive legend on the back of the Old Certificate(s), the New
Certificate will be issued with the same restrictive legends that are on the back of the Old Certificate(s).
The
Company expects that our transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates.
No service charges will be payable by holders of shares of Common Stock in connection with the exchange of certificates.
All of such expenses will be borne by the Company.
STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Fractional
Shares
The
Board of Directors will have the discretionary authority to determine whether to arrange for the disposition of fractional interests
by stockholders entitled thereto, to pay in cash the fair value of fractions of a share as of the time when those entitled to
receive such fractions are determined, or to entitle stockholders to receive from the Company’s transfer agent, in lieu
of any fractional share, the number of shares rounded up to the next whole number.
If
the Board of Directors determines to arrange for the disposition of fractional interests by stockholders entitled thereto or to
pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined,
stockholders who would otherwise hold fractional shares because the number of shares of Common Stock they hold before the Reverse
Stock Split is not evenly divisible by the ratio ultimately selected by the Board of Directors will be entitled to receive cash
(without interest or deduction) in lieu of such fractional shares from either: (i) the Company, upon receipt by the transfer agent
of a properly completed and duly executed transmittal letter and, where shares are held in certificated form, upon due surrender
of any certificate previously representing a fractional share, in an amount equal to such holder's fractional share based upon
the closing sale price of the Common Stock on the trading day immediately prior to the Effective Time as reported on the Nasdaq
Capital Market, or other principal market of the Common Stock, as applicable, as of the date the Reverse Stock Split is effected;
or (ii) the transfer agent, upon receipt by the transfer agent of a properly completed and duly executed transmittal letter and,
where shares are held in certificated form, the surrender of all old certificate(s), in an amount equal to the proceeds attributable
to the sale of such fractional shares following the aggregation and sale by the transfer agent of all fractional shares otherwise
issuable. If the Board of Directors determines to dispose of fractional interests pursuant to clause (ii) above, the Company expects
that the transfer agent would conduct the sale in an orderly fashion at a reasonable pace and that it may take several days to
sell all of the aggregated fractional shares of Common Stock. In this event, such holders would be entitled to an amount equal
to their pro rata share of the proceeds of such sale. The Company will be responsible for any brokerage fees or commissions related
to the transfer agent's open market sales of shares that would otherwise be fractional shares.
The
ownership of a fractional share interest following the Reverse Stock Split will not give the holder any voting, dividend or other
rights, except to receive the cash payment, or, if the Board of Directors so determines, to receive the number of shares rounded
up to the next whole number, as described above.
Stockholders
should be aware that, under the escheat laws of various jurisdictions, sums due for fractional interests that are not timely claimed
after the effective time of the Reverse Stock Split may be required to be paid to the designated agent for each such jurisdiction,
unless correspondence has been received by the Company or the transfer agent concerning ownership of such funds within the time
permitted in such jurisdiction. Thereafter, if applicable, stockholders otherwise entitled to receive such funds, but who do not
receive them due to, for example, their failure to timely comply with the transfer agent's instructions, will have to seek to
obtain such funds directly from the state to which they were paid.
Effect
of the Reverse Stock Split on Employee and Consultant Plans, Options, Restricted Stock Awards and Units, Warrants, and Convertible
or Exchangeable Securities
Based
upon the Reverse Stock Split ratio determined by the Board of Directors, proportionate adjustments are generally required to be
made to the per share exercise price and the number of shares issuable upon the exercise or conversion of all outstanding options,
warrants, convertible or exchangeable securities entitling the holders to purchase, exchange for, or convert into, shares of Common
Stock. This would result in approximately the same aggregate price being required to be paid under such options, warrants,
convertible or exchangeable securities upon exercise, and approximately the same value of shares of Common Stock being delivered
upon such exercise, exchange or conversion, immediately following the Reverse Stock Split as was the case immediately preceding
the Reverse Stock Split. The number of shares deliverable upon settlement or vesting of restricted stock awards will
be similarly adjusted, subject to our treatment of fractional shares. The number of shares reserved for issuance pursuant
to these securities will be proportionately based upon the Reverse Stock Split determined by the Board of Directors, subject to
our treatment of fractional shares.
Accounting
Matters
The
Reverse Stock Split Amendment will not affect the par value of our Common Stock per share, which will remain $0.001 par value
per share. As a result, as of the Effective Time, the stated capital attributable to Common Stock and the additional
paid-in capital account on our balance sheet, on aggregate, will not change due to the Reverse Stock Split. Reported
per share net income or loss will be higher because there will be fewer shares of Common Stock outstanding.
Certain
Federal Income Tax Consequences of the Reverse Stock Split
The
following summary describes certain material U.S. federal income tax consequences of the Reverse Stock Split to holders of our
Common Stock
Unless
otherwise specifically indicated herein, this summary addresses the tax consequences only to a beneficial owner of our Common
Stock that is a citizen or individual resident of the United States, a corporation organized in or under the laws of the United
States or any state thereof or the District of Columbia or otherwise subject to U.S. federal income taxation on a net income basis
in respect of our Common Stock (a “U.S. holder”). A trust may also be a U.S. holder if (1) a U.S.
court is able to exercise primary supervision over administration of such trust and one or more U.S. persons have the authority
to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person. An
estate whose income is subject to U.S. federal income taxation regardless of its source may also be a U.S. holder. This
summary does not address all of the tax consequences that may be relevant to any particular investor, including tax considerations
that arise from rules of general application to all taxpayers or to certain classes of taxpayers or that are generally assumed
to be known by investors. This summary also does not address the tax consequences to (i) persons that may be subject
to special treatment under U.S. federal income tax law, such as banks, insurance companies, thrift institutions, regulated investment
companies, real estate investment trusts, tax-exempt organizations, U.S. expatriates, persons subject to the alternative minimum
tax, traders in securities that elect to mark to market and dealers in securities or currencies, (ii) persons that hold our
Common Stock as part of a position in a “straddle” or as part of a “hedging,” “conversion”
or other integrated investment transaction for federal income tax purposes, or (iii) persons that do not hold our Common
Stock as “capital assets” (generally, property held for investment).
If
a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our
Common Stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the
partner and the activities of the partnership. Partnerships that hold our Common Stock, and partners in such partnerships,
should consult their own tax advisors regarding the U.S. federal income tax consequences of the Reverse Stock Split.
This
summary is based on the provisions of the Code, U.S. Treasury regulations, administrative rulings and judicial authority, all
as in effect as of the date of this information statement. Subsequent developments in U.S. federal income tax law, including
changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal
income tax consequences of the Reverse Stock Split.
PLEASE
CONSULT YOUR OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE REVERSE
STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION.
U.S.
Holders
The
Reverse Stock Split should be treated as a recapitalization for U.S. federal income tax purposes. Therefore, a stockholder
generally will not recognize gain or loss on the Reverse Stock Split, except to the extent of cash, if any, received in lieu of
a fractional share interest in the post-Reverse Stock Split shares. The aggregate tax basis of the post-split shares received
will be equal to the aggregate tax basis of the pre-split shares exchanged therefore (excluding any portion of the holder’s
basis allocated to fractional shares), and the holding period of the post-split shares received will include the holding period
of the pre-split shares exchanged. A holder of the pre-split shares who receives cash will generally recognize gain or loss equal
to the difference between the portion of the tax basis of the pre-split shares allocated to the fractional share interest and
the cash received. Such gain or loss will be a capital gain or loss and will be short term if the pre-split shares were held for
one year or less and long term if held more than one year. No gain or loss will be recognized by us as a result of the Reverse
Stock Split.
No
Appraisal Rights
Under
Delaware law and our charter documents, holders of our Common Stock will not be entitled to dissenter’s rights or appraisal
rights with respect to the Reverse Stock Split.
Required
Vote
The affirmative vote of a majority of the votes cast by holders of Voting Stock entitled to vote as of the
Record Date is required to approve the amendment to our Certificate of Incorporation to implement the Reverse Split.
RECOMMENDATION
OF THE BOARD FOR PROPOSAL NO. 3:
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR GRANT OF AUTHORITY FOR A REVERSE SPLIT OF THE COMPANY’S COMMON STOCK
PROPOSAL
4:
APPROVAL
OF ISSUANCE OF SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS WHERE
THE MAXIMUM DISCOUNT AT WHICH SECURITIES WILL BE
OFFERED WILL BE EQUIVALENT
TO A DISCOUNT OF 20% BELOW THE MARKET PRICE OF OUR COMMON STOCK IN
ACCORDANCE WITH NASDAQ MARKETPLACE
RULE 5635(d)
Our
Common Stock is currently listed on the Nasdaq Capital Market and, as such, we are subject to Nasdaq Marketplace Rules. Nasdaq
Marketplace Rule 5635(d) (“Rule 5635(d)”) requires us to obtain stockholder approval prior to the issuance of our
Common Stock in connection with certain non-public offerings involving the sale, issuance or potential issuance by the Company
of Common Stock (and/or securities convertible into or exercisable for Common Stock) equal to 20% or more of the common stock
outstanding before the issuance. Shares of our Common Stock issuable upon the exercise or conversion of warrants, options, debt
instruments or other equity securities issued or granted in such non-public offerings will be considered shares issued in such
a transaction in determining whether the 20% limit has been reached, except in certain circumstances such as issuing warrants
that are not exercisable for a minimum of six months and have an exercise price that exceeds market value.
We
may seek to raise additional capital to implement our business strategy and enhance our overall capitalization. We have not determined
the particular terms for such prospective offerings. Because we may seek additional capital that triggers the requirements of
Rule 5635(d), we are seeking stockholder approval now, so that we will be able to move quickly to take full advantage of any opportunities
that may develop in the equity markets.
We
hereby submit this Proposal 4 to our stockholders for their approval of the potential issuance of shares of our Common Stock,
or securities convertible into our Common Stock, in one or more non-public capital-raising transactions, or offerings, subject
to the following limitations:
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The
aggregate number of shares issued in the offerings will not exceed 8,000,000 shares of our Common Stock, subject to adjustment
for any reverse stock split effected prior to the offerings (including pursuant to options, warrants, convertible debt or other
securities exercisable for or convertible into Common Stock) (See Proposal 3);
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The
total aggregate consideration will not exceed $25 million;
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The maximum discount at which
securities will be offered (which may consist of a share of Common Stock and a warrant for the issuance of up to an additional
share of Common Stock) will be equivalent to a discount of 20% below the market price of our Common Stock at the time of issuance
in recognition of the historical volatility making the pricing discount of our stock required by investors at any particular time
difficult, at this time, to predict. For example, as reported in our Annual Report on Form 10-K filed with the SEC on April 14,
2017, the range of high and low closing prices for our Common Stock as reported by the Nasdaq Capital Market, for the period July
25, 2016 (the date on which our Common Stock began trading on the Nasdaq Capital Market) through April 12, 2017 was $16.70 and
$1.95, respectively.
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Such offerings will occur, if at all, on or before January [ ], 2019; and
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Such
other terms as the Board of Directors shall deem to be in the best interests of the Company and its stockholders, not inconsistent
with the foregoing.
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The
issuance of shares of our Common Stock, or other securities convertible into shares of our Common Stock, in accordance with any
offerings would dilute, and thereby reduce, each existing stockholder’s proportionate ownership in our Common Stock.
The stockholders do not have preemptive rights to subscribe to additional shares that may be issued by the Company in order to
maintain their proportionate ownership of the Common Stock.
The
issuance of shares of Common Stock in one or more non-public offerings could have an anti-takeover effect. Such issuance could
dilute the voting power of a person seeking control of the Company, thereby deterring or rendering more difficult a merger, tender
offer, proxy contest or an extraordinary corporate transaction opposed by the Company.
The
Board of Directors has not yet determined the terms and conditions of any offerings. As a result, the level of potential dilution
cannot be determined at this time, but as discussed above, we may not issue more than 8,,000,000 shares of Common Stock in the
aggregate pursuant to the authority requested from stockholders under this proposal, subject to adjustment for any Reverse Stock
Split. (See Proposal 3). It is possible that if we conduct a non-public stock offering, some of the shares we sell could be purchased
by one or more investors who could acquire a large block of our Common Stock. This would concentrate voting power in the hands
of a few stockholders who could exercise greater influence on our operations or the outcome of matters put to a vote of stockholders
in the future.
We
cannot determine what the actual net proceeds of the offerings will be until they are completed, but as discussed above, the aggregate
dollar amount of the non-public offerings will be no more than $10 million. If all or part of the offerings is completed, the
net proceeds will be used for general corporate purposes. We currently have no arrangements or understandings regarding any specific
transaction with investors, so we cannot predict whether we will be successful should we seek to raise capital through any offerings.
No
Appraisal Rights
Under
the Delaware General Corporation Law, our stockholders are not entitled to appraisal rights with respect to the issuance of securities
in on or more non-public offerings, and we will not independently provide our stockholders with any such rights.
Required
Vote
The affirmative vote of a majority of the
votes cast for this proposal is required to approve the issuance of securities in one or more non-public offerings, as required
by and in accordance with Nasdaq Marketplace Rule 5635(d).
RECOMMENDATION
OF THE BOARD FOR PROPOSAL NO. 4:
THE
BOARD RECOMMENDS A VOTE FOR THE ISSUANCE OF SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS WHERE THE MAXIMUM DISCOUNT AT WHICH
SECURITIES WILL BE OFFERED WILL BE EQUIVALENT TO A DISCOUNT OF 20% BELOW THE MARKET PRICE OF OUR COMMON STOCK IN ACCORDANCE WITH
NASDAQ MARKETPLACE RULE 5635(d)
PROPOSAL
5:
APPROVAL
OF ISSUANCE OF SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS WHERE
THE MAXIMUM DISCOUNT AT WHICH SECURITIES WILL BE
OFFERED WILL BE EQUIVALENT
TO A DISCOUNT OF 15% BELOW THE MARKET PRICE OF OUR COMMON STOCK IN
ACCORDANCE WITH NASDAQ MARKETPLACE
RULE 5635(d)
In
the event that the stockholders do not approve Proposal 4, the Board recommends the stockholders approve the following proposal
which is identical to Proposal 4 except that the maximum discount at which securities of the Company will be offered will be equivalent
to a discount of 15% below the market price for our Common Stock at the time of issuance. The Board of Directors desires to give
the Company’s stockholders a meaningful opportunity to make an informed decision regarding the maximum discount below the
market price for our Common Stock to be authorized for future issuance consistent with the principles adopted by
Nasdaq
and believes providing stockholders several options permits a meaningful informed decision. In
the event both Proposal 4 and Proposal 5 are approved by stockholders, only Proposal 4 shall be deemed to have any effect.
Our
Common Stock is currently listed on the Nasdaq Capital Market and, as such, we are subject to Nasdaq Marketplace Rules. Nasdaq
Marketplace Rule 5635(d) (“Rule 5635(d)”) requires us to obtain stockholder approval prior to the issuance of our
Common Stock in connection with certain non-public offerings involving the sale, issuance or potential issuance by the Company
of Common Stock (and/or securities convertible into or exercisable for Common Stock) equal to 20% or more of the common stock
outstanding before the issuance. Shares of our Common Stock issuable upon the exercise or conversion of warrants, options, debt
instruments or other equity securities issued or granted in such non-public offerings will be considered shares issued in such
a transaction in determining whether the 20% limit has been reached, except in certain circumstances such as issuing warrants
that are not exercisable for a minimum of six months and have an exercise price that exceeds market value.
We
may seek to raise additional capital to implement our business strategy and enhance our overall capitalization. We have not determined
the particular terms for such prospective offerings. Because we may seek additional capital that triggers the requirements of
Rule 5635(d), we are seeking stockholder approval now, so that we will be able to move quickly to take full advantage of any opportunities
that may develop in the equity markets.
We
hereby submit this Proposal 4 to our stockholders for their approval of the potential issuance of shares of our Common Stock,
or securities convertible into our Common Stock, in one or more non-public capital-raising transactions, or offerings, subject
to the following limitations:
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The
aggregate number of shares issued in the offerings will not exceed 8,000,000 shares of our Common Stock, subject to adjustment
for any reverse stock split effected prior to the offerings (including pursuant to options, warrants, convertible debt or other
securities exercisable for or convertible into Common Stock) (See Proposal 3);
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The
total aggregate consideration will not exceed $25 million;
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The maximum discount at which securities will be offered (which may consist of a share of Common Stock and a warrant for the issuance of up to an additional share of Common Stock) will be equivalent to a discount of 20% below the market price of our Common Stock at the time of issuance in recognition of the historical volatility making the pricing discount of our stock required by investors at any particular time difficult, at this time, to predict. For example, as reported in our Annual Report on Form 10-K filed with the SEC on April 14, 2017, the range of high and low closing prices for our Common Stock as reported by the Nasdaq Capital Market, for the period July 25, 2016 (the date on which our Common Stock began trading on the Nasdaq Capital Market) through April 12, 2017 was $16.70 and $1.95, respectively.
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Such offerings will occur, if at all, on or before January [ ], 2019; and
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Such
other terms as the Board of Directors shall deem to be in the best interests of the Company and its stockholders, not inconsistent
with the foregoing.
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The
issuance of shares of our Common Stock, or other securities convertible into shares of our Common Stock, in accordance with any
offerings would dilute, and thereby reduce, each existing stockholder’s proportionate ownership in our Common Stock.
The stockholders do not have preemptive rights to subscribe to additional shares that may be issued by the Company in order to
maintain their proportionate ownership of the Common Stock.
The
issuance of shares of Common Stock in one or more non-public offerings could have an anti-takeover effect. Such issuance could
dilute the voting power of a person seeking control of the Company, thereby deterring or rendering more difficult a merger, tender
offer, proxy contest or an extraordinary corporate transaction opposed by the Company.
The
Board of Directors has not yet determined the terms and conditions of any offerings. As a result, the level of potential dilution
cannot be determined at this time, but as discussed above, we may not issue more than 8,000,000 shares of Common Stock in the
aggregate pursuant to the authority requested from stockholders under this proposal, subject to adjustment for any Reverse Stock
Split. (See Proposal 3). It is possible that if we conduct a non-public stock offering, some of the shares we sell could be purchased
by one or more investors who could acquire a large block of our Common Stock. This would concentrate voting power in the hands
of a few stockholders who could exercise greater influence on our operations or the outcome of matters put to a vote of stockholders
in the future.
We
cannot determine what the actual net proceeds of the offerings will be until they are completed, but as discussed above, the aggregate
dollar amount of the non-public offerings will be no more than $10 million. If all or part of the offerings is completed, the
net proceeds will be used for general corporate purposes. We currently have no arrangements or understandings regarding any specific
transaction with investors, so we cannot predict whether we will be successful should we seek to raise capital through any offerings.
No
Appraisal Rights
Under
the Delaware General Corporation Law, our stockholders are not entitled to appraisal rights with respect to the issuance of securities
in on or more non-public offerings, and we will not independently provide our stockholders with any such rights.
Required
Vote
The affirmative vote of a majority of the
votes cast for this proposal is required to approve the issuance of securities in one or more non-public offerings, as required
by and in accordance with Nasdaq Marketplace Rule 5635(d).
RECOMMENDATION
OF THE BOARD FOR PROPOSAL NO. 5:
THE
BOARD RECOMMENDS A VOTE FOR THE ISSUANCE OF SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS WHERE THE MAXIMUM DISCOUNT AT WHICH
SECURITIES WILL BE OFFERED WILL BE EQUIVALENT TO A DISCOUNT OF 15% BELOW THE MARKET PRICE OF OUR COMMON STOCK IN ACCORDANCE WITH
NASDAQ MARKETPLACE RULE 5635(d)
OTHER
MATTERS
The
Board of Directors knows of no other business which will be presented at the Special Meeting. If any other matters properly come
before the meeting, the persons named in the enclosed Proxy, or their substitutes, will vote the shares represented thereby in
accordance with their judgment on such matters.
ADDITIONAL
INFORMATION
Proxy
Solicitation Costs
The
proxies being solicited hereby are being solicited by the Company. The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of the Notice, the Proxy Statement, the Proxy Card. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of common stock
beneficially owned by others to forward to such beneficial owners. Officers and regular employees of the Company may, but without
compensation other than their regular compensation, solicit proxies by further mailing facsimile or electronic means. We will,
upon request, reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation material to the beneficial
owners of stock.
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By Order of the Board of Directors,
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/s/
Eliyahu Walles
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Eliyahu Walles
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Chairman of the Board of Directors
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Appendix
A
Certificate
of Amendment
of
Amended
and Restated Certificate of Incorporation
of
My
Size, Inc.
Under
Section 242 of the Delaware General Corporation Law
My
Size, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”) hereby
certifies as follows:
FIRST:
The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended by replacing FIFTH in its entirety
with the following:
FIFTH:
The total number of shares of stock which the Corporation shall have authority to issue is one hundred million (100,000,000) shares
of common stock with a par value of $0.001 per share (the “Common Stock”). The Common Stock may be issued from time
to time without action by the stockholders. The Common Stock may be issued for consideration as may be fixed by the Corporation’s
Board of Directors (the “
Board of Directors
”).
SECOND:
The foregoing amendment has been duly adopted in accordance with the provisions of Section 242 of the General Corporation law
of the State of Delaware by the vote of a majority of each class of outstanding stock of the Corporation entitled to vote thereon.
IN
WITNESS WHEREOF, I have signed this Certificate this __ day of _________, 201__.
Appendix
B
Certificate
of Amendment
of
Amended
and Restated Certificate of Incorporation
of
My
Size, Inc.
Under
Section 242 of the Delaware General Corporation Law
My
Size, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”) hereby
certifies as follows:
FIRST:
The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended by replacing FIFTH in its entirety
with the following:
FIFTH:
The total number of shares of stock which the Corporation shall have authority to issue is one hundred million 100,000,000 shares
of common stock with a par value of $0.001 per share (the “Common Stock”). The Common Stock may be issued from time
to time without action by the stockholders. The Common Stock may be issued for consideration as may be fixed by the Corporation’s
Board of Directors (the “
Board of Directors
”).
The
foregoing amendment shall be effective as of _____ a.m., New York City time on _____, 201__ (the “Effective Time”),
every _____ (_____) shares of the Corporation’s Common Stock (the “Old Common Stock”), issued and outstanding
immediately prior to the Effective Time, will be automatically reclassified as and converted into one (1) share of common stock,
par value $0.001 per share, of the Corporation (the “New Common Stock”) (such formula herein, the “Determined
Ratio”). Further, every right, option and warrant to acquire shares of Old Common Stock outstanding immediately prior to
the Effective Time shall, as of the Effective Time and without any further action, automatically be reclassified into the right
to acquire one (1) share of New Common Stock based on the Determined Ratio of shares of Old Common Stock to shares of New Common
Stock, but otherwise upon the terms of such right, option or warrant (except that the exercise or purchase price of such right,
option or warrant shall be proportionately adjusted).
Notwithstanding
the immediately preceding paragraph, the Corporation shall not be required to issue or deliver any fractional shares of New Common
Stock. At the Effective Time any such fractional interest in such shares of New Common Stock shall be [converted into the right
to receive, an amount in cash, without interest, determined by multiplying (i) the closing sale price of the Common Stock (on
a post-reverse-split basis as adjusted for the amendment effected hereby) on the trading day immediately prior to the Effective
Time as reported on the Nasdaq Capital Market by (ii) such fractional share interest to which the holder would otherwise be entitled]/[rounded
up to the next whole share]. Shares of Common Stock that were outstanding prior to the Effective Time and that are not outstanding
after the Effective Time shall resume the status of authorized but unissued shares of Common Stock.
Each
stock certificate that, immediately prior to the Effective Time, represented shares of Old Common Stock shall, from and after
the Effective Time, represent that number of whole shares of New Common Stock into which the shares of Old Common Stock represented
by such certificate shall have been reclassified (as well as the right to receive [cash]/[whole shares] in lieu of any fractional
shares of New Common Stock as set forth above); provided, however, that each holder of record of a certificate that represented
shares of Old Common Stock shall receive, upon surrender of such certificate, a new certificate representing the number of whole
shares of New Common Stock into which the shares of Old Common Stock represented by such certificate shall have been reclassified,
as well as any [cash]/[whole share] in lieu of fractional shares of New Common Stock to which such holder may be entitled pursuant
to the immediately preceding paragraph.
SECOND:
The foregoing amendment has been duly adopted in accordance with the provisions of Section 242 of the General Corporation law
of the State of Delaware by the vote of a majority of each class of outstanding stock of the Corporation entitled to vote thereon.
IN
WITNESS WHEREOF, I have signed this Certificate this __ day of _________, 201__.
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VOTE
ON INTERNET
Go
to http://www.vstocktransfer.com/proxy and log-on using the below control number.
CONTROL
#
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the envelope we have provided.
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*
SPECIMEN *
1
MAIN STREET
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ANYWHERE
PA 99999-9999
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VOTE
BY FAX
Mark, sign and date your proxy
card and fax it to 646-536-3179.
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VOTE
BY EMAIL
Mark,
sign and date your proxy card and send it to vote@vstocktransfer.com.
VOTE
IN PERSON
If
you would like to vote in person, please attend the Special Meeting to be held at the offices of Barnea & CoLaw Offices, 58
HaRakevet St., Tel Aviv 6777016, Israel on January , 2018, at 4:00 pm local time.
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Please
Vote, Sign, Date and Return Promptly in the Enclosed Envelope.
Special
Meeting Proxy Card - My Size, Inc.
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▼
DETACH
PROXY CARD HERE TO VOTE BY MAIL
▼
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1.
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To
approve an amendment to the Company's 2017 Consultant Equity Incentive Plan to increase
the reservation of common stock for issuance thereunder to 4,500,000 shares from 3,000,000
shares.
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☐
FOR
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☐
AGAINST
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☐ ABSTAIN
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2.
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To
approve an amendment to the Company's Amended and Restated Certificate of Incorporation
to increase the authorized number of shares of the Company's common stock from 50,000,000
shares to 100,000,000 shares.
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☐
FOR
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☐
AGAINST
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☐ ABSTAIN
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3.
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To
approve an amendment to the Company's Amended and Restated Certificate of Incorporation
to implement a reverse stock split of the Company's outstanding common stock at a ratio
within the range of 1-for-2 and 1-for-10 at any time prior to January , 2019.
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☐
FOR
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☐
AGAINST
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☐ ABSTAIN
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4.
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To
approve the issuance of securities in one or more non-public offerings where the maximum
discount at which securities will be offered will be equivalent to a discount of 20%
below the market price of the Company's common stock, as required by and in accordance
with Nasdaq Marketplace Rule 5635(d).
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☐
FOR
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☐
AGAINST
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☐ ABSTAIN
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5.
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To
approve the issuance of securities in one or more non-public offerings where the maximum
discount at which securities will be offered will be equivalent to a discount of 15%
below the market price of the Company's common stock, as required by and in accordance
with Nasdaq Marketplace Rule 5635(d).
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☐
FOR
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☐
AGAINST
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☐ ABSTAIN
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Date
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Signature
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Signature, if held jointly
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To change the address on your account, please check the box at right and indicate your new address. ☐
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* SPECIMEN
*
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AC:ACCT9999
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90.00
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MY
SIZE, INC.
Special Meeting
of Stockholders
January __, 2018
MY SIZE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby
appoints Ronen Luzon, as proxy, with full power of substitution, to represent and to vote all the shares of common stock of My
Size, Inc. (the “Company”), which the undersigned would be entitled to vote, at the Company’s Special Meeting
of Stockholders to be held on January __, 2018 and at any adjournments thereof, subject to the directions indicated on this Proxy
Card.
In his discretion,
the proxy is authorized to vote upon any other matter that may properly come before the meeting or any adjournments thereof. This
proxy will be voted in accordance with the specifications made, but if no choices are indicated, this proxy will be voted FOR
all the proposals listed on the reverse side. The Board of Directors recommends a vote
FOR
proposals 1, 2, 3, 4,
and 5.
Please check here if you plan to attend the Special Meeting
of Stockholders on January __, 2018 at 4:00 p.m. local time. ☐
Please indicate your status by signing Ѵ in the relevant
checkbox:
Related Party
1
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Company officeholder
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Institutional Investor
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None of the above
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1
A holder of not less
than 5 percent of the outstanding securities.
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